EXCLUSIVE:
ARUNMA OTEH'S SEC, NNPC, TOP LIST OF AGENCIES STEALING BILLIONS OF FEDERAL
REVENUES- GOVT. REPORT
As
the Nigerian government struggles to raise more money to cushion the impact of
the crashing oil price, a federal regulator has confirmed how billions of Naira
that should have been paid to state coffers as internally generated revenues
were hidden or diverted by government agencies.
Leading
the pack of offenders, the Fiscal Responsibility Commission said, are the
state-run oil company, Nigerian National Petroleum Corporation, NNPC, and
capital market regulator, Securities and Exchange Commission, SEC.
The
two agencies, and many others, either lied about how much they generated, or
how much was due to the government, according to exclusive details obtained.
The
extent of the fraud was so extensive and well worked out that agencies of
government deliberately supplied contradictory information to different
regulatory bodies — the finance ministry, Accountant General’s office, and the
Fiscal Responsibility Commission – to mislead the government, and make it
appear they were fulfilling their fiscal responsibilities.
The
regulatory agencies too, failed to cooperate with each other to combat the
violations, effectively helping the defaulting revenue generating agencies
defraud the government for years, the Fiscal Responsibility Commission
disclosed.
The
biggest culprit, the Fiscal Responsibility Commission said, has been the
Ministry of Finance which has consistently refused to provide financial details
requested by the fiscal commission concerning offices such as the Securities
and Exchange Commission.
The
Fiscal Responsibility Commission said the finance ministry and the Budget
Office of the Federation have frustrated efforts to ensure that respective
revenue generating agencies remit to government the revenues they generate.
“(FRC)
is finding it difficult to enforce compliance with the FRA. We have not been
getting the kind of cooperation and support required from the Finance Ministry and
the Budget Office towards the implementation of the budget according to set
timelines,” said Charles Abana. The commission’s Head of Legal, Investigations
and Enforcement Directorate.
The
first flaw, according to Mr. Abana, is in respect of reports the constitution
tasks government offices to send to the Fiscal Commission.
“After
the approval of the medium term expenditure framework, MTEF, the law demands
that MDAs and corporations should be sending reports on the implementation of
the budget on a quarterly basis to the Commission for effective monitoring of
compliance,” he said. “None of these have been happening. When we request from
the ministry or Budget Office for budget performance, no response is received
as they see the commission as meddlesome interlopers.”
SEC,
NNPC subverting the law
According
to the commission, one of the many illegal ways Ministries, Departments and
Agencies, MDAs, hide and divert billions of naira they generate include using
“creative accounting practice”, a scheme that has seen them delivering
different financial statements to different supervisory authorities each year.
The
commission said its investigation showed that that the financial statements
submitted by some of the agencies to the Office of the Accountant General of
the Federation, OAGF, and Minister of Finance/Budget Office of the Federation
were often different from the ones submitted to it.
While
the statements submitted to the OAGF and the Minister/ Budget Office would show
the agencies as either profitable or breaking even, those sent to the Fiscal
Responsibility Commission would show that they were operating at a loss.
“This
practice is not only illegal and criminal, but also economic sabotage,” Mr.
Abana said. “What these agencies are doing with the accounts to the Finance
Ministry/Budget Office and OAGF is to show that they are delivering on their
mandates, while their declaration of losses in the account to the FRC is to
enable them avoid fulfilling their obligations by remitting their operating
surpluses to government as required by law.”
The
Fiscal Responsibility Act requires all revenue agencies to pay 80 percent of
their annual surplus to the federal government.
Citing
the Securities and Exchange Commission, Mr. Abana said since 2007, the capital
market regulator has neither submitted its audited final statements nor
evidence of its establishment of a General Reserve Fund, and its payment of 80
per cent of its operational surplus to the government as required by law.
Similarly,
the NNPC, the multibillion dollar government oil firm, has consistently refused
to make its books open to the commission for scrutiny despite several requests
as mandated by law.
But
the case of SEC, the commission said, appears most troubling.
The
Fiscal Responsibility Commission said following a letter it wrote to demand
SEC’s audited financial statement for five years, the capital market regulator
responded by submitting the 2007 and 2008 accounts, claiming to have recorded
losses as a result of the global financial crisis that affected the capital
market.
The
SEC only admitted N800 million as surplus that year, the FRC said.
But
the Fiscal Responsibility body said on a close review of the statements, it
became clear that rather than incurring losses, SEC made about N11billlion as
operating surplus for 2007.
That
year, SEC said it paid 80 percent of N800 million, and not N11 billion it
actually generated, to the government.
Even
so, the Fiscal Commission said there was no evidence from SEC in the form of
treasury receipt from the Accountant General’s office to confirm such payment.
A
similar review of the 2008 audited statement of SEC, the FRC said, also
revealed that despite recording over N14 billion as surplus, there was also no
evidence with the OAGF that SEC paid 80 per cent (about N11.6 billion) that
should have been remitted to the federal government that year.
“A
computation of the total amount SEC has not remitted to the Federal Government
as operating surplus was put at over N22 billion for the two years alone,” Mr.
Abana said.
Apart
from the two years, Mr. Abana said there was no other record of payment by SEC
to the Consolidated Revenue Fund(the government’s central purse) since 2009,
despite recent public statements that it made over N13billion as operating
surplus for 2013 at a time it claimed its 2012/2013 financial records were not
ready.
In
July 2014, the Fiscal Revenue Commission said it wrote to remind SEC that it
was yet to provide evidence that it had prepared and published its audited
financial report from 2009 to 2013.
After
a two-month delay, a three-man delegation representing the Director General of
the capital market commission, Arunma Oteh, visited FRC in September 2014 to
report that the statements were ready and would be submitted within a week.
The
officials said they were not in a position to provide the documents, and that
their mission was only to inform the Fiscal Responsibility Commission that Ms.
Oteh would have wished to visit the office personally and explain things out,
but for her trip outside the country.
They
assured Ms. Oteh would visit immediately she returned.
“Till
date the documents have not been brought. Their explanation was that the
capital market was in crisis and that they were now trying to bounce back. Yet,
till date they have not brought the financial records reflecting the impact of
the crisis,” Mr. Abana told us.
Ms.
Oteh took over as the Director General of the Securities and Exchange
Commission, SEC, in January 2010.
The
disclosures by the Fiscal Responsibility Commission means Ms. Oteh took after
her predecessor, Musa Al Faki, who led the capital market since 2004 without
remitting appropriate rates of internally generated revenues to the government.
Mr.
Al Faki failed to pay up to the federal government between 2007 and 2009 when
he left office, while Ms. Oteh is responsible for similar violation from 2010
till date, according to details provided by Fiscal Responsibility Commission.
The
commission’s emphasis is based on 2007, the year fiscal responsibility law came
into force.
Finance
Minister, SEC react
The
Senior Communications Advisor for SEC, Obi Adindu, said the Commission had
already opened an engagement process with the Commission on the issue and
expressed outrage that the commission was reaching out to the media on the
matter.
Mr.
Adindu said apart from the fact that all the financial reports the Commission
was accusing the capital market regulator of not releasing to them were “public
information already freely available on SEC website, a formal response was
being prepared for submission to the Commission.
Mr.
Adindu, who accused the FRC of not understanding its mandate, while adopting a
hasty approach over the issue by resorting to “ambush media tactics,” refused
to say when the response would be taken to the Commission.
“How
can that organization not know the difference in public accounting between
surplus and profit? This was after they had been informed that our (SEC)
accounting was done on an actual basis,” he stated.
He
did not provide specific reasons why SEC had failed to pay to the government
the appropriate rates on its surplus, as required by law.
The
Finance Minister, Ngozi Okonjo-Iweala, rejected any blame for MDAs’
non-compliance with the fiscal responsibility law.
According
to the minister, government has a long list of MDAs and could not give the
names of those complying or not complying.
“The
key issue is not which one is complying or not, but everyone should be
compliant. Everyone should remit what the law says they should to government
coffers. We are not interested in one, but all,” she said.
She
said President Goodluck Jonathan had met with all the revenue generating MDAs
to remind them of what they should do, while the ministry also met with bank
managers to solicit their cooperation to ensure MDAs complied with the law by
remitting monies due to government.
No comments:
Post a Comment