INTERVIEW: Why ICAN should sanction Auditor General over audit report on NDDC — Ogiri, NDDC Executive Director

Henry Ogiri, executive director, finance & administration, Niger Delta Development Commission, spoke with the African Independent Television, AIT, this week on the raging controversy surrounding the allegation by the Auditor-General that the NDDC failed to account for a princely N183.7billion.

Below are excerpts of the interview as monitored in Abuja.

You must have been shocked by recent headlines of corruption in NDDC and the general impression that NDDC is a cesspool of corruption; one organization where goats have been eating our yams illegally.

Mr. Ogiri: Thank you. First and foremost, it is important to state that the period covered by the Auditor General’s report is 2008-2012. The present executive management was inaugurated on December 2013. And so the period is clearly outside the purview of our administration. But government is a continuum and the NDDC is a going concern… And so we will not say because we were not in office at the time when this report concerns, therefore we will not respond to the issues that have been raised. But I would say that the manner in which the Auditor-General provided this report to the public and then the National Assembly and granted interviews is not good. To me two things come to mind. Firstly, apart from the fact that the period was not covered under our tenure, there is this attitude of playing to the gallery in view of the fact that President Muhammadu Buhari has taken the decision to fight corruption head-on, and then people are now like let me do this to play to the gallery. Secondly, the report did not conform to ethical practices in the accounting profession.

How?

Mr. Ogiri: Yes, because if you look at the position of Lord Justice Lourdes, who says that the auditor is a watchdog and not a bloodhound, and that the auditor should approach his duty with care; and he should not approach his duty with suspicious mind; and where he is in doubt, he should carry out further investigations and if possible engage expert opinion. Now, there is a process before you can pronounce fraud, there is a process. The Auditor-General has produced a report which dates back to 2008. In the first instance, why do we have to wait for 5 years?

That’s a very crucial point.

Mr. Ogiri: Yes five years to do a special investigation on the NDDC. Because from accounting point of view, the further you go backward into an event, the less likely you are to get a realistic position. And there are so many issues that the Auditor-General has raised that, on a prima-facie, don’t hold water. While we will not be holding brief for the executive management and the board that were in place at the time the report concerns, we are responding to the auditor’s queries; we have communicated to the Auditor-General’s office to tell him that this is a report that we understood took him seven months to prepare and you cannot expect people who came in after the audit and after the event had occurred to produce answers in one month. It is not possible…This is a 307-page document; with so many queries, some of them on trivialities. But we are determined to respond to them to show that, in good faith, we are managers indeed. And we will take responsibilities for explaining the records as far as the records are available. And so the report did not follow the ethical process, because if you look at the…

Is that why you described it as premature.

Yes it is premature, because it has not gone through the processes yet. And again, it has not satisfied the SMART objective. For a report to be meaningful for whatever reason the management may need to use it, it must be Specific, it must be Measurable, it must be Accurate, it must be Reliable and it must be Timely. A five years report will not be very reliable and accurate for making decisions in 2015. And so, I believe strongly that the Auditor-Generals report is out of tune with the ethical requirements of the accounting discipline.

You raised the issue of ethical standards. Is it a standard practice that it takes that long to audit an agency of the government like the NDDC. I assume that the office of the Auditor-General works every year and that every agency should turn in a report every year for the Auditor-General’s office to conduct its own investigation at least, once in a year.

Clearly so. The Auditor-General is expected to carry out spot checks on the NDDC activities based on the reports of the external auditors of which the Auditor-General is party to appointing. He must confirm before he is appointed. If you look at section 18, sub-section II of the NDDC Act, it says that “the board shall cause to be kept proper accounts of the commission in report of each year and proper records in relation thereto; and shall cause the account to be audited not later than six months after each end of year by auditors appointed from the list and in accordance with the guidelines supplied by the Auditor-General of the federation”. Now the Auditor-General is not expected to take the responsibilities of the external auditors for which he is party to the appointment. The only statutory body entitled to carry out back-duty investigation is the Federal Inland Revenue Service.

What is back-duty investigation?

Back-duty investigation means you can go back to look at records up to five years, backwards, like we are talking about 2008-2012. The FIRS is the statutory body entitled to do so. Here the Auditor-General, more on less usurped that responsibility. We are not saying they cannot come to check. In the NDDC Act there is no provision that the Auditor General will conduct a detailed audit of the NDDC. But that is not to hold brief that they can do that. The President can call for an investigation to be done. That will come under special investigation. And like you rightly mentioned, the issue of audit is a yearly thing. Audits are not kept until they accumulate for five years. Alright! So every year an audit is done. This current management… under the leadership of Barr. Bassey Dan-Abia took a bold decision that look, if accounts are not audited and brought up to date then clearly there will be issues in responding to queries. So we are taking steps even before this report got to us. And then, as I speak to you we have cleared the four years arrears and audited accounts have been completed for 2013 and the external auditors are presently working on 2014. And so you can see clearly that the management is working within the guidelines as stipulated in the NDDC Act.

When the Auditor-General conducts a spot-check what will he be looking at?

If there had been perhaps petitions or…maybe there are issues that are not clear…where the auditors expressed an opinion that the books are not properly kept as far as they are concerned…then they will have to conduct spot checks, to look at vouchers, procedures for payments, bank lodgments and things like that.

Obviously, there are dereliction of duties on the part of so many institutions, including that of the Auditor-General and probably the NDDC management in the past.

The headlines were sensational and I was really taken aback, especially when I got a call from a friend in America. He said that one of his relations said that they have been pursuing payment for so many months now in NDDC and we were not able to pay but we have N183.7 billion naira to embezzle. This is very serious. He said he saw it online that he has not read the details. I asked him to read the details and call me back. The next thing he did, he sent SMS to say he is very sorry, that he did not even know that it was not in our tenure. For a sensational report of that magnitude to be directed at people who were not even in office at the time of the audit report clearly shows that it was ill-intentioned.

Are you saying that the Auditor-General didn’t know the process…

I strongly doubt if he knows that; if he knows, then it is unfortunate because I believe that very senior members of the Institute of Chartered Accountants of Nigeria are also watching the unfolding drama and I believe they will also take action in this direction because it is just queries and I can disprove on prima-facie evidence, I can dispose a whole numbers of issues. For instance, he has calculated monies that were received into a bank from off-shore companies like N20 Million dollars into an account. Now the date the instruction was given and the date when the money hit the account is different by about eight days. He now calculated that and said, so the interest that would have been earned by the Commission using current interest rate is missing and you are reporting that as missing money and I look at that and…

Using 2015 interest rate?

Yes 2015 and you are recording that as monies that are taken away or diverted. I looked at it … Those are notional interests. If you buy shares from say Shell and there is an announcement tomorrow that Shell has discovered a new oil well. At the 11th Floor of the NSE in Lagos, price will go up immediately. Now you will be happy. I bought it at N2, now it is N2.50k. If the next day or the next week, a report now comes out that sorry, the oil that was discovered was not good… Immediately, there will be a reverse of that trend. This is a response to efficient market hypothesis. Whatever profit you would have made or interest you would have made on that period is notional. Notional because until you sell you don’t realize that money. So, he (Auditor-General is doing a kind of a deductive accounting as far as I am concerned, and you can’t use the deductive accounting to justify fraud.

But how long does it take to respond to audit query?

This audit query I understand took those about seven months to raise. Queries are easier to raise than to answer. I can look at a voucher and say, look where are the supporting documents to these or why was so so date not coinciding with this and that. Some of the queries that are even in this ( Auditor-General) report are ridiculous.
If they say we did a one kilometer road, it does not necessarily mean one stretch of a straight road. It can be made up of 2 or 3 adjoining internal roads in a community that added up to make up one kilometer.
And then they used some elementary engineering mathematics to say because this place is 800 meters, it is not up to one kilometer. They calculated that and then said, money is missing.
I have never seen where deductive accounting is used as the basis to establish fraud. Fraud is not a gamble. To establish fraud is not a gamble. You must be certain of what you are saying.
So, when this report came in, we were not aware and then by the time it got to us, a couple of months back, it was just a cover letter, reminder that you have not sent responses to the queries.
We now asked where are the attachments. You can’t respond to a query based on just a single sheet of document. They said they have sent it to the office of the MD.
The MD now wrote back to ask for the full document because what he got was just a letter saying we have sent you the report. Send the entire documents let`s see.
They now forwarded the report. This was like three months ago. I told you that it is a 307-page document, with numerous queries and we are doing justice to it.
I communicated to them to give us a few more weeks and they will get a complete response to their queries. Then…they sent this out to the public…I cannot justify ( or defend) all the issues he queried but there are clear cases of misrepresentation, misinformation, ill intension to divert the minds of the public and portray the leadership of Barr. Dan Abia as a corrupt team.
This is very sad for this country. We can`t fight corruption, we can`t even support the president`s corruption drive with documentations like this.
It is really unfortunate.