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17 Oct 2018

New Report Exposes How Nigerian Agency Wasted N2.5 Billion On Failed Contracts, Fraudulent Approvals

A new audit report has shown how a Nigerian agency wasted as much as N2.5 billion on failed contracts and fraudulent approvals.

A Nigerian agency mismanaged over N2.5 billion via illegal disbursments, payments to incompetent contractors, abandoning critical projects and failing to get value for cash disbursed, a government audit report has revealed.

The Cross River Basin Development Authority (CRBDA) mismanaged the sum between 2008 to 2015 according to the audit report from the office of the Auditor General of the Federation.

A PREMIUM TIMES’ analysis of the report shows how the agency frivolously spent public funds on poorly executed projects while leaving others to lie in ruins in flagrant abuse of the Fiscal Responsibility Act.
The 2016 audit report is the latest one from the Office of the Auditor-General of the Federation.

Transfer Of Project Funds Without Contract Agreement

According to the report, a sum of N10.8 million was transferred from the Authority to a company without any contract agreement and whose line of business does not include consultancy or supervision, between August and December 2015.

According to the report, the transfer of project funds to the said company, which was not named, without any contract agreement for a job to be carried out appears to be a diversion of public funds.

More so, the task of supervising the agency’s projects lie with a relevant department designated and trained for such a task.

The auditor general demanded that the managing director justifies the transfer of project funds or recovers the sum of N10.8 million.

Abandoned Projects

A contract for the construction of Itu irrigation/drainage/flood control project was awarded in December 2008 to a company at the sum of N1.9 billion. Itu is a local government in Akwa Ibom.

According to the executive director, planning and design department of the agency, the project had not been able to take off smoothly due to youth restiveness, land donor issues, compensation, slow progress of work and several changes in the management of the company.

He said the agency had expended N617.8 million out of the total contract value.

According to the AUGF report, a visit to the project site revealed that the total area for the project is about 1,265 hectares, while only about 500 hectares were cleared, the project had been abandoned, no value was derived for the money spent so far and obsolete equipment were abandoned on the site.

In a meeting held in February 2015 between the agency and the contractor, it was resolved that the contract be ended since the completion period had lapsed. The managing director was however requested to involve the federal ministry of works to determine the work done so far, terminate the contract and recover money paid to the contractor since he (contractor) did not abide by the contract’s terms of agreement, blacklist the contractor and demote the staff concerned.

Incompetent Companies Engaged

Another concern in the report is the Itigidi irrigation project in Cross River State which was first contracted to a company in August 2009 for N485.9 million but was terminated due to non-progress of work in November 2012. The supervising ministry was asked to recover the sum of N196 billion from the contractor.

According to the report, the same project was awarded to another company in December 2012 for N505.6 million, with a expected completion period of 24 months.

It was later discovered that the company which the project was awarded to, was not technically fit to handle the project but sub-awarded the project to another company, in violation of the provision of the Public Procurement Act 2007. Even so, no progress was recorded at the end of 24 months.

The managing director was requested to make available to the office of the accountant general of the federation, evidence of recovery and remittance of the sum of N196 billion from the first contractor, also provide evidence which shows that due process was followed in re-awarding the contract and give reasons why the contract was re-awarded in the first place to an incompetent contractor. He was also asked also to terminate the contract and recover any unearned amount paid to the second company.
Cross River Basin Development Authority (CRBDA)

Project Funds Siphoned

About N50 million was paid to a multipurpose cooperative society for the purpose of training communities in Odukpani Local Government Area of Cross River State, on agro-business in 2015 without evidence of how the money was utilised.

According to the report, a visit to the project site revealed that the centre was not functional as it was under lock, overgrown by weed; there was no member of staff seen at the multipurpose; there was also no sign of agricultural activity going on at the centre and no evidence of any ongoing training.

The report stated that the managing director was requested to justify the abandonment of the centre after spending such a huge amount of money, provide evidence that the communities benefited from the purported training, otherwise recover the sum of N50 million.

Unauthorised Virement

The audit report also revealed how the CRBDA spent N8.6 million which was a capital project fund to pay overhead expenses in 2015. This, it added amounted to virement without recourse to National Assembly’s approval, as well as abuse of the 2015 Appropriations Act.

The managing director was asked by the auditor general to justify the unauthorised virement. The auditor general also stated that the managing director did not respond to his audit inspection dated June 2017, hence said he (official) should be properly sanctioned and forced to enforce the recommendation contained in the report.

‘Shaky’ Defence

The managing director of the Authority, Bassey Nkposong, in reaction to the report explained why some of the projects were abandoned.

He said most times, when the lawmaker who proposes them (projects) is no longer in power, the projects run into a storm. He also identified insufficient funds released by the government as another reason. He also said the projects were awarded by his predecessor.

He, however, said the agency he heads would like to know ”where they have (been) faulted and these would be addressed”.

“There are procurement provisions we follow and statutory requirements that have to be met while awarding projects, someone who doesn’t pay tax does not get a chance to do the job. As you know, more than a thousand persons come for different projects but we take out time to ascertain the competence of whoever the job goes to,” he said.

Isaac Botti of the Social Action, an outfit that tracks such projects, in reaction to the report said the sleaze was one of the great concerns of people in the region.

He said his organisation recently tracked some projects and discovered that about 70 per cent of these ”are either abandoned or have not been attended to at all.”

***
Source: PREMIUM TIMES

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