Friday, April 18, 2014

INVESTIGATION: Ministers violate monetization policy, illegally spend billions on exotic cars

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Photo: Toyota Nigeria

In the first of a two-part series, investigation shows how government officials secretly make purchases never approved in the budget, frittering away billions in revenue in what seems a ploy to evade public fury over illegal purchases.

When a fierce outcry forced the presidency to back down from more than half a billion naira car spend early this year, critics, who helped make that happen, missed something more serious.

As the State House suspended the plan to buy cars worth N565 million for President Goodluck Jonathan and Vice, Namadi Sambo, federal lawmakers, renowned for controversial spending, were sealing a more than N6 billion car purchase deal, their biggest such expenditure yet.

Reps shipped in 400 Toyota Camrys while Senators got more than 109 Prados, all 2012 models.

The slip notwithstanding, public anger, galvanized by a ruthless new media, has been credited with helping to push back budget cost this year. An initial review authorized by the president, saved N100 billion – enough to pay 104 thousand graduates N80,000 monthly for one year.

Now, evidences have shown that days after the uproar over presidential cars, dozens of government ministers, and hundreds of Heads of agencies began taking delivery of the same kind of cars senators acquired, in breach of the monetization policy.

Hundreds of the officials are today chauffeured in the 2012 Toyota Prado or Land Cruisers.

Over several weeks, PREMIUM TIMES tracked over 90, while the Directorate of Road Transport Services, DRTS, confirmed registering another 57 in less than six months for Abuja alone.

Hundreds more are said to be registered by the Federal Road Safety Corp. The FRSC could not release the data before this report.

But for all the ubiquity of these government-owned cars across the nation, one location they can hardly be found is the national budget.

Months of PREMIUM TIMES investigation into how officials comply with approved spending guidelines has shown that that budgetary provisions were never made for many of the new government-owned vehicles littering the nation’s roads this year.

Spending public funds on stuff that are not budgeted for, lawmakers say, highlight a bigger narrative and appear to bolster a long-held belief that government officials, desperate to avoid criticism, circumvent budgets, conceal frivolous subheads and arbitrarily deploy public funds without supervision.

It is part of long-standing anomalies that have plagued federal appropriations for years, derailing implementations, and undermining badly needed developments, procurement activists say.

“Procurement in this country is where you find the highest form of corruption,” said Austin Onuoha of the African Centre for Corporate Responsibility, one of over a hundred independent observer teams accredited by government to monitor federal procurements.

Cornering billions meant for developmental projects to buy cars

At an average of N11 million each, the hundreds of Prados total more than N3 billion this year, excluding those owned by senators.

But the budget provides only N1.2 billion for cars this year, and even many of them are supposed to be project vans, patrol trucks, buses and ambulances.

Approved utility vehicles were to cost N348 million, our analysis of the 2012 budget shows.

Of the 29 ministries reviewed, only eight ministries received approvals for cars purchases, while 48 departments and agencies got the nod amongst 507 establishments reviewed. Only forty two departments got same approval in 2011.

Yet, nearly all ministries have purchased at least the Prado or Land Cruiser within the past nine months, the assessment found. In one ministry, the Prado is commonplace it is assigned to Special Advisers to the ministers.

What that means, lawmakers say, is that officials either cornered monies meant for other projects-possibly developmental ones –for the unauthorized vehicles; or cornered part of their internally generated revenues to acquire the cars.

Under the scheme that has cost several billions over the last few years, offices would often not state their plan to procure cars-perceived as amongst the most inflammatory budget items-but they will always take delivery of exotic vehicles.

Where such proposals are ever tabled for National Assembly approval, and rejected, officials still divert unallocated funds to secure them.

Offices involved in this brazen mismanagement of public funds usually defy a federal law punishing unbudgeted expenditure with a three-year jail term and a N100,000 fine; and a lesser penalty of one year or N50, 000 fine, where the offender merely transferred monies to other approved subheads.

Despite being in place since 2007, the legislation has indicted no government minister or head of parastatal for embarking on unbudgeted expenditures or diverting public funds.

The Economic and Financial Crimes Commission, EFCC, declined to comment on why the violations are pervasive yet senior officials hardly get punished.

Spokesperson, Wilson Uwajeren told PREMIUM TIMES he could only comment on specific cases. But when presented with some cases that clearly stood out, he asked that an email be sent to him.

In interviews, representatives of the ministries deny knowledge of the violations.

Yet, lawmakers who spoke to PREMIUM TIMES say the plot has thrived for years, and still does for a nation often accused of a short-lived memory, proficient at condemning government misdeeds, but taking no specific action to press for change.

Lying on the facts

When such projects are detected by the National Assembly during oversight, responses from the ministers or directors involved, usually go like this: “Oh we had one grant like that” or “We have other sources of funding” or “It was a gift”, lawmakers said.

At a recent oversight tour, the legislators grilled the petroleum ministry over a building project that apparently was absent from the budget, a member of the House committee on petroleum downstream said.

The response was typical, according to the lawmaker. The ministry claimed funding was drawn from a foreign grant.

“No matter how much you say these things, the people will never take on the executive,” said Victor Ogene, who is the deputy chairman, House committee on Media and Public Affairs. “If the people could accord the same attention the national assembly receives to the executive, 80 percent of this country will be more prosperous,” Mr. Ogene said.

At the ministry of works for instance, one spokesperson said the Prados were “inherited” from the former minister who left office mid 2011. No new purchases have been made since then, he said.

While the investigations noted ministries purchased old 2009 Prado years back, some which still remain in the ministers’ convoys, denials such as the work’s ministry’s informed PREMIUM TIMES’ decision to target only 2012 brands of the Prado and Land Cruisers in its review, given they could only have been released early 2012 or late 2011.

For weeks, correspondents mapped government-owned Prado and Land Cruiser 2012 brands which are today amongst the commonest utility vehicles on officials’ fleet, visited offices, called at hotels where most officials attend events.

In addition, data obtained from the DTRS, reviews of contract details between 2007 and 2009 from the Bureau of Public Procurement, BPP, and a collation of cars appropriation in 2011 and 2012, provided a glimpse into an audacious violation that has for years cost the nation dear.

Ministers, DGs bend the budget to buy cars

For 2012, while nearly all the ministries own at least one Prado and Land Cruiser SUVs (PREMIUM TIMES could not immediately confirm those owned by Finance and Health ministries), only the ministries of Foreign Affairs, Works, Education, Health, Agriculture and Rural Development, Trade and Investment, Culture and Environment received approval for cars.

Even so, the cars are not being used for the purposes for which they were appropriated for. For instance, while the foreign affairs ministry received N50m, N42m, N88 m and N30 million car votes, they were meant for Nigerian embassies in London, Pretoria, Singapore and Lisbon respectively, not the headquarters.

This newspaper confirmed at least one 2012 Land Cruiser listed for the local Foreign Affairs office, and one Prado with registration number, FG 173 A09.

In the 2011 budget, the foreign affairs in 2011 got approval for only “project vehicles” comprising 10 Toyota Hilux pickup and 10 Ford Explorers.

For the Works ministry, car approvals came only for 10 Hilux project pickups, plants, equipments, towing vans, and excavators. The ministry received nothing for 2011.

But no other office examined appeared with more 2012 Prado than the works ministry.

PREMIUM TIMES found FG-517 F20, FG-507 F20 and 20A 61 FG, marked to the ministry. At its office, one was stationed in the parking lot of the minister or the minister of state, the other a Special Assistant.

While there were others, their registrations could not be immediately noted.

A spokesperson for the ministry, Bisi Agbonhin, Director of Information, denied knowledge of the violations when reached via phone. “I don’t have any information about that,” he said.

When confronted with the details, spokesperson for the Minister of State, Tony Ikpasaja who initially explained the cars were inherited, said only the permanent secretary could provide further details.

For the Tertiary Education Tax Fund, TETFUND, a well-off office with billions of undisbursed education tax funds, not only was the office denied allocations for cars, but for any other capital expenditure this year. But the agency was credited with a 2012 Prado, numbered FG 02A H07.

The University of Abuja Teaching Hospital for instance only received funding for the construction of an intensive care, accident, and burns unit and purchase of medical equipment including endoscopy.

Somehow the hospital officials managed to accommodate a recently purchased Prado with the new number plate, 12Q 01 FG.

Vague billions help hide abuses

Lawmakers hinge the sourcing of funds for the unapproved purchases on a wieldy cash envelope passed to the offices under bogus and ambiguous subheads that encourage inappropriate spending.

At the Aviation ministry for instance, the Director General of the Nigerian Airspace Management Agency(NAMA), is chauffeured in a Prado 2012 recently purchased as indicated in the new number plate, 21E 03FG. Yet, the office got no such either for 2012 or 2011.

The agency only got approvals for the “purchase of navigational equipments” – N2.09 billion for 2012, and N3.24billion for 2011.

At the Agriculture ministry too, such vague allocation of funds are rampant. The 39 research institutes under the ministry are annually entitled to hundreds of millions of naira earmarked for “research and development”.

Under that subhead this year, the Agricultural Research Council of Nigeria, like many others, secured N400 million.

The specific reason for requesting the funds is even hazier: “Competitive grant for research and development of value chains” took N200 million, then renovations, journals, “infrastructural upgrade” and certain food security advocacy summit took the remaining.

The council has recently commissioned a new 2012 Prado, with the new plate number for the head office, ARCN FG 21. Officials would not respond to request for comment on the acquisition of the new cars.

The National Environmental Standards and Regulations Enforcement Agency ( NESREA), for instance, too has no car vote, but owns the latest model of Kia Optima, X02 09FG.

Long history of abused budget

For years, hardly has any subject pitted the executive against the National Assembly as the budget.

Lawmakers have repeatedly alleged that appropriations intended to stimulate growth and build infrastructures are annually distorted by the MDAs who unilaterally decide what to implement.

As the officials jettison approved projects, they foist new ones and transfer funding without recourse to further approvals, successive sessions of the national assembly have always argued.

The entire exercise has so ridiculed the budgeting system, turning it to mere “ritual” than an actual economic process with targeted reliefs, House speaker, Aminu Tambuwal, said recently.

“The Appropriation Act is observed more in breach than execution,” Mr. Tambuwal said a fortnight ago as lawmakers re-assembled.

In exclusive reviews, PREMIUM TIMES examined the Bureau of Public Procurement’s contract award details for dozens of offices for 2007, 2008 and 2009, matching implemented projects against budgetary proposals.

The pairing turned up a startling find: several unbudgeted subheads received allocations in some offices; and many centered on relatively less critical subheads often cited as a conduit for draining public funds.

In 2009, the ministry of petroleum for instance spent far into an extra billion naira not stated in its budget, according to the procurement records.

Contracts for several gas pipeline expansion contracts and other technical needs were duly awarded as stated in the budget, and so were “project workshop”, “sensitization workshop”, found nowhere in the budget.

Two of the three “project workshops and training” went to the ministry headquarters. One cost N1.04 billion, the other N143 million.

A curious “Implementation of workshop/Sensitization Retreat programme in Public Procurement Act” was also awarded for N39 million in addition to a number of other “Workshop and sensitization” totaling nearly N200 million. None of those appeared in the budget.

In an earlier emailed response to PREMIUM TIMES on pricing irregularities in the budget, the Bureau for Public Procurement, BPP, which made the records available, said it often monitors violations in the procurement process but lacks the power to punish erring offices.

Indicted organizations are forwarded to the EFCC for investigations, the bureau said. It would not give names of those referred to the EFCC so far, and it would not say whether he petroleum ministry was among those so far indicted.

“Only a Court can convict a person,” Segun Imohiosen, the bureau’s Chief Press Secretary said.

Ministers, worst culprits

While nearly all ministers currently drive the Prado and the Land Cruiser, none of the ministries has such exotic cars approved for it, either in the 2012 or 2011 budgets.

Officials have continued to spend public funds to buy exotic cars for themselves despite the monetization policy, which expects majority of our public office holders to buy cars for themselves from allowances paid to them upfront for the purpose.

If the search is narrowed from “vehicles approvals”, to “Prado or Land Cruiser approvals” in the entire budget this year, only two offices out of hundreds, would be spared an indictment.

The Librarian Council of Nigeria listed the Prado for N10 million and the National Eye Centre listed the Land Cruiser for N16.5 million.

As for “utility vehicles” which may also imply the two cars, only twelve offices got approvals.

They include, Code of Conduct Bureau, National Obstetric Fistula, Institute of Public Analysts of Nigeria, Federal Medical Centra, FMC Taraba, FMC Birnin Kebbi, FMC Yola and the Federla government college, Okigwe.

Others are, National Orthopedic Hospital, Lagos, Community health practitioners’ registration council, National Gallery of Arts, London and Pretoria embassies, University of Maiduguri and, Federal College of Animal health and Production Technology, Ibadan.

Thirty-seven remaining offices given car approvals were for buses, Hilux for projects, ambulances, vans, and ranger patrol vehicles.

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