Business & Economy - News - February 17, 2021

ICPC reviews uncover massive budget manipulations, abuses by MDAs

How MDAs manipulate the annual budgets

System Study Reviews of Budget Implementation by the Independent Corrupt Practices and Other Related Offences Commission (ICPC) between 2017 and 2020 uncovered massive manipulation and abuses by most ministries, departments and agencies (MDAs).
The Chairman of ICPC, Bolaji Owasanoye, who disclosed this at a one-day forum in Abuja on Wednesday said reviews conducted in 2019 on 208 government-funded agencies uncovered about N31.8billion in personnel cost surpluses as outstanding for 2017 and 2018.
Also, he said about N19.8billion and N9.2billion were misapplied Personnel Cost and Capital Fund respectively for the period.
About N42billion unspent surplus allocations for Personnel Cost for 2019 and N147billion in 2020, he said, was blocked from possible abuse and pilfering from health and some educational institutions as a result of the anti-graft agency’s intervention.
The forum on the theme: “Transparency and Fiscal Discipline in Implementation of FGN Budget” was jointly organized by the Budget Office of the Federation and the ICPC to discuss transparency and fiscal discipline in the implementation of government budgets.
Participants included Directors of Finance and Accounts as well as Heads of Internal Audit departments of some agencies of the federal government entrusted the responsibility of managing public finance and assets.
The ICPC Chairman said although these officials are given this responsibility to enable government achieve transparency and integrity in public resources, it was under their watch and active collaboration that most of the anomalies, distortions and corruption in the MDAs occur.
“The failure of integrity on the part of these critical watchdogs of public finance is what accounts for the under development of Nigeria, the absence of infrastructure the fragility of the economy and the near collapse of the nation state. Within this room are those who make or mar the future of Nigeria,” the ICPC Chairman said.
Mr Owasanoye said the collaboration by ICPC with the Budget Office was to highlight to the public that what the officials know and do undermine government’s agenda and fiscal projections in the budget.
Enforcing fiscal discipline in budget implementation
The meeting, he said, underscored government’s determination to enforce fiscal discipline in the implementation of the 2021 budget and beyond.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, who was represented by the Permanent Secretary, Special Duties, in the Ministry said the government has put in place measures to ensure the country exits the current recession as soon as possible.
Part of the measures, the Minister said, was the constitution of a committee headed by the DG, Budget Office to recommend how to resolve the issue of incessant lock out of ministries, departments and agencies (MDAs) from the integrated personnel payroll information system (IPPIS).
The Minister was optimistic that interactive session would come up with recommendations on how to enhance transparency and fiscal discipline in the implementation of the Federal Budget
In his presentation, the ICPC Chairman said the Commission’s System Study Review of Budget Implementation of MDAs was part of reform of the systems and procedures by identifying, eliminating, preventing, blocking and obstructing opportunities for corruption.
The exercise, the ICPC boss said, targeted the detection of areas of vulnerabilities, weaknesses, leakages and corruption risks.
He said the exercise was to help in recommending ways to strengthen the systems by removing the discretionary gaps and such opportunities for both individual and institutional malfeasance on public resources.
Apart from reviews on agencies in the health and education sectors in 2020, a similar exercise involving educational institutions indicted in the 2017 Auditor-General’s Annual Audit Report for several financial infractions resulted in a series of on-going investigations, the ICPC boss said.
Findings from the reviews on Personnel Cost allocation and Capital Development Fund between 2017 and 2020 showed that surpluses in both appropriation and releases received by most MDAs beyond their actual needs were misappropriated.
As a tradition, the report said, the surplus funds were usually tied down at the end of each year for payment to non-existent personnel, a practice said to have deprived the government of needed funds for other critical but underfunded areas, especially overhead and capital development.
On personnel cost allocation, Mr Owasanoye said a substantial part of the budget was found to have been spent on matters not related to subject, such as duty tour allowance (DTA) and estacode.
Other payments include electricity, water and sewage bills, procurement of diesel and stationery, transport allowance and flight fares, wages for outsourced services and ad hoc (locum, visiting and at times illegal employees) as well as illegal allowances.
For Capital Development Fund, the review established huge expenditure on both personnel and overhead related items, which frustrated government’s capacity for infrastructural development.
Besides, budgets for Capital Fund were shifted heavily to overhead-related activities, such as empowerments, sensitizations, trainings, thus reducing the visibility of government assets and infrastructural projects commensurate with the value of capital appropriation.
He said some government agencies engaged in massive capital project implementation through direct labour with attendant implication for corruption and loss of project quality and tax revenues.
Reviews in 51 health institutions
Findings from the review conducted in 51 health sector Institutions revealed heavy padding of nominal rolls including inclusion of outsourced staff; warrant releases in excess of actual personnel cost needs.
Other findings included inadequate budgetary overhead allocations or non-budgetary allocation for outsourced services and widespread misuse of Personnel Cost allocation on non-personnel related expenditure, especially on outsourced services for which N4.5billion was spent.
Also, unspent excess balances, despite abuses and misuse stood at about N4.86billion, apart from fraudulent diversion of funds through manipulation of account numbers of beneficiaries on the Government Integrated Financial Management Information System (GIFMIS) Platform.
The report said the practice where REMITA payment system did not allow for the matching of account numbers with account names made committing fraud easy, apart from inordinate balance staffing levels between Teaching Hospitals and Federal Medical Centres.
Reviews in educational institutions
Reviews on educational institutions and Auditor General’s 2017 Annual Report, the ICPC said, uncovered many MDAs indicted for misapplying their budgets without adequate explanation.
In the Auditor-General’s report, most MDAs awarded contracts and made payments without formal contract agreements and job completion certificates, others awarded contract without due process, while others made bulk payments to microfinance banks; cash withdrawal without explanation; contract splitting to circumvent approval threshold; conversion of public property; deductions paid into individual’s accounts due to challenges with GIFMIS Platform and disbursement of funds through staff private accounts.
Other infractions include diversion of revenues (recovered staff loans) to unauthorized accounts; double payment of allowances to University Staff without approval; factoring of 3% Development Levy and 1% Administration charges on contract pricing; retention of staff aged over-70 (academic) and 65+ (non-Academic) Staff on payroll; illegal end-of-tenure payment; illegal furnishing of residences despite rent allowance; illegal organization of training abroad, and illegal payment of allowances to retired officers.
The reviews also indicted the agencies for illegal transfer of funds to individual accounts in private banks; illegal travel overseas without Head of Civil Service approval; loss of Federal Government revenue through non-provision of withholding tax and value added tax in direct purchases; non-deduction of WHT/VAT; non-remittance of tax deducted to State Board of Internal Revenues (BIRs); overpayment of contractors; overpayment of contract sums; overpayment of reimbursable expenses and payment of preliminary expenses without evidence.
Findings showed most government agencies undertake payments for work not done; payment of contract mobilization fees beyond approved limits; payment of illegal allowances; payment of sitting allowance to management committee for meetings held during official hours; payment of unauthorized allowances; payment without payment vouchers/Supporting documents; payments to beneficiaries through third parties; personnel Vote misapplied on expenses not related to personnel matters; procurement of store items not delivered; unapproved expenditures; under-remittance of internally generate revenue (IGR) or unremitted IGR, and unretired/unaccounted for funds meant for disbursement to beneficiaries.
Reviews on Open Treasury Portal
Findings on the Open Treasury Portal (OTP) review showed a number of infractions, including 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 yet to be captured or not on the agencies’ GIFMIS Platform; payment to project officers/accountants to pay casual/onsite employees who are employed for short periods and cannot be registered on the platform; payment to contractors/vendors who were not on the GIFMIS Platform through staff and/or third parties, and payments to staff for procurement of welfare and palliatives for staff.
Other infractions through the portal include payment to staff of funds meant for loans to different empowerment beneficiary types; cash payments for staff DTA, Transport, collation of results and the like for personnel of paramilitary services under the Ministry of Interior for promotion exercise; payment of funds as logistics and training fees for empowerment, trainee stipends, and trainers’ fees paid from Personnel Cost; MDAs making payments into nominated third party personal accounts as a result of problems with GIFMIS Platforms making it difficult to pay third party deductions.
To circumvent the rule of not exceeding N5million limit, most MDAs approve multiple payments of N4.9million, N4.8million so that such transactions would not be captured and uploaded on the OTP.
Most official deliberately make the GIFMIS platform not to work to allow payments to staff or government agencies to be made to project accountant (PA) for onward transmission to the actual beneficiaries; MDAs transferring funds from TSA to Sub-TSA accounts for the purpose of making it possible for payments beyond advances approved limits, project funds, payments to third parties and possible abuses.
Reviews on Federal Unity Schools
Findings on the reviews on payments on Federal Unity Schools showed that meal subsidy released to schools before and during the COVID-19 lockdown period were used for several other purposes of recurrent nature in addition to procurement of food supplies during school sessions and settlement of outstanding obligations.
As a result of the exposure by the ICPC, the Chairman said the government withheld or reduced releases to the FGCs from June 2020, thus saving about N6.1billion the Schools said canceled out any recoveries antigraft agency might have directed.
ICPC recommendations
Following the reviews, the ICPC recommended that unpent funds by the MDAs should be blocked and restrained/reversed immediately salaries are paid to prevent misuse; prevent unauthorized editing of payroll information data on the GIFMIS platform for MDAs until after payment has been concluded by granting them view-only status; prevent inflation of nominal rolls by MDAs for the 2021 Budget and beyond to eliminate surplus allocation and releases, and other resultant infractions; withdrawal of MDAs’ access to non-regular, pension and NHIS lines on GIFMIS and restrict same to IPPIS staff; direct the application of the Bank Verification Number (BVN) as a requirement in populating the Personnel Cost Budget Template and IPPIS data to eliminate any fraudulent payments.
Other recommendations included filtering repetitions of names of Medical/Education Sector personnel that feature in regular (pensionable) and non-regular (non-pensionable) nominal rolls for budget purposes, like locum, contract staff, etc.; reform REMITA payment system to provide matching of account name with number for all payments; directing banks to ensure that account names and numbers match before completing payments; admitting ‘outsourced services’ as a budget head for hospitals and education institutions, and regularly cash-backing same to enable them appropriately draw funds, therefrom and end diversion of Personnel Cost to that causes.
The agency also called on the government to clarify and agree with institutions status of ALL their receipts identifying those that are IGR and those that are not and provide them template for remittance into the consolidated revenue fund; conduct a staffing audit especially for educational and health Institutions in order to establish actual staffing and staffing needs based on volume of work and appropriately right-size for cost efficiency.

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