ICPC uncovers budget fraud in MDAs

The Independent Corrupt Practices and Other Related Offences Commission (ICPC) has uncovered how civil servants manipulate budget to fleece the system.

ICPC Chairman, Prof. Bolaji Owasanoye (SAN) on Wednesday in Abuja said the Commission has uncovered multiple layers of corrupt practices perpetuated by civil servants across Ministries Departments and Agencies (MDAs).

He disclosed this at the Budget Office/ICPC Interactive Forum with Directors of Finance and Accounts and Directors of Internal Audit.

Owasanoye said the Commission stumbled on these infractions while carrying out a System Study Review of Budget Implementation.

According to him, “there was budget manipulation by most MDAs which resulted in MDAs receiving both appropriation and releases beyond their actual needs. While these surpluses were open to the risk of being misappropriated as is tradition.”

According to him “in 2019 ICPC reviewed 208 agencies of government that are funded from the Federal Treasury and came up with outstanding results which included discovery of N31.8 billion personnel cost surpluses for 2017 and 2018, and misapplication of N19.8 billion and N9.2 billion from Personnel Cost and Capital Fund respectively.”

Owasanoye said with these discoveries, “N42 billion unspent surplus allocations for Personnel Cost for 2019 alone was blocked from possible abuse and pilfering mostly from health and some educational institutions.”

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The ICPC boss lamented that “despite confronting erring ministries and MDAs with federal circulars prohibiting these activities, the infractions continue thus stronger measures on the part of government and anti-corruption agencies are inevitable”.

With regards to manipulations of the 2020 budget implementation, Owasanoye said, “a number of investigations are on-going on this as we have instituted a mechanism for continuous review of current and subsequent Annual Audit Reports.”

Owasanoye disclosed that while investigating infraction on Personnel Cost allocation, “we found that quite a substantial part of the Personnel Cost Budget was expended on matters not related to Personnel Cost.

“These expenditure types included Duty Tour Allowance (DTA) and estacode, electricity, water and sewage bills, procurement of diesel and stationery, payment of transport allowance and flight fares, payment of wages for outsourced services and ad hoc (locum, visiting and at times illegal employees), as well as illegal allowances”.

For Capital Development Fund, Owasanoye said the investigation “established huge expenditure on both personnel and overhead related items thus frustrating government’s capacity for infrastructural development.

He was concerned “that the budgeting system for Capital Fund had shifted heavily to overhead related activities such as empowerment, sensitizations, trainings, etc thus reducing the visibility of government assets and infrastructural projects commensurate with the value of capital appropriation.”

He said “some agencies of government engaged in massive capital project implementation through direct labour with attendant implication for corruption and loss of project quality and tax revenues”.

Specifically, the ICPC discovered from 51 Health Sector Institutions incidences of: padding of nominal rolls including inclusion of outsourced staff; warrant releases in excess of actual personnel cost needs; inadequate budgetary overhead allocation; inadequate or non-budgetary allocation for outsourced services and widespread misuse of Personnel Cost allocation on non-personnel related expenditure especially on outsourced services (N4.5 billion).

The ICPC investigations also discovered unspent excess balances despite abuses and misuse (N4.86 billion); fraudulent diversion by role players of funds through manipulation of account numbers of beneficiaries on the GIFMIS Platform; REMITA payment system not allowing for the matching of account numbers with account names and thus making fraud easy and inordinate balance staffing levels between Teaching Hospitals and Federal Medical Centres”.

Owasanoye noted that while many MDAs defended their indictments before both the Ministry of Finance (MoF) and the Public Accounts Committee (PAC) of the National Assembly thus substantially reducing the indictments, many still remained on misapplication of funds which could not be explained”.

Other infractions include: award of contract and payment without contract agreement and job completion certificates; award of contract without due process; bulk payments to microfinance banks; cash withdrawal without explanation; contract splitting; conversion of public property; deductions paid into individual’s accounts due to challenges with GIFMIS Platform.

From the revelations made by the ICPC chairman, it appears it is still business as usual in the MDAs

The recently established Open Treasury Portal (OTP) was also not spared from the activities of unscrupulous civil servants.

The ICPC boss revealed that they uncovered payment of advances beyond approved limit of N200, 000 to individuals’ accounts; advances for projects paid into project accountants’ personal accounts with commercial banks; payments to individual staff/accountants for disbursement to ad hoc employees/outsourced services and other employees (say those on transfer to the MDAs who were yet to be captured/not on the agencies’ GIFMIS Platform).

There were payments to contractors/vendors who were not on the GIFMIS Platform through staff and/or third parties; payments to staff for procurement of welfare and palliatives for staff; MDAs having problems with GIFMIS Platforms and finding it difficult to pay third party deductions and thus the third parties requested that their payments be made into nominated personal accounts of individuals.

In order to circumvent the rule, some MDAs had many payments below the N5 million thresholds such as multiple payments of N4.9 million, N4.8 million ostensibly that such transaction will not be captured and uploaded on the OTP.

Owasanoye stated that part of the outcome from the 2019 System Study and Review of the Commission “is the mopping up of N42 billion (Personnel Cost) in 2019 and N147 billion in 2020 respectively. The Minister of Finance through findings of the Commission of the wrong application of Personnel Cost on Overhead and Capital item issued a negative Warrant to mop up excess cash available in the Personnel Cost of the MDAs to forestall further misapplication of funds”.

Similar warrant he said was issued in 2020 totalling N147 billion which was resulted in significant savings to the government.

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