The Auditor-General of the Federation, AGF, has uncovered financial irregularities to the tune of N4.64 billion in the Federal Ministry of Works (Housing Sector).
According to report by the PUNCH, the discovery has raised concerns about systemic non-compliance with financial regulations and procurement laws.
This is contained in the Auditor-General for the Federation’s Annual Report, covering activities between 2020 and 2021. The report also revealed significant lapses in internal controls under the former Minister of Works and Housing, Babatunde Fashola,
According to the report, there were infractions that included payments made without proper documentation and extra-budgetary expenditures. Also discovered were mobilization fees exceeding approved thresholds, and contracts awarded without following due process.
Also, a sum of N1.08 billion was paid from the Government Integrated Financial Management Information System Account without the requisite payment vouchers. Thus violating Paragraph 601 of the Financial Regulations, 2009.
It also discovered that N546 million was transferred to project accounts without adequate documentation or budgetary provision.
The Auditor-General’s report attributed these anomalies to weak internal control mechanisms in the Ministry. And warned of risks such as fund misappropriation and loss.
The report noted that despite queries, the Ministry failed to respond to these issues.
The Auditor-General, therefore, recommended that the Permanent Secretary justify the payments, recover the funds, and remit them to the Treasury.
The audit report also recommended that evidence of compliance should be submitted to the National Assembly’s Public Accounts Committees. Failure which, sanctions under Paragraph 3106 of the Financial Regulations should apply.
According to the report, it was unearthed that extra-budgetary expenditures amounting to N2.89 billion, including N1.88 billion was spent without legislative appropriation.
Also, over N1 billion was paid to contractors for road projects in Katsina State. Projects that were only included in the 2017 Appropriation Act.
These expenditures, the report stated, contravene Section 80(4) of the 1999 Constitution, which mandates legislative approval for all withdrawals from public funds.
The audit report read, “The sum of N1,883,795,670.51 (One Billion, Eight Hundred and Eighty-three Million, Seven Hundred and Ninety-Five Thousand, Six Hundred and Seventy Naira, Fifty-one Kobo) was expended by the Ministry without evidence of appropriation.
“The sum of N1,003,039,708.79 (One Billion, Three Million, Thirty-nine Thousand, Seven Hundred and Eight Naira, Seventy-nine Kobo) was paid to four contractors for the construction of roads in Daura, Katsina State. The project was budgeted for in the 2017 Appropriation Act.
“Approval for the extra-budgetary expenditures in (i) and (ii) above, totaling N2,886,835,379.30 (Two Billion, Eight Hundred and Eighty-six Million, Eight Hundred and Thirty-five Thousand, Three Hundred and Seventy-nine Naira, Thirty Kobo) by the National Assembly was not presented for audit.
“The above anomalies could be attributed to weaknesses in the internal control system at the Federal Ministry of Works (Housing Sector).”
It noted that the lack of adherence to financial accountability standards raises concerns about the potential diversion of public funds.
The report pointed out that no response was provided by the Ministry to clarify these expenditures.
It, therefore, called for the recovery of the unauthorized funds and recommended sanctions for those responsible under relevant financial regulations.
The report further revealed contracts worth N493.97 million were awarded to companies not registered with the Corporate Affairs Commission.
On this, the report revealed that N170.36m was paid to unregistered entities. And a company awarded a contract in 2016 was only registered in 2019. Thus, contravening the Public Procurement Act, 2007, and the Companies and Allied Matters Act, 2020.
The report also noted that the absence of legal registration increases the risk of contract non-execution. Fund mismanagement, and payment to ghost entities.
It stated, “Payment for Contracts totaling N493,967,484.24 (Four Hundred and Ninety-three Million, Nine Hundred and Sixty-seven Thousand, Four Hundred and Eighty-four Naira, Twenty-four Kobo) were made to non-existing companies.
“The sum of N5,825,989.28 (Five Million, Hight hundred and Twenty-five Thousand, Nine Hundred and Eighty-nine Naira, Twenty-eight Kobo) was paid to a contractor vide payment voucher with Ref. No PROC/PBHD/CAP1345/2020 dated 30th December, 2020. This is out of the total contract sum of N493,967,484.24 without the company being incorporated.
“Three contractors were paid a total of N170,355,961.05 without evidence of incorporation with the Corporate Affairs Commission (CAC).
“A company that was awarded a contract on the 25th of November, 2016 was incorporated with CAC on the 16th of August, 2019.
“The above anomalies could be attributed to weaknesses in the internal control system at the Federal Ministry of Works (Housing Sector),” the report stated.
The report, therefore, advised the Ministry to recover the funds and ensure remittance to the Treasury. And to implement sanctions against officials involved in the irregular awards.
The report also noted that in Oyo State, the ministry paid N110.81 million, representing 22.61 per cent of a total contract sum, as mobilization fees for a project. Thus, exceeding the 15 per cent limit prescribed by Paragraph 2933 of the Financial Regulations.
The report pointed out that contract was also irregularly awarded on a Sunday. Thus, further raising concerns about procedural integrity.
The report, therefore, called for the recovery of the excess payment. While recommending strict sanctions for gross misconduct under Paragraph 3129 of the Financial Regulations.
In Edo State, the report stated that a contract worth N46.31 million for classroom construction in Edo State was awarded without adhering to due process.
The report further noted that N40.83 million, representing 88.18 per cent of the contract sum, was paid to the contractor. Thus, exceeding the mobilization thresholds.
It maintained, therefore, that the lack of documentation, such as tender evaluations and approvals, exposes the ministry to risks of incomplete projects and fund diversion.
The report noted that five contracts worth N27.84m were awarded without obtaining bids from at least three unrelated contractors. This is against the requirement under Section 24(1) of the Public Procurement Act, 2007.
source: PUNCH
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