A report of the Senate Committee on Public Accounts reveals how the Federal Government has since 2002 doled out over N1 trillion from its three special accounts in dodgy circumstances for purposes other than for which they were created

•From Left: Obasanjo, Yar’Adua and Jonathan. The wasteful spending of public funds from special accounts have continued since 2002

A Nigerian Head of State was reported to have boasted sometime in the 1970s that the country’s problem was not money, but what to do with the billions of petro-dollars accruing to the country’s treasury at the time. With this mindset, officials of that administration and those that came after it embarked on wanton looting of public funds and wasteful spending on gargantuan projects to the utter neglect of investments that would have accelerated the country’s socio-economic development. Almost four decades after, with the country saddled with decrepit infrastructure and having one of the lowest human development indexes in Africa, the culture of waste has continued. This fact was vividly brought to life in the report of the Senate Committee on Public Accounts’ probe into the special funds accounts of the Federal Government submitted to the National Assembly last Tuesday. In the main, the findings of the Committee indicated that, not unlike their predecessors, former President Olusegun Obasanjo, late President Umaru Yar’Adua and President Goodluck Jonathan continued the tradition of wasteful spending public funds. The Senator Ahmad Lawan-led Committee was mandated last year to conduct a status inquiry into the special funds accounts made up of  the Development of Natural Resources Account, Derivation and Ecology Account and Stabilisation Account. The three accounts, owned by the Federal Government, are directly funded with 3, 1.46 and 0.72 per cent deductions from the budget. The Natural Resources Account is meant to provide funds for the development of alternative mineral resources to oil and gas, while the Derivation and Ecology Account is meant for intervention in ecological problems in the country. The Stabilisation fund is jointly owned by the three tiers of government and is meant to provide a buffer for the country in case of unforeseen contingencies such as unfavourable developments in the economy.

•Lawan: His committee made startling discoveries

Despite the defined purposes for their establishment, the Senate Committee report indicated that officials of the Federal Government have since 2002 treated the three accounts like a source of slush funds available to spend on projects and initiatives that catch their fancy. The report observed that there are no operational guidelines for the administration, regulation, approval and procedures for the release of money as the “funds are practically being operated as loan granting pools. Several beneficiaries of the funds utilise them for purposes that are not contemplated by the intendment of the funds”. Thus, the bulk of the disbursements from the accounts since 2002 have been in form of loans to states, government agencies and private organisations.

The report indicated, for instance, that out of the N1.5 trillion which accrued to the accounts between 2002 and June 2012, N1.04 trillion was diverted to irrelevant purposes such as loans to foreign countries, companies and organisations. A further breakdown of the amount diverted from the intended purpose revealed that a total of N580 billion was paid out to various organisations and individuals as loans contrary to the objectives of the funds. A total of N348bn of the borrowed fund had yet to be refunded. Ironically, while the government has been talking about its determination to develop other natural resources outside oil as a way of enhancing national revenue, the funds that it could have used to do it are being diverted to other, totally unrelated purposes.

The Lawan Committee report indicated that the Development of Natural Resources Account was the most abused as 100 per cent of the disbursements were for unintended purposes. Hence, though Nigeria’s vast solid mineral resources are crying for development, not a kobo of the N701.5bn, which accrued to the account from 2002 to June 2012, was disbursed to the sector. Instead, as was stated in the report, funds were rampantly disbursed from the account as loans to government agencies and projects and for financing deficits and shortfalls.

•Okonjo-Iweala: Finance Minister

Also, the report indicated that N2bn was granted as loan to enable payment to Gitto Costruzioni General Limited on 19 September 2005 while, in November and December 2004, N3.745bn from the Natural Resources Development Account was granted as loan to the Federal Ministry of Foreign Affairs to buy a chancery in Tokyo, Japan. Another loan of N10.11bn was drawn from the account for the payment of arrears of monetised fringe benefits to workers in Federal Government establishments. Also, the Federal Ministry of Works drew a N15bn loan against the 2007 appropriation for the dualisation of the East-West road on 18 January 2007. The sum of N612, 276,016.65 was paid as JVC contribution deducted from Akwa Ibom grant between March and May, 2002. In the same vein, the Federal Government took another N1.3bn loan for the Derivation Escrow Account on 24 July 2003. On 18 April  2005, N864,725,036 loan was given to the National Health Insurance Scheme, NHIS, for ID cards production, while N452,218,449.70 loan was granted the Federal Government on 9 September 2005 as payment to ADB for purchase of shares. The committee findings revealed that the Ministry of Water Resources got N14,988,625,000.02 as loan from the Natural Resources Account for the Gurara Water Project, while N100 billion was released for financing of second quarter capital on 15 May 2007, two weeks to the end of the Obasanjo administration. On 1 September 2010, the last tranche of N70bn in the account was released as loan to accelerate capital budget releases. The Stabilisation Account has not received a better treatment.

•Ekweremadu: Laments the use of money meant for ecological fund to build malls and abattoir

The Committee said disbursements from the account were for purposes wide apart from what the fund was established for. It noted for instance that a total of N191,780,136,241, about 75 per cent of the funds drawn since its inception, were given out as loans by government. They include N16.2mn to the Directorate of Pilgrim Affairs in 2003, 2004 and 2005 respectively, while another N1.4bn was released to the Nigeria Customs Service as cost of revenue collection in 2005. The committee noted that N87.7bn was given to the Independent National Electoral Commission in 2010 to commence fresh voters’ registration even though the exercise was provided for in the budget. Also, N1.084bn was released to the Federal Inland Revenue Service, FIRS, in the same year. Another N12bn was given to Ghana and Sao Tome & Principe as loan between 2004 and 2005. In May 2007, the Federal Government also dipped its hands into the account to grant itself a loan of N2.8bn, which it used as its contribution to the first phase of the pioneer car finance scheme for public servants in paramilitary agencies.  Another N142.6mn was released to Gong Publishing Company as loan in lieu of of repayment of debt owed by local government councils on 26 September 2005. In the same vein, various loans totalling N309. 2mn were granted the Inspector-General of Police for the “purchase of vehicles for the UN Peace-keeping operations in Haiti.” In 2010, N34.9bn loan was released to Akwa Ibom and Delta states while Dr. Ngozi Okonjo-Iweala, the Minister of Finance, according to the Senate report, also approved the release of N5bn to the Federal Ministry of Aviation, National Identity Management Commission and National Judicial Council in September 2011.

For the Derivation and Ecology Account, out of the total N329.9bn paid out, N149.9bn was allegedly diverted to other uses outsides its mandate. The beneficiaries of funds in the account are supposed to be state governments and the National Emergency Management Agency, NEMA. But the Lawan Committee findings revealed that, like in the case of the other two accounts, the federal government treated the account as its piggybank where it regularly dipped its hands to dole out funds to its favoured agencies in form of loans. In 2002 for instance, the Federal Government withdrew N200mn for its Presidential Research and Communications Unit, another N800mn for resurfacing the runway of Malam Aminu Kano International Airport in 2003, and N10mn for building of abattoir in Bida, Niger State. The sum of N200mn was released to the Federal Ministry of Works for the upgrading of the Lagos-Shagamu expressway to six lanes in 2004 while a year earlier, the Nigeria Railway Corporation was a beneficiary of N150mn for the Iju-Ijoko rail dualisation project.

•Mark: National Assembly not doing enough to monitor use of funds from special accounts

Also, N750mn was released for development of Abuja Downtown Mall in 2007 and in 2009, the Federal Government drew N10.9bn to the Consolidated Revenue Fund for funding of the 2008 Appropriation Act. Also, a total of N6bn was released to the Federal Capital Development Authority, FCDA, for the provision of engineering infrastructure at Kubwa Karshi Satellite Town in 2007 while another N1bn was released to Ogun State government for the construction of a section of Badagry-Igboho road in the same year.  The abuse of the Ecological Fund was in spite of the fact that various parts of the country were facing serious environmental problems. “Section 8(82) of the Constitution states that no money shall be withdrawn from the Consolidated Revenue Fund of the Federation except to meet expenditure. In this situation, we have seen where money meant for the Ecological Fund is being used to develop airports, to build malls and to build abattoir,” noted Senator Ike Ekweremadu, the Deputy Senate President.  President of the Senate, David Mark, said it was the failure of the National Assembly to perform its oversight functions that led to the profligacy discovered during the probe:  “The problem we have with these funds is that, apart from not having guidelines for them or any Act guiding the disbursements and the utilisation, we also, at the various committees or the committee responsible, are not taking enough pain, we just take it for granted that these funds exist and we can use them in any way and manner that whoever is operating it decides.”

Most senators who spoke on the issue last Tuesday agreed that they had not done enough in monitoring the management of the accounts.  Another issue they agreed on was the need for the Committee to go back and look at those who have paid back and those who have not paid back their loans. The Committee recommended that all outstanding loans from the Special Funds Accounts should be recovered within six months, while the practice of approving loans from the accounts should be stopped. It also recommended that clear guidelines, regulations and procedures should be established to guide the use of money from the account. A bill to guide the administration of funds from the Special Fund Accounts has passed first reading in the Senate.

Those who spoke to this magazine last week said the lawmakers should go beyond what is in the document handed to them to unravel what the billions of naira withdrawn across the three accounts were actually used for. This, they insisted, should include a probe of the projects that funds withdrawn from the accounts were used to fund. An example is the N750mn granted as loan for the building of a mall, which is reportedly still at the foundation level. Many also wondered why the Federal Government took upon itself the payment of N146mn debt owed by local government councils to Gong Publishing Company, and why the IGP should take upon himself the task of purchasing vehicles for peace-keeping operations in Haiti.

The operation of the three accounts created in 2002 under the administration of Chief Obasanjo has been controversial and perhaps, scrapping the accounts might just be the best option.

—Ayorinde Oluokun/Abuja

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Posted in Nigeria News. A DisNaija.Com network.

Source: PM News

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