How officials steal Lagos local government dry (Part 2)

The officials of Amuwo-Odofin local government were indicted for “unauthorised excess expenditure” running into millions of naira.


The Executive Council of the Amuwo Odofin local government spent millions of naira in “spurious expenditure” and non-executed contracts in the council in 2012, according to official documents seen by PREMIUM TIMES.

The officials of the local government, and those of its offshoot, Oriade Local Council Development Area, LCDA, were indicted for “unauthorised excess expenditure” running into millions of naira.

An audit examination of the books and records of the council for the year ended December 31, 2012, revealed that the local government’s awards of contracts were littered with irregularities.

A report of the Auditor-General for Local Governments on the accounts of the council, made available to PREMIUM TIMES, revealed a series of official graft by the Executive arm of the local government.

Like their counterparts in other local governments, several official queries sent by the Auditor-General to both Ayodele Adewale and Joseph Sanusi, the council bosses of Amuwo Odofin and Oriade local councils respectively, were not responded to, according to the report.

It is not only auditors that have accused Mr. Adewale of graft. In 2010, he was accused by the councillors in his local government of misconduct and maladministration, and was impeached in a unanimous vote.

The impeachment was, however, controversially reversed a few months later on the orders of the Lagos State House of Assembly.
‘Spurious expenditures’ in Amuwo Odofin

During the year under review, the local government generated an internal revenue of N107.4 million (inclusive of LASAA, Wharf Landing and Land Use Charge) while the annual revenue budget amounted to N105 million.

Further investigations of heads and sub-heads by the auditors disclosed Internal Revenue Shortfall totalling N6.3 million recorded under four heads and eleven sub-heads. Out of the estimated revenue of N24.3 million, about N18 million was actually collected.

“This is a 26.04 per cent shortfall which is contrary to F.M. (Financial Memoranda) 1.8(2) which states that ‘seeing that all revenue due to the Local Government is collected promptly and properly and paid promptly into the Local Government Funds,'” the report stated.

The examination of the expenditure records showed a total expenditure of N1.3 billion of the annual budgeted expenditure of N3.84 billion.

“Further investigation of heads by heads showed excess expenditure amounting to N18,235,153 recorded under five heads and five sub-heads,” said the report.

An inspection of the payment vouchers of the local government revealed that payments totalling N41.2 million were expended on various projects whose contracts were fraught with irregularities.

Some of the irregularities included violation of due process, no evidence of registration of the contractors with the local government, tender procedures not adhered to, and performance bond from financial institution registered not produced before mobilisation fees were paid.

“This is contrary to F.M 17.10 which states that ‘except where approval has been given under Financial Memoranda 17.5 all transactions for works, services, materials and stores for ordering supplies at intervals over a period or for current works and services to be undertaking or supplied over a period must go to open tender contract,'” the report revealed.

The report noted that the sanction for the offence include recovery of the amount involved and removal of the officer from the schedule.

A further examination of the council’s books showed that a contractor, Amuwo Sowapo Nigeria Limited (a Revenue Contractor), failed to remit N1.5 million to the local government for the period under review.

Also, the revenue items contracted to Fortress Valley Consulting were not specifically stated.

“Also, books and records being used for the acknowledgment of money received from the contractors were also not made available. Therefore we were unable to examine and ascertain performance of the contractors during the period under review,” the report stated. “Audit examination of revenue books and records revealed that the Local Government failed to bond its revenue officers, which is contrary to F.M. 42.3, which states that ‘The Local Government shall require all staff whose duties involve the handling of Local Government funds are adequately bonded. The Executive Chairman, Council Manager, Council Treasurer, and the Legal Officer should be held liable for any contingent loss of fund arising there from.”

Audit examination of the council’s payment vouchers revealed that it defrayed expenditure for the N13 million for various purposes without proper accountability.

Also, N3.5 million was paid to some council functionaries to enable them defray sundry expenses on behalf of the local government during the year under review.

“It was observed that the expenditure was spurious, lacking transparency and not supported by credible documentary evidences to substantiate. It was extremely difficult for audit to ascertain that the amounts involved were actually expended for the intended purposes,” the report said.

The examination of payment vouchers disclosed that N8.4 million was incurred on the grading of roads. However, an audit inspection of the roads with the Council Engineer revealed that some of the roads were partially graded while some were not graded.

From the deposits ledger and records, N189 million deducted from contracts in respect of withholding Taxes and Value Added Taxes was not remitted to the appropriate agencies.

“No genuine reasons were given for delay in remitting these sums of money,” the auditors noted.

Also, despite repeated demands by the auditors, the council failed to produce for audit 59 payment vouchers amounting to N22.3 million paid and entered into the combined Cashbook.

“It was extremely difficult for audit to ascertain whether the payments were properly authorized, reasonable and judiciously expended,” said the report.

The auditors further noted that the statement of Cash Flow Analysis presented in the council’s Financial Statements did not reflect the true cash flow trend of the local government for the year ended 31st December, 2012.

‘Irreconcilable cash flows’ in Oriade

While the debt profile of Amuwo Odofin local government stood at N457.7 million for the year under review, that of Oriade LCDA totalled N97.5 million.

During the year under review, Oriade LCDA had a revenue budget of N62.6 million but actually collected N89.5 million.

“This showed that the Local Council underestimated her revenue. The Local Council should take this into consideration in the preparation of year 2013 revenue estimate,” the audit report noted.

Audit examination of revenue books of accounts and records revealed that the LCDA contracted commercial motorcycles (Okada) and commercial tricycles (Keke Marwa) to various revenue contractors without valid contractual agreements while record of performance of the franchised revenue contractors was not maintained by the local council.

“In the light of the above, it was extremely difficult for the audit to ascertain whether revenue due was collected promptly and properly paid into the local council’s account.

“Audit query No LGA/INSP/ORLCDA/Q.11/2012/F4 of 6th February, 2013, issued was not responded to,” he report added.

The auditors further examined the deposit ledger and payment vouchers of the council and discovered that N48 million, being deduction levy from various contracts, was not remitted to appropriate agencies.

“No genuine reasons were given for the delay in remitting this amount. The local council should produce evidence of remittance to this office for verification. Audit query No LGA/INSP/ORLCDA/Q.15/2012/F4 of 6th February, 2013, issued was not responded to,” the report said.

According to the auditors, the statement of Cash Flow analysis presented in the financial statements for the year under review showed “irreconcilable” cash flow trends of the local council.

When PREMIUM TIMES visited the Oriade LCDA secretariat, a staff at the Council Treasurer’s office said that the council had already responded to all the queries in the audit report.

“It took me three months to prepare that report,” said the official who declined to say his name. “It’s only the executive chairman that can respond to your questions because it is his name that was written there, unless he directs us to talk.”

Repeated efforts by PREMIUM TIMES to speak with Ibrahim Sanusi, the council boss, were unsuccessful.

Three weeks ago, when PREMIUM TIMES first visited the secretariat, Rosemary Uneanya, the council’s Head of Information Unit, said that Mr. Sanusi had just returned from the All Progressives Congress, APC’s convention in Abuja.

She promised to arrange an interview with Mr. Sanusi. However, subsequent phone calls by PREMIUM TIMES to get an audience with the council boss failed to yield any result.

At the secretariat of Amuwo Odofin local government, Olusegun Ajayi, the Council Manager, said that they had submitted their response to the queries raised in the audit report to the Public Accounts Committee of the Lagos State House of Assembly.

“Public Accounts Committee is the final arbiter. I hope you know that a query is not an indictment,” Mr. Ajayi said. “For example, on the issue of unremitted tax, if we have outstanding taxes from previous governments and we are faced with challenges of fixing roads, we’d fix the road first, and then when we have extra money, we can then pay the outstanding. Also on revenue shortfall, if in January we budget a particular sum, and then Okada is banned, it would affect the revenue coming to the local government. It is only when the Public Accounts Committee releases their report that you can know who is actually guilty,” Mr. Ajayi added.

See the first part of the series here.

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