Auditor faults NNPC for £14 million spent on London Office

The Nigerian National Petroleum Company Limited (NNPCL) is under scrutiny for allegedly failing to account for £14.3 million spent on its London office, according to the Auditor-General’s latest report.

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The findings in the 2022 audit report, the latest by the auditor-general, are interim observations requiring the oil regulator to provide explanations. While the company responded to the query, the auditor-general said some of the explanations were untenable.

The report detailed regulatory failures as well as a disregard for due process and accountability standards.

The auditor stated that a total of £14.3 million was expended on the London Office during the 2021 financial year.

Audit officials were not provided with the necessary documents or allowed to confirm how the funds managed by the London office were utilised, nor could they ascertain whether the expenditures were made in line with due process and economy as required by extant regulations, the report said.

The transaction, the report noted, contravenes Paragraph 112 of the Financial Regulations (FR) (2009), which states: “The functions of the Accounting Officer shall include: …(i) ensuring internal guides, rules, regulations, procedures are adequately provided for the security and effective check on the assessment, collection and accounting for revenue.”

Furthermore, Paragraph 415 of the FR (2009) states: “The Federal Government requires all officers responsible for expenditure to exercise due economy. Money must not be spent merely because it has been voted.”

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Similarly, Paragraph 603(1) of the FR (2009) states: “All vouchers shall contain full particulars of each service such as dates, numbers, quantities, distances and rates, to enable them to be checked without reference to any other documents and will invariably be supported by relevant documents such as local purchase orders, invoices, special letters of authority, time sheets, etc.”

The inherent risk in such transactions, according to the auditor-general, includes the diversion and misappropriation of public funds.

The above anomalies, the report said, could be attributed to weaknesses in the internal control system at NNPC.

However, the NNPC management told the audit team that the London office operates as a service unit within NNPC and, like all other service units, has an annual budget.

“The approved budget for 2021, amounting to £14.3 million, was executed in line with operational and financial requirements and accounted for in the London Office’s books of accounts,” the NNPC said in response to the audit query.

“While the audit findings raise concerns about unaccounted expenditures, it is important to note that details of specific transactions or line items under scrutiny were not provided. Without specific references or documentation requirements, it is challenging to provide tailored evidence or clarity of particular expenditure,” the management said.

It added that the London office maintains detailed records of all transactions, including supporting documents for personnel costs, fixed contracts, and other operational expenditures.

“These records can be made available upon request for audit review to verify compliance with financial regulations and ensure alignment with due process and economy.

“The NNPC remains committed to maintaining and strengthening internal control systems across all units, including the London Office, to ensure transparency, compliance with financial regulations and the prevention of anomalies in expenditure management.”

Still, the auditor-general said the response was not satisfactory; therefore, the findings remain valid until management implements the recommendations.

The report asked the Group Chief Executive Officer to recover and remit to the treasury the sum of £14.3 million.

“Otherwise, sanctions relating to irregular payments and failure to account for public funds specified in paragraphs 3106 and 3115 of the Financial Regulations (2009) respectively, should apply.”

PREMIUM TIMES reported that the new audit report also accuses the state oil firm of fund misappropriation, inflated contracts, irregular payments and failure to deduct statutory taxes. The anomalies, which occurred between 2020 and 2021, involve over $51 million in questionable settlements.

The company was also indicted for questionable expenditures totalling about N684 million on abandoned projects, unexecuted contracts and irregular procurements.

Past controversies

Over the years, the NNPCL has become one of the most opaque national oil companies in the world, evident in the lack of making its audited accounts public for 43 years, until 2020.

Presently, the Economic and Financial Crimes Commission (EFCC) is investigating 14 NNPCL officials, including two former chief executives, Mele Kyari and Abubakar Yar’Adua, over an alleged $2.7 billion fraud in the maintenance and rehabilitation of the Kaduna, Warri and Port Harcourt refineries.

The three refineries have consistently underperformed and recorded zero production over the years, despite receiving allocations for turnaround maintenance.

Since June, the Senate Committee on Public Accounts has been probing the NNPCL over N210 trillion allegedly unaccounted for in its audited financial statements between 2017 and 2023. The management was summoned four times to explain the inaccuracies, but only sent a written explanation last week.

The auditor‑general’s 2021 report also flagged the NNPC for unauthorised deductions and diversion of N514 billion.

In an editorial published this month, PREMIUM TIMES urged the NNPCL to return the missing funds. “No economy survives amid such dubious fiscal exertion on the treasury,” the editorial read.