The Nigeria Ministry of Defence has failed to provide credible evidence of financial expenses amounting to N261,474,766 (two hundred and sixty-one million, four hundred and seventy-four thousand, seven hundred tand sixty-six naira), an audit report shows.
The money was used to purchase air tickets, organize programmes which were unaccounted for, for unauthorized virement, and irregular payments, among others.
This was contained in the 2016 annual audit report released by the Auditor General of the Federation, Mr. Anthony Ayine. The audit report revealed how financial mismanagement took place and the remarks of the Auditor General which include: some of the monies spent were illegitimate, improper charge of public funds among others.
The report, also noted how the agency failed to provide receipts, vouchers or contract documents for the transactions made. The 2016 Audit is the most recent audit report.
DIRECT PAYMENTS INSTEAD OF CASH ADVANCES AND LOSS OF REVENUE
During the audit examination of payment vouchers raised at the Ministry of Defence Headquarters, Abuja, it was observed that 16 (sixteen) payment vouchers for sums totaling over eleven million naira (N11,160,340.00) were paid to 15 (fifteen) officers of the Ministry between May and December 2016 to undertake various services such as printing of documents, purchase of stationeries, renovations and repairs of offices, furniture, equipment, vehicles, etc.
However, the audit examination revealed that direct payments were made to the officers instead of cash advances to be retired on completion of the assignments. It was also revealed the payments exceeded the authorized benchmark of two hundred thousand naira allowed on advances for procurement of goods and services, beyond which such procurements should be made through award of contracts as stipulated by Treasury Circular of March 24, 2009.
Failure to procure these goods and services through contract award led to the loss of over one million naira (N1,116,034.00) being 5% withholding and 5% Value Added Tax revenue that would have accrued to government had they done the procurement through contract awarding.
The Permanent Secretary was requested to justify the violation of the treasury circular and the loss of tax revenue to government but did not.
UNAUTHORISED VIREMENT
In a payment voucher dated October 10, 2016, the sum of thirty four million naira (N34,021,717.50) was raised and paid in favour of a company based in Abuja for the supply and installation of 1 (one) 500KVA soundproof generator to the headquarters of the Ministry.
By examining the voucher, it was discovered that the purchase was made relying on the emergency procurement clause in the Public Procurement Act. However, the certificate of No-Objection to award contract duly issued by the Bureau of Public Procurement in accordance with the Procurement Act 2007 was not produced for verification. It was also revealed in the Auditor General’s report that the procurement of a 500KVA soundproof Mikano generator does not fall within the threshold of security equipment allowed to be procured under the emergency procurement clause.
The payment for the above was charged to the vote meant for purchase of security equipment instead of purchase of plants and equipment vote. This practice represents an unauthorized virement of funds without the approval of the Honourable Minister of Finance and the National Assembly, as required by the Financial Regulation 417 which states that expenditure shall strictly be classified in accordance with the estimates, and votes must be applied only to the purpose for which the money is provided.
This payment is considered an irregular payment, in accordance with Financial Regulations 3106 and 415 which require that all officers responsible for expenditure are to exercise due economy, as money must not be spent merely because it has been voted.
The Auditor General of the Federation, Mr. Anthony Ayine, said in the report, I cannot certify that this expenditure represented a legitimate and proper charge against public funds. The Permanent Secretary was asked to produce the approval for virement and the No objection Certificate from the Bureau of Public Procurement for audit verification, otherwise the amount involved should be recovered from the officer who approved the payment, in accordance with Financial Regulation 3106 and evidence of recovery forwarded for audit verification.
FUNDS NOT ACCOUNTED FOR
An Army officer was paid the sum of N20,311,838 on October 17, 2016, for the inauguration of National Planning Committee for year 2017 Armed Forces Remembrance Day celebration. A close examination revealed that the payment was made directly to the officer as opposed to cash advance and was therefore not properly accounted for on the completion of the assignment.
Also, the details and cost breakdown of the activities that make up the expenditure were not made available to authenticate the genuineness of the expenditure. All relevant supporting documents such as receipts, invoices, and Store Receipts Vouchers, were not attached to the payment voucher, contrary to Financial Regulation 603(i) which states that, All vouchers shall contain full particulars of each service, such as dates, numbers, quantities, distances and rates, so as to enable them to be checked without reference to any other documents and will invariably be supported by relevant documents such as local purchase orders, invoices, special letters of authority, time sheets, etc.
The Auditor General again requested the Permanent Secretary was requested to comment on these infractions and to produce the relevant documents for examination or otherwise, recover the sum of N20,311,838 from the officer, pay to treasury and forward relevant particulars for verification. The Permanent Secretary was also asked to confirm the current status of this transaction.
LOSS OF GOVERNMENT REVENUE AND ILLEGITIMATE EXPENDITURE
To procure international tickets for the Minister of Defence and others to travel to the United States of America (USA) from March 28, 2016, to attend the Nuclear Summit organized by the US Government and a meeting of the Nigeria–USA Bi-National Commission in Washington, the sum of seven million naira (N7, 422,482) was paid directly to a staff instead of the travel agency which issued the ticket. This resulted in a loss of 10% Withholding Tax and Value Added Tax revenue of N742,248.20 (Seven hundred and forty-two thousand, two hundred and forty-eight naira, twenty kobo) which would have accrued to government had payments been made to the company. Besides, there is no evidence that quotations were received from three (3) reputable travelling agencies for comparison and evaluations before the fare was arrived at, as required by extant regulations.
Additionally, receipts, invoices and other relevant supporting documents were neither attached to the voucher before payment nor produced for audit verification. According to Mr. Ayine, the expenditure is therefore un-receipted and illegitimate. There was no letter of invitation or any document attached to the voucher to indicate the duration of the meetings. Therefore, the basis of the 6-7 days estacode paid to each of the staff should be justified.
The Permanent Secretary was requested to comment on these infractions, and produce the relevant documents for examination, otherwise the amount in question should be recovered from the officer, paid back to treasury and relevant particulars forwarded for verification.
FOUL PLAY SUSPECTED
A staff was paid the sum of four million naira (N4,981,200.00) on September 19, 2016, for the Reform Monitoring and Sensitization programme in the Ministry’s Civilian Personnel Unit (CPU).
However, further examination of the payment voucher revealed that the memo approved by the Permanent Secretary did not disclose the 8 Civilian Pay Units to be visited. It was also not clear how the officer arrived at the cost.
The quantity of stickers, key-holders and pamphlets procured for a sum of N1,036,820.00 was not specified in the memo to the Permanent Secretary.
Details, such as date, time, number of persons, etc., constituting monitoring teams to the CPUs, for which a provision of N2,981,400.00 was made, was not provided or attached to the voucher.
The stickers, pamphlets, key-holders and other materials procured were neither taken on store ledger charge nor issued out through Store Issue Vouchers, as required by the Financial Regulation 2402(ii).
Owing to the foregoing, the Internal Audit unit raised a query on the procedure for procuring the items such as key-holders, Servicom books, evaluation forms, etc. totaling over one million naira (N1, 909,800.00) and requested compliance with the Secretary to the Government of the Federation (SGF) Circular of July 26, 2016, which prohibits Ministries, Departments and Agencies from spending money on gift items during workshops.
The Permanent Secretary was requested to explain the infractions of the Financial Regulations and extant circulars, otherwise recover the sum of N4,981,200.00 and forward particulars for verification. The Permanent Secretary should report action taken, following audit recommendation.
FUNDS SIPHONED
The sum of Twenty-one million naira (N21,669,664.28) was paid to a company on March 30, 2016, being Interim Payment on a contract worth N130, 667,860.72 (One hundred and thirty million, six hundred and sixty-seven thousand, eight hundred and sixty Naira, seventy-two kobo), awarded to the company on March 4, 2013, for the construction of 20 Units SOQ (Single Storey) block at Pathfinder Naval Barracks, Port-Harcourt, Rivers State.
During auditing, the auditor discovered that there was no evidence of any need assessment undertaken for this project, which is in violation of the Public Procurement Act, 2007 and Financial Regulation 2918(a) which require that the Procurement Planning Committee shall prepare a needs assessment and evaluation for all procurements.
The audit also revealed no evidence of adherence to due process and the Public Procurement Act, 2007 requirement by the ministry before the award of this contract to the company. Evidence of newspaper advertisements, open competitive bidding, evaluation and acceptance of bid before award was not produced for audit verification, thereby rendering this expenditure doubtful. No-objection certificate was not obtained from the Bureau of Public Procurement before payment was effected.
Other anomalies discovered include: Relevant supporting documents such as the Ministerial Tenders Board minutes, contract award letter, Contract Agreement, receipts, invoices, were neither attached to the voucher nor produced for audit verification. The project file, technical assessment report of work done and outstanding work handed over to the ministry by the defunct Presidential Committee on Barrack Rehabilitation (PCBR) were not produced for audit verification.
Interestingly, the building design was not attached or produced for audit verification as prescribed by Financial Regulation 2925(i) (b) which states that, No contract work involving construction shall be considered by Tenders Board unless the design of the building, i.e., architectural, structural, electrical, mechanical designs and Bills of Quantities is presented to the Tenders Board.
Mr. Ayine said that as at the time of concluding the audit report, the status of the project could not be determined, as no pictorial evidence was produced. It is therefore difficult to conclude that this project had been executed and that the payment represented a legitimate and proper charge against public funds.
The Permanent Secretary was requested to produce the above mentioned documents or recover the amount involved, with relevant particulars of recovery forwarded for audit verification in accordance with Financial Regulation 3106. The Permanent Secretary is required to give an update of action taken on this matter, following audit recommendation to the Ministry.
Another seventy nine million naira (N79,107,000.00) for Medical and Health Awareness programmes at the Ministry of Defence was raised and paid to 8 (Eight) officers of the Ministry to undertake various programmes across the nation, to add value to the lives of citizens working and living in various military formations across the nation.
The sum of N38,039,600.00 (Thirty-eight million, thirty-nine thousand, six hundred naira) representing 48.1% of the total programme cost was spent on duty tour, transport and local running allowance. The sum of N16,393,510.00 (Sixteen million, three hundred and ninety-three thousand, five hundred and ten naira) representing 21% was for rent of halls, Public Address System and tea/lunch, while the sum of N24,673,890.00 (Twenty-four million, six hundred and seventy-three thousand, eight hundred and ninety naira) representing 31.2% was cost of the main programme.
It was discovered through the 2016 audit report that the sum of N38,039,600.00 (Thirty-eight million, thirty-nine thousand, six hundred naira) being Duty Tour Allowances, Travelling and Local Running cost to various beneficiaries of the 8 (eight) programmes was paid directly into the accounts of the 8 (eight) Program Managers that wrote the memo for the funds for onward disbursement to other beneficiaries which contravenes the Federal Government Circular for implementation of e-payment policy. There was no evidence that these beneficiaries received the amounts.
Also revealed in the audit report was that the sum of N6,572,510.00 (Six million, five hundred and seventy-two thousand, five hundred and ten naira) was allegedly spent on rental of halls, chairs and tables, generators and Public Address System (PAS) which was rather odd as most of these barracks have functionally equipped halls with chairs, Public Address System and generators which should have been utilized for the purpose.
Additionally, some receipts from Abuja-based companies were used to support expenditures on hall rentals, Public Address System, generator, canopies, chairs, etc, totaling N1,418,500.00, in respect of programmes that were held in Lagos, Jos and Kaduna.
These items, according to Mr. Ayine, could not have been hired from Abuja and taken to Lagos, Jos and Kaduna for programmes taking place there. Therefore, the sum of N1, 418,500.00 involved should be recovered from the officer, and the recovery particulars forwarded for verification.
The sum of N9, 821,000.00 (Nine million, eight hundred and twenty-one thousand Naira) allegedly expended on tea breaks and lunch for participants at the various programmes were not receipted.
There was no evidence that needs assessment was undertaken and the Commanders of the various Military formations where these programmes were allegedly undertaken did not attest to completion of the programmes.
The Permanent Secretary, being the Accounting Officer, was requested to comment on these anomalies, explain the violation of the Financial Regulations and recover the irregular payments, failing which the provision of Financial Regulation 3106 should be invoked.
Consequently, the Permanent Secretary is required to justify these transactions or simply effect the necessary recoveries and forward particulars for verification.
Amounts totaling N13,891,000.00 (Thirteen million, eight hundred and ninety-one thousand naira) were paid to a staff through 3 (three) payment vouchers dated 30th November 2015, to undertake In-door Residual Spraying for Malaria Control in Military formations at Jos, Lagos and Makurdi.
Out of thirteen million naira, a total of 1,940 sachets of insecticide valued at N4, 656,000.00 was allegedly purchased for use during the programme. The items purchased were neither taken on store ledger charge nor issued out on Store Issue Voucher. Therefore, there was no evidence to show that these items were bought and used for the programme as claimed.
Two resource persons were hired but the details–name, rank, bank account numbers of the 2 (two) resource persons hired for the 3 (three) events for which the sum of N360, 000.00 (Three hundred and sixty thousand naira) was paid, were not disclosed.
The sum of N675,000.00 allegedly spent on training of 15 spray men and assistants for the three (3) events was not receipted.
Similarly, allowances totaling N2, 250,000.00 paid to the 15 (fifteen) spray men and assistants for the 3 (three) events at the rate of N750, 000.00 per programme were un-receipted.
In the light of these infractions, I was unable to confirm that the expenditures were legitimate and proper charges against public funds and that commensurate value was derived,Mr Ayine noted.
The Permanent Secretary was requested by the auditor general to explain these anomalies, or recover the sum of N7,941,000.00 from the officers, forwarding particulars of recovery for verification. He should confirm action taken, following audit recommendation on Inspection Report to the Ministry.
Four million naira (N4,630,575.00) was paid to three staff, through 2 (two) payment vouchers dated November 30, 2015. The payment was for Estacode Allowance, registration fee, visa fee and air ticket to enable them travel for the 2015 National HIV Prevention Conference held in Atlanta, Georgia, USA, from December 6-9, 2015.
Evidence of the invitation or nomination letter to the participants was neither attached to the voucher nor produced for audit verification.
A registration fee of $425.00 was allegedly paid by each of the 3 participants, totaling $1,275.00 equivalent of N286, 875.00, visa fees of N40, 000.00 per participant, totaling N120, 000.00 for which no receipt was produced to confirm this payment. Also, the sum of N2, 250,000.00 was allegedly spent on return tickets purchased by the 3 (three) participants. Neither the receipt nor copy of the air ticket was produced to authenticate this expenditure.
These irregularities raised doubt as to the genuineness of this expenditure.
The Permanent Secretary was requested to explain these anomalies and produce the documents mentioned or recover the sum of N4, 630,575.00 (Four million, six hundred and thirty thousand, five hundred and seventy-five naira) from the officers and forward particulars of recovery for verification.
He was also directed to provide a status report on action taken on audit recommendations.
IMPROPER CHARGE OF PUBLIC FUNDS
At the Ministry of Defence Headquarters, Abuja, it was observed that amounts totaling N44,615,000 (Forty-four million, six hundred and fifteen thousand naira) were paid to an officer on December 31, 2015, for N26, 095,000.00 and March 8, 2016, for N18,520,000 to facilitate the tour of the Honourable Minister of Defence, Mansur Muhammad Dan Ali, and his entourage to various Military formations in the country, from January to February 2016 and March to April 2016.
It was observed that details–names, ranks, designations, rate used to compute traveling allowances, bank account numbers, etc.of the beneficiaries were not stated. It was therefore difficult to understand how the total of N44, 615,000.00 was arrived at. Also, N44,615,000 meant for many beneficiaries was paid into an individual’s account, in violation of the e-payment policy.
The first payment of N26,005,000.00 was charged to the vote meant for rental services instead of Local Travel and Transport vote, thereby constituting an unauthorized virement and misapplication of funds.
In view of these observations, the payment of N44, 615,000.00 was inappropriate and irregular,Mr Ayine noted in his report. Therefore, I do not consider it as a legitimate and proper charge against public funds. There was no evidence that the money was treated as advance and duly retired after the purported tours.
The Permanent Secretary was requested to comment on the anomalies and also produce relevant documents to authenticate these expenditures, otherwise, the sum of N44,615,000 allegedly expended for these tours should be recovered and paid to treasury, forwarding evidence of recovery for audit verification. No response was received. The Permanent Secretary was therefore required to provide and update of action taken on this matter, following audit recommendation.
THEFT IN BROAD DAYLIGHT
Amounts totaling N19,663,949 (Nineteen million, six hundred and sixty-three thousand, nine hundred and forty-nine naira) were raised and paid to 5 (five) officers of the Ministry between February and March 2016 for air tickets, duty tour allowances, sundry purchase of goods, etc.
However, the audit report revealed that: the names, ranks, designation and amount paid to the various beneficiaries were not stated. Besides, there was no evidence produced to show that the amounts were acknowledged by the beneficiaries.
The amount was paid directly into the accounts of the officers mentioned in the voucher, instead of directly to the accounts of the beneficiaries. This is a contravention of Treasury Circular of October 22, 2008, which requires all employees of the federal government to open an account with a commercial bank into which all payments due to them are made.
Invoices, receipts, Store Receipt Vouchers (SRV), etc. necessary to authenticate these expenditures were neither produced nor attached to the vouchers.
The Permanent Secretary was requested to justify the violation of the quoted circular and also produce evidence to authenticate the receipt of the money by the beneficiaries. The Permanent Secretary should confirm the action taken on this matter.
The sum of N9,986,860.00 (Nine million, nine hundred and eighty-six thousand, eight hundred and sixty naira) was paid to Nigerian Navy on payment voucher dated March 24, 2016, being refund of expenditure incurred on the completion of the 16×1 Recruit Accommodation (female arrival hall) project, taken over from a contractor. Further examination of the voucher revealed that:
The original letter of award and contract agreement signed between the company and the Ministry was not attached or produced to establish the terms of contract and attendant penalty of its breach by either party.
The technical assessment of work done and the completion stage of the contract, before the contract was abandoned or revoked and eventually taken over by the Navy was not disclosed. Details of earlier payments totaling N10, 227,833.30 and stage of work completion by the contractor were not provided.
The basis for the takeover of the project by the Navy was not disclosed.
The Bill of Quantity, architectural drawings, completion certificates, invoices, receipts, etc.necessary to authenticate this expenditure were not produced.
The Permanent Secretary was requested to comment on the above observations, and produce the relevant supporting documents and evidence of project completion. No response was received. The Permanent Secretary was required to provide an update on this project, Mr. Ayine said.