Auditor General alleges distortions in Federation Account – illegal conversion of equity exists, huge amounts missing

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Auditor General of the Federation (AGF) Samuel Ukura

Auditor General of the Federation (AGF) Samuel Ukura

FG, states, councils share N2.91 trillion

THE Auditor General of the Federation (AGF) Samuel Ukura has alleged that the management of the Federation Account leaves much to be desired.

In the 2009 yearly report, which is before the National Assembly, the AGF alleged illegal conversion of equity and missing records of some huge financial transactions.

In section 2.32 of his report titled: “Omission of N10,000,000,000. 00 for Federal Mortgage Bank’’ submitted to both Senate and the House of Representatives, the AGF said: “The sum of N10,000,000,000.00 debited to Consolidated Revenue Fund in favour of Federal Mortgage Bank for investments in affordable Housing Mortgage Scheme for civil servants could not be traced. The Accountant General of the Federation has been requested to explain this omission from the financial statements.”

On illegal conversion of loans to equity, the report said: “The loans converted to equity, as earlier reported in my annual reports  for years 2004 to 2006 have now been converted to loans without authority and to the knowledge of the beneficiaries.” The report listed the beneficiaries as Ajaokuta Steel Company (N72,756, 239,000.00) and  NITEL (N42,395,300,872.00), totalling N115,343,932,195.00.

The AGF also noted that subvention/grants to non-existing companies were converted to shares.  “The sum of N30,328,849.00 said to be subventions/grants to Nigeria Airways Ltd. was converted to shares in the same amount during the year under review. It is surprising to see how subventions/grants to a non-existing company can be converted to shares. Also, subventions/grants   amounting to N218,900,855.00 and N200,000,000.00 granted to Nigerian Ports Authority and Nigerian Coal Corporation respectively were converted to shares during the year under review. The Accountant General of the Federation has been requested to provide the share certificates, number of shares, unit price of the shares of the amount converted to shares and authority for the conversion in respect of Nigeria Airways Ltd., Nigerian Ports Authority and Nigerian Coal Corporation,” the report said.

The AGF equally raised issues on non-placement of share certificates of quoted companies in the   Central Securities Clearing System Ltd., saying: “Share certificates of all quoted companies ought to have been registered with Central Security Clearing System Ltd.”

The report alleged that out of the 14 companies in the statement of external investments, only one paid dividend in 2009. “The list of the 14 companies in the statement of external investments given, showed that these are companies are based outside Nigeria in which Federal Government has investment totalling N943,530,919.00. However, the returns of revenue collected from Revenue and Investment Department revealed that only Royal Swaziland Sugar Co. out of the 14 companies paid dividend of US$1,467,703..72 on investment during the year under review.”

The report said further: “A loan of $40,000,000.00 was granted to the Republic of Ghana on the 3rd August, 2004 for financing Ghana’s interest in West African Gas Pipeline project at a zero interest rate. The loan agreement indicated that it would be repaid in five equal instalments of US$8,000,000.00 annually. The figure for this loan was not reflected in the financial statement. Similarly, a loan of US$5,000,000.00 was granted to Sao Tome and Principe by the Federal Government of Nigeria to enable the Democratic Republic of Sao Tome and Principe to achieve the objective of establishing the treaty on the Exploration and Development of resources in the Joint Development Zone (JDZ). This loan was also not reflected in the statement.’’

The report added that federal, state and local governments shared a total of N2.9 trillion in 2009 from the Federation Account in 2009.

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