How ICPC blocked diversion of N189bn by MDAs

From Uche Usim, Abuja

Dealing with institutionalised corruption has remained the pivotal function of the Independent Corrupt Practices and Other Related Offences Commission (ICPC) since its inauguration on September 29, 2000.

With perpetrators of graft becoming more sophisticated to evade detection, ICPC, on its part, has responded by conducting regular systems study and review of ministries departments and agencies (MDAs) of government.

This entails reform of the processes, systems and procedures of public agencies with a view to identifying, eliminating, preventing and blocking opportunities for corruption wherever identified.

The move, applauded by forensic auditors, aims to detect areas of vulnerability, actual weaknesses, leakages and corruption risks and to recommend ways of strengthening these systems and removing the discretionary gaps and opportunities for individual and institutional pilfering of public resources.

In addition, the review also targets boosting public resources for government and making them available for utilisation in delivering good governance and the dividends of the country’s democratic machinery.

Over the years, the system study reviews have led to the blockage of N189 billion fraud via personnel cost diversion by some MDAs.

Oftentimes, the reviews lead to full-blown investigations of infractions, query enforcement measures and have also led to asset recovery and prosecution of culprits.

In 2019, the ICPC reviewed 208 agencies of government funded from the federal treasury and, after surfing through their operations, it discovered some deep-seated infractions.

Top on the list was the discovery of N31.8 billion personnel cost surpluses for 2017 and 2018. ICPC also detected the misapplication of N19.8 billion and N9.2 billion from personnel cost and capital fund, respectively.

Consequently, N42 billion unspent surplus allocations for personnel cost for 2019 alone was blocked and insulated from possible abuse and diversion. Major culprits are health and educational institutions.

Last year, the ICPC flagged N147 billion personnel cost that would have been diverted by government agencies. Similarly, between 2018 and 2020, the commission flagged N220 million that some MDAs had diverted from tax and other third party deductions such as union dues.

Fraud investigators said, if the ICPC’s had covered the entire civil service, the figures would be humongous.

However, the ICPC, in 2020, extended its review and focused strongly on the health and education sectors. These sectors not only directly impact the lives of ordinary citizens, they are also critical to meeting internationally recognised development goals. Unfortunately, they have remained a major headache to budget execution in Nigeria, forcing the commission to look into them and end the logjam.

Specifically, the ICPC commenced a review of educational institutions heavily indicted in the 2017 Auditor-General’s annual audit report, to unravel any financial infraction.

In its efforts to deepen transparency and accountability, the Federal Government launched the Open Treasury Portal in December 2019, where all payments from N5 million and above by MDAs were meant to be electronically published for public scrutiny.

With the launch of the initiative, the ICPC began studying payment data on the portal with special focus on educational and health institutions.
In the process, the issue of discrepancies in payments of feeding allowance to federal unity secondary schools cropped up, compelling the commission to carry out further investigations on expenditure on meal subsidy releases that remained constant, even during the COVID-19-induced lockdown that forced students to stay at home for months while schools remained shut.

In response to the commission’s findings, the Federal Government set up the Transparency Portal Quality Assurance and Compliance Committee, with ICPC as a member. The committee went to work by scrutinising payments on the portal and periodically sent lists of agencies with serious infraction for further review and sometimes investigation and enforcement action.

It reported its findings on fraud or unaccounted expenditure. However, despite confronting erring ministries and MDAs with federal circulars prohibiting these activities, the infractions continued with impunity.

This development necessitated stronger anti-graft measures to be put in place on the part of government and anti-corruption agencies.

Speaking on the development, chairman of the ICPC, Prof. Bolaji Owasanoye, SAN, noted that, so far, the commission has uncovered massive financial irregularities in the operations of 51 Federal Government health institutions in the country.

Owasanoye was appointed ICPC chairman in 2017. Before then, he was a member/executive secretary of the Presidential Advisory Committee Against Corruption (PACAC).

He was appointed into PACAC by President Muhammadu Buhari to promote the reform agenda of government in the anti-corruption effort as well as advise on the prosecution of the war against corruption and the implementation of reforms in Nigeria’s criminal justice system.

Coming with many years of hands-on experience in anti-graft matters, the ICPC chairman, on assumption of office, told directors of finance and accounts and directors of internal audit during an interactive forum there would be more focus on health and education sectors as it scrutinises MDAs activities.

He said the need to focus on health and education sectors was because the sectors directly touched the lives of ordinary citizens and were critical to meeting any of the internationally recognized development goals.

Based on the review, he said the agencies had become a hinderance to budget execution as the ICPC discovered padding of nominal rolls, including inclusion of outsourced staff; warrant releases in excess of actual personnel cost needs; inadequate budgetary overhead allocation; and inadequate or non-budgetary allocation for outsourced services.

Owasanoye also said there was widespread misuse of personnel cost allocation on non-personnel expenditure, especially on outsourced services (N4.5 billion); unspent excess balances despite abuses and misuse (N4.86 billion); and fraudulent diversion by role players of funds through manipulation of account numbers of beneficiaries on the GIFMIS Platform.

The ICPC boss also noted that there were issues of 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.

He explained that the ICPC discovered the payment of advances beyond approved limit of N200,000 to individuals’ accounts; advances for projects paid into project accountants’ personal accounts with commercial banks; and payments to individual staff/accountants for disbursement to ad hoc employees/outsourced services and other employees.

In addition, there was payment to project officers/accountants to pay casual/onsite employees who were employed for short periods and could not be registered on the platform; while cash was made for staff duty tour allowance, transport, collation of results and the like for personnel of paramilitary services under the Ministry of Interior for promotion exercise.

To address these challenges, he called on the Federal Government to stop the late release of budgetary allocation, especially at the end of the year to check fraud and corrupt practices by MDAs. He said the practice where funds were released at the end of the year for execution of projects raised opportunity for frenzied expenditure, circumvention of procedure, fraud and corruption.

Over the years, the Federal Government, due to the delay in passing the budget, had always resorted to late release of funds to MDAs as a measure to increase the rate of budget implementation.

For instance, in the 2020 budget, the Federal Government had extended the timeline for the execution of capital projects till March 31, 2021, as opposed to the December 31 budget cycle. The extension was done after the Minister of Finance, Zainab Ahmed, had written to the parliament, seeking extension of the timeline.

However, speaking on the development, the ICPC boss said the appropriated funds should be released in time to allow for strict compliance with procurement procedure, adding that when this cannot be achieved, the fund should be deferred till the following fiscal year, as government is a continuum.

Owasanoye said: “MDAs should be advised to issue financial reports on time to enable completion of annual audit and publishing of result on time. Sanctions should be introduced for inordinate delays.

“Government should avoid late releases of budget allocation, especially at the end of the year.

“Appropriated funds should be released in time to allow for strict compliance with procurement procedures, otherwise deferred till the following fiscal year.”

He also recommended that unspent balances be blocked and restrained/reversed immediately salaries are paid to prevent misuse.

The ICPC chairman also said there was need to prevent unauthorised editing of payroll information data on the Government Integrated Financial Management Information System platform for MDAs until after payment has been concluded by granting them view-only status.

He added that prevention of inflation of nominal rolls by MDAs for the 2021 budget and beyond was vital to eliminate surplus allocation and releases, and other resultant infractions.

Owasanoye called on the Federal Government to withdraw MDAs’ access to non-regular, pension and National Housing Insurance Scheme lines on GIFMIS and restrict the same to IPPIS staff.

To eliminate fraudulent payments, Owasanoye called on the Federal Government to direct the application of the bank verification number as a requirement in populating the Personnel Cost Budget Template and IPPIS data.

He also urged government to carry out a reform of the REMITA payment system to provide matching account names with numbers for all payments.

He said banks should be directed to ensure that account names and numbers match before completing payment.

In the area of personnel, he advised that a staff audit should be conducted, 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.

He added that MDAs should be advised to issue financial reports on time to enable completion of annual audit and publishing of results on time, noting that sanctions should be introduced for inordinate delays.

Owasanoye said: “The infractions established constitute the risks and building blocks for the inefficient public expenditure and pervasive corruption that bedevil our public finance.

“The continuity of these infractions challenges our professed political will to deal with impunity characterised by disobedience of laws and regulations.

“This is an existential threat to the nation and it has already negatively impacted stability and development because funds appropriated for major infrastructure and development projects are simply diverted or mismanaged the same way, thus, diminishing the hope of the people and the plans and programmes of government.

“It starts with those of us in this room. This impunity cannot continue ad-infinitum. Nigeria cannot and will not survive it.

“We are at a turning point with a global pandemic whose end is uncertain, reduced public revenue but escalating citizen expectation, youth restiveness, insecurity and lack of or decaying critical infrastructure.

“In all of this, government is striving to put money in the right place for the benefit of the people. The least we can do is to ensure that the expectations of the government and the people are met and we get value for money.

“We believe that infractions can no longer be ignored or excused on the pedestal of ‘everyone is doing it’.”

He said the ICPC was already investigating and prosecuting a number of egregious cases: “We have got to the point where we will prosecute without discrimination public officers found with any, including the simplest of infractions, so that we entrench zero tolerance for budget execution inefficiency, which breeds corruption.

“The country should no longer slide into poverty if only you will be firm and refuse to tolerate culpability from anyone, starting with yourselves.”

He stated that the ICPC would continue to collaborate with all critical stakeholders towards entrenching integrity in the polity and in public finance management; for the overall good of the country.

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