REPORT: Nigerian agency wasted N2.5 billion on failed contracts

A Nigerian agency mismanaged over N2.5 billion by making payment without evidence, making payments to incapacitated contractors and not getting value for money, a government audit report has revealed.

Cross River Basin Development Authority (CRBDA) mismanaged the sum between 2008 to 2015 according to the audit report from the office of the accountant general of the federation.

A CAMPUS REPORTER analysis of the report shows how the agency haphazardly spent public funds on poorly executed projects while leaving others to lay in ruins in flagrant abuse of the Fiscal Responsibility Act.

The ‘2016 audit report’ is the latest one from the office of the Auditor-General.

The audit report shows the following

TRANSFER OF PROJECT FUND WITHOUT CONTRACT AGREEMENT

A sum of N10.8 million was transferred from the Authority to a company without any contract agreement and whose line of business does not include consultancy and supervision between August and December 2015.

According to the report, the transfer of project fund to the said company without any contract agreement for a job to be carried out seems to be a diversion of public funds for an ulterior purpose.

More so, the task of supervising the agency’s projects lies with a relevant department designated and trained for such a task.

The auditor general demanded that the managing director justifies the transfer of project funds or recover the sum of N10,888,880.

ABANDONED PROJECT WITH NO VALUE DERIVED FOR MONIES SPENT

A contract for the construction of Itu irrigation/drainage/flood control project was awarded in December 2008 to a company at the sum of N1.9 billion. Itu is a local government in Akwa Ibom

According to the executive director planning and design department of the agency, the project had not been able to take off smoothly due to youth restiveness, land donor issues on compensation, slow progress of work and several changes in the management of the company. He also said the agency had expended N617.8 million out of the total contract value.

According to the AUGF report, a visit to the project site revealed that the total area for the project is about 1,265 hectares, while only about 500 hectares were cleared, the project had been abandoned, no value was derived for the money spent so far and obsolete equipment was abandoned on the site.

In a meeting held in February 2015 between the agency and the contractor, it was resolved that the contract be brought to an end since the completion period had lapsed. The managing director was however requested to involve the federal ministry of works to determine the work done so far, terminate the contract and recover money paid to the contractor since he did not abide by the contract’s terms of agreement, blacklist the contractor and demote the staff concerned.

AWARDING CONTRACT TO INCOMPETENT COMPANIES

Another concern in the report is the Itigidi irrigation project in Cross River State which was first contracted to a company in August 2009 at the total sum of N485.9 million but was terminated due to non-progress of work in November 2012 and the supervising ministry was asked to recover the sum of N196,064,864.62 from the contractor.

According to the report, the same project was awarded to another company in December 2012 at the sum of N505.6 million, with a completion period of 24 months.

It was later discovered that the company which the project was awarded to was not technically fit to handle the project and sub-awarded the project to another company, in violation of the provision of the public procurement act 2007. Even so, the job made no progress at the end of twenty-four months.

The managing director was requested to make available to the office of the accountant general of the federation, evidence of recovery and remittance of the sum of N196,064,864.62 from the first contractor, also provide evidence which shows that due process was followed in re-awarding the contract and give reasons why the contract was re-awarded to an incompetent contractor and terminate the contract and recover any unearned amount paid to the second company.

SYPHONING PROJECT FUNDS

The sum of N50 million was paid to a multipurpose cooperative society for the purpose of training communities in Odukpani LGA of Cross River State, on agro-business in 2015 without evidence of how the money was utilized.

According to the report, a visit to the project site revealed that the Centre was not functional as it was under lock and key, overgrown by weed; there was no staff seen at the multipurpose; there was also no sign of agricultural activity going on at the centre and no evidence of training members of the community through this cooperative.

The report stated that the managing director was requested to justify the abandonment of the centre after spending such huge amount of money, provide evidence that the communities benefited from the purported training, otherwise recover the sum of N50 million naira and paid to the consolidated revenue fund.

UNAUTHORISED VIREMENT

The audit report also revealed how the CRBDA expended the sum of N8.6 million which was a capital project fund to pay overhead expenses in 2015, this amounted to virement without recourse to National Assembly’s approval as well as abuse of the 2015 Appropriations Act.

The managing director was asked by the auditor-general to justify the unauthorised virement, however, the auditor general also stated that the managing director did not respond to his audit inspection dated June 2017, hence he should be properly sanctioned and forced to enforce the recommendation contained in the report.

The managing director of the Cross River Basin Development Authority Bassey Nkposong in reaction explained that some of the reasons why abandoned projects always occur could be attributed to discontinuity of projects after the lawmaker who appoints them (projects) is no longer in power and secondly cases of insufficient funds being released by the government.

He also said that the agency would like to know where they have faulted and it would be addressed.

These projects were awarded by his predecessor, he noted.

“There are procurement provisions we follow and statutory requirements that have to be met while awarding projects, someone who doesn’t pay tax does not get a chance to do the job, as you know more than a thousand person come for different projects but we take out time to ascertain the competence of whoever the job goes to,” he said.

Mr Isaac Botti of Social Action in reaction to the issues of abandoned projects said it was one of the great concerns in the Akwa Ibom region as his organisation tracked some projects and discovered that about 70% of these projects are either abandoned or not attended to at all.