EXCLUSIVE: Arumah Oteh’s SEC, NNPC, Top List Of Agencies Stealing Billions Of Federal Revenues – Govt. Report

As the Nigerian government struggles to raise more money to cushion the impact of a crashing oil price, a federal regulator has confirmed how billions of naira that should have been paid to state coffers as internally generated revenues were hidden or diverted by government agencies.

Oteh, Director-General of the SEC

Leading the pack of offenders, the Fiscal Responsibility Commission said, are the state-run oil company, Nigerian National Petroleum Corporation, NNPC, and capital market regulator, Securities and Exchange Commission, SEC.

The two agencies, and many others, either lied about how much they generated, or how much was due to the government, according to exclusive details obtained by PREMIUM TIMES.

The extent of the fraud was so extensive and well worked out that agencies of government deliberately supplied contradictory information to different regulatory bodies — the finance ministry, Accountant General’s office, and the Fiscal Responsibility Commission – to mislead the government, and make it appear they were fulfilling their fiscal responsibilities.

The regulatory agencies too, failed to cooperate with each other to combat the violations, effectively helping the defaulting revenue generating agencies defraud the government for years, the Fiscal Responsibility Commission told PREMIUM TIMES.

The biggest culprit, the Fiscal Responsibility Commission said, has been the Ministry of Finance which has consistently refused to provide financial details requested by the fiscal commission concerning offices such as the Securities and Exchange Commission.

The Fiscal Responsibility Commission said the finance ministry and the Budget Office of the Federation have frustrated efforts to ensure that respective revenue generating agencies remit to government the revenues they generate.

“(FRC) is finding it difficult to enforce compliance with the FRA. We have not been getting the kind of cooperation and support required from the Finance Ministry of Finance and the Budget Office towards the implementation of the budget according to set timelines,” said Charles Abana, the commission’s Head of Legal, Investigations and Enforcement Directorate.

The first flaw, according to Mr. Abana, is in respect of reports the constitution tasks government offices to send to the Fiscal Commission.

“After the approval of the medium term expenditure framework, MTEF, the law demands that MDAs and corporations should be sending reports on the implementation of the budget on a quarterly basis to the Commission for effective monitoring of compliance,” he said. “None of these have been happening. When we request from the ministry or Budget Office for budget performance, no response is received as they see the commission as meddlesome interlopers.”

SEC, NNPC subverting the law

According to the commission, one of the many illegal ways Ministries, Departments and Agencies, MDAs, hide and divert billions of naira they generate include using “creative accounting practice”, a scheme that has seen them delivering different financial statements to different supervisory authorities each year.

The commission said its investigation showed that that the financial statements submitted by some of the agencies to the Office of the Accountant General of the Federation, OAGF, and Minister of Finance/Budget Office of the Federation were often different from the ones submitted to it.

While the statements submitted to the OAGF and the Minister/ Budget Office would show the agencies as either profitable or breaking even, those sent to the Fiscal Responsibility Commission would show that they were operating at a loss.

“This practice is not only illegal and criminal, but also economic sabotage,” Mr. Abana said. “What these agencies are doing with the accounts to the Finance Ministry/Budget Office and OAGF is to show that they are delivering on their mandates, while their declaration of losses in the account to the FRC is to enable them avoid fulfilling their obligations by remitting their operating surpluses to government as required by law.”

The Fiscal Responsibility Act requires all revenue agencies to pay 80 percent of their annual surplus to the federal government.

Citing the Securities and Exchange Commission, Mr. Abana said since 2007, the capital market regulator has neither submitted its audited final statements nor evidence of its establishment of a General Reserve Fund, and its payment of 80 per cent of its operational surplus to the government as required by law.

Similarly, the NNPC, the multibillion dollar government oil firm, has consistently refused to make its books open to the commission for scrutiny despite several requests as mandated by law.

But the case of SEC, the commission said, appears most troubling.

The Fiscal Responsibility Commission said following a letter it wrote to demand SEC’s audited financial statement for five years, the capital market regulator responded by submitting the 2007 and 2008 accounts, claiming to have recorded losses as a result of the global financial crisis that affected the capital market.

The SEC only admitted N800 million as surplus that year, the FRC said.

But the Fiscal Responsibility body said on a close review of the statements, it became clear that rather than incurring losses, SEC made about N11billlion as operating surplus for 2007.

That year, SEC said it paid 80 percent of N800 million, and not N11 billion it actually generated, to the government.

Even so, the Fiscal Commission said there was no evidence from SEC in the form of treasury receipt from the Accountant General’s office to confirm such payment.

A similar review of the 2008 audited statement of SEC, the FRC said, also revealed that despite recording over N14 billion as surplus, there was also no evidence with the OAGF that SEC paid 80 per cent (about N11.6 billion) that should have been remitted to the federal government that year.

“A computation of the total amount SEC has not remitted to the Federal Government as operating surplus was put at over N22 billion for the two years alone,” Mr. Abana said.

Apart from the two years, Mr. Abana said there was no other record of payment by SEC to the Consolidated Revenue Fund(the government’s central purse) since 2009, despite recent public statements that it made over N13billion as operating surplus for 2013 at a time it claimed its 2012/2013 financial records were not ready.

In July 2014, the Fiscal Revenue Commission said it wrote to remind SEC that it was yet to provide evidence that it had prepared and published its audited financial report from 2009 to 2013.

After a two-month delay, a three-man delegation representing the Director General of the capital market commission, Aruma Oteh, visited FRC in September 2014 to report that the statements were ready and would be submitted within a week.

The officials said they were not in a position to provide the documents, and that their mission was only to inform the Fiscal Responsibility Commission that Ms. Oteh would have wished to visit the office personally and explain things out, but for her trip outside the country.

They assured Ms. Oteh would visit immediately she returned.

“Till date the documents have not been brought. Their explanation was that the capital market was in crisis and that they were now trying to bounce back. Yet, till date they have not brought the financial records reflecting the impact of the crisis,” Mr. Abana told PREMIUM TIMES.

Ms. Oteh took over as the Director General of the Securities and Exchange Commission, SEC, in January 2010.

The disclosures by the Fiscal Responsibility Commission means Ms. Oteh took after her predecessor, Musa Al Faki, who led the capital market since 2004 without remitting appropriate rates of internally generated revenues to the government.

Mr. Al Faki failed to pay up to the federal government between 2007 and 2009 when he left office, while Ms. Oteh is responsible for similar violation from 2010 till date, according to details provided by Fiscal Responsibility Commission.

The commission’s emphasis is on 2007, the year fiscal responsibility law came into force.

Finance Minister, SEC react

The Senior Communications Advisor for SEC, Obi Adindu, said the Commission had already opened an engagement process with the Commission on the issue and expressed outrage that the commission was reaching out to the media on the matter.

Mr. Adindu said apart from the fact that all the financial reports the Commission was accusing the capital market regulator of not releasing to them were “public information already freely available on SEC website, a formal response was being prepared for submission to the Commission.

Mr. Adindu, who accused the FRC of not understanding its mandate, while adopting a hasty approach over the issue by resorting to “ambush media tactics,” refused to say when the response would be taken to the Commission.

“How can that organization not know the difference in public accounting between surplus and profit? This was after they had been informed that our (SEC) accounting was done on an actual basis,” he stated.

He did not provide specific reasons why SEC has failed to pay to the government the appropriate rates on its surplus, as required by law.

The Finance Minister, Ngozi Okonjo-Iweala, rejected any blame for MDAs’ non-compliance with the fiscal responsibility law.

According to the minister, government has a long list of MDAs and could not give the names of those complying or not complying.

“The key issue is not which one is complying or not, but everyone should be compliant. Everyone should remit what the law says they should to government coffers. We are not interested in one, but all,” she said.

She said President Goodluck Jonathan had met with all the revenue generating MDAs to remind them of what they should do, while the ministry also met with bank managers to solicit their cooperation to ensure MDAs complied with the law by remitting monies due to government.

Source: Premiumtimes