How Nigerian agency mismanaged N1.3 billion on ghost contracts, poorly executed projects, others – Audit Report

Ajinapa water supply scheme
A water supply scheme (File Photo)

A Nigerian agency mismanaged N1.3 billion by making payments without evidence of such, overpaying for some (abandoned) projects, and not getting value for money on many others, an audit report shows.

About N1.33 billion was mismanaged by the Ogun Osun River Basin Development Agency (OORBDA) in 2016, according to the audit report by the office of the Auditor-General of the Federation.

A PREMIUM TIMES’ 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.

Most of the funds were reportedly siphoned through ghost contracts, overpayment of mobilisation fees, poorly executed/abandoned project and unprized provision in Bill of Quantity, the report revealed.

In other instances, contractors were overpaid for work not completed or haphazardly done. Many payments made were without receipts and many unprized items were discovered in the bill of quantity and contracts documents while many projects were abandoned contrary to extant financial regulation.

During the audit evaluation of how public funds were spent at the Ogun-Osun River Basin Development Authority (OORBDA), Abeokuta, the following was revealed.

Contractors Overpaid For Abandoned Projects

A number of the projects were abandoned, according to the report of the AUGF. Despite the abandonment of the projects, the authority still went ahead to overpay the contractors.

For instance, according to the report, a contract for the construction of water supply structures at Agbado – Isoye in Ogun State was awarded for N565 million in 2008. The auditor’s visit to the site revealed the project has been abandoned despite N404 million payment for 71 per cent work done while the projects status report of OORBDA revealed only 52 per cent of work valued at N294 million was actually done.

Also, the contractor was reportedly overpaid N111 million.

“The Managing Director was however, requested to recover and refund to treasury, the sum of N111 million outrageously overpaid on an abandoned project,” the report noted.

Another contract, the construction of an earth dam at Ilobi–Irinja Ogun State was awarded for N293 million and contractor was paid a mobilisation fee of about N44 million.

According to the AUGF report, it was discovered the project site was only handed over to the contractor four years after contract award.

It was discovered that despite the payment, the contractor didn’t mobilise to site and also failed to refund the mobilisation fee. The project has since been abandoned.

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“The Managing Director was asked to enforce the recovery of the mobilisation fee paid to the contractor against the backdrop of non-performance since 2011, blacklist the contractor and report him to the Economic and Financial Crimes Commission (EFCC) for prosecution, in line with Financial Regulation 3104 and refund to treasury, the recovered sum of N44 M paid to the contractor,” the report noted.

More Sleaze Uncovered

At Ajinapa, Orire LGA of Oyo State, a contract for the construction of mini–water scheme was awarded to a company at a contract sum of N449.7 million in October 2012.

The project was completed with N449 million paid to the contractor. It was however observed that another contract was awarded and tagged Phase 2 of the construction of the Ajinapa Water Supply Scheme at a N250 million out of which N187 million was paid in September 2014, even when the first contract had not been completed.

A visit to the site by the auditor revealed that there was no evidence of work done on the ‘second phase’ of the project despite the payment.

PREMIUM TIMES and UDEME in January tracked the said water supply scheme and reported how residents suffer over dearth of water and the difficulties the dry season has subjected them to.

“Whenever there is no water, we usually pay ‘bikemen’ to fetch for us at the dam. If we give them three jerry cans (25 litres kegs), we pay like N300. Sometimes we put alum in the water but most times, we drink the water like that. I usually send my small children to fetch most times because I don’t have the strength to carry it (the water). Instead of that water project they wasted money on, they should give us more boreholes,” a resident had lamented when the project was inspected in January.

A contract for the construction of a small earth dam at Asa in Surulere LGA of Oyo State was awarded for N521 million in November, 2010. The audit report revealed that despite payment of 30.5 per cent of the contract sum to the contractor, the project had been abandoned.

Interestingly, according to OORBDA management records, the status of the project is 19.21 per cent level of execution despite 30.5 per cent payment to the contractor indicated in report.

The report also indicates an overpayment of N58.7 million despite the abandoned state of the project.

“The contractor must be compelled to carry out the outstanding works or recover and refund sum of N59m overpaid for work not done on the site,” the auditor-general said.

No Evidence For Payments Made

Contract for the construction of Ibara–Onikoko water supply scheme in Abeokuta was awarded for N391 million in 2011.

As at the time of audit in 2016, documents reviewed indicated a 54 per cent level of job completion, while payment to the contractor as at December 2013, stood at N139 million.

The management of OORBDA reportedly failed to produce payment records and due to their intransigence, the auditor was not able to inspect the project site.

Contract for the construction of mini-water supply at Ife-Odan Osun State, was awarded at a contract sum of N538 million in 2012. The contractor was certified to have achieved 98 per cent completion valued at N528 million as at December 22, 2015.

However, audit scrutiny of the payment profile revealed that the contractor was paid N568 million, an overpayment of N40 million in violation of extant regulations.

The audit report also revealed there were no evidence by way of bills, receipts and invoices for the expenditure of N6.5 million paid for project vehicle, N10 million provided for capacity building, N5 million and N2.5 million provided for supervision works during construction and project management respectively.

Contract for the construction of water treatment plant at Oko Township, Surulere LGA, Oyo State, was awarded to a company at a contract sum of N244 million in September 2014. As at the time of audit, N221 million has been paid to the contractor. But contrary to extant regulations, there were no evidence of receipts/invoices to support alleged expenditure of N25 million for supervision works during construction, project management, monitoring and evaluation and capacity building.

Also, payment of N11 million out of the N25 million provided for contingencies was made with no evidence of approval for variation or additional works to justify payment.

“The above expenditure of N25,553,467 without valid proof as required by Financial Regulation cannot be accepted as a legitimate charge against public funds,” the report noted.

It urged the Managing Director to recover and refund N25 million to treasury and forward recovery particulars for verification.

Other Revelations

Improvement of the Olode water supply scheme in Ife South LGA of Osun State was awarded in 2009 for N200 million.

According to the audit report, documents revealed that the contract was 95 per cent completed after a total of N192 million was certified paid to the contractor. Further examination of documents revealed that the concrete work done was damaged and the river bank was eroded beyond normal level. The audit report revealed that another contract was awarded at N40 million in September 2014.

“As at the time of audit in April 2016, it was observed that the project has been abandoned despite receiving payment of N17 million on the new contract since 2015, hence value for money was not derived from the entire project,” the AUGF noted.

Also captured in the audit report was contract for the drilling of 15 solar powered boreholes in Lagos State which was awarded at a contract sum of N118 million in November, 2010.

Documents showed that only 10 out of the 15 boreholes were drilled and put to use leaving a balance of N40 million for five boreholes not drilled, but which the contractor was paid for.

Contract for the construction of Igbojaiye earth dam for N154 million was awarded in 2010. A visit to the site confirmed the project had been completed.

Further checks revealed that another contract termed “Phase 2” for earth works, spillway and protective works was awarded to the same contractor in 2013 for the sum of N211 million and the sum of N164 million was paid to the contractor.

While reasons for awarding the second contract were not disclosed, it was noted that the embankment of the dam was haphazardly done and authorities of the OORBDA said 78 per cent job completion has been achieved.

“There was no value derived for the money spent on the project since desired result was not achieved, despite the huge amount expended and payments to the contractor are not in line with milestone achievements and thus cannot be accepted as legitimate charges against public funds,” the auditor said.

Contract for the construction of Panseke – Onikolobo water supply scheme in Abeokuta South LGA of Ogun State, was awarded to a company for N383 million in December 2012 and as at 2013, N204 million had been paid to the contractor.

However, during the physical inspection of the project in 2016, the project had been abandoned and most aspects of work claimed to have been executed had deteriorated. Also, some items and equipment had been vandalised, a development that suggests that no value for money was derived from the project, the report added.

A contract for the construction of water supply scheme at Asa Dam in Oyo State was awarded for N618 million in 2011. A review of documents, according to the audit report, revealed that N308 million had been paid to the contractor.

However, physical inspection carried out at the project site revealed that the project has been abandoned and most of the works certified to have been done were not executed, an indication that “the financial commitment far outweighs actual work done,” the report said.

Agency Keeps Mum

The Public Relations Officer of the OORBDA, Saliu Niyi, when contacted declined comments. He directed this reporter to the head of audit of the OORBDA.

However, the head of audit, one Mr Asore, did not pick calls and did not reply to text messages sent to his phone when PREMIUM TIMES tried to reach him for a response to the report.

Meanwhile, the 743-page audit report also revealed that many ministries, departments and agencies (MDAs) have refused to submit their accounts for review since President Muhammadu Buhari assumed office in 2015.

The poor compliance of MDAs to Nigerian laws on submission of accounts was reported to be worse in Mr Buhari’s first two years in office, than any previous year since Nigeria returned to democracy from military dictatorship in 1999.

Civil Society Group Reacts

The situation at the OORBDA was condemned by the Executive Director, Paradigm Leadership Support Initiative, Olusegun Elemo.

“Government agencies cannot just take public funds and decide to spend it the way they like without adequate value for the money spent.

“It is important for citizens to pay attention to this kind of report so they can use such to push for accountability and ensure that justice is done on money spent on projects. Meanwhile, anti-corruption agencies also have work to do on their hands,” he said in reaction to the report.

“In most rural communities, where these projects have been abandoned, residents don’t have access to any decent water, some of them are getting water from the stream and then when you have votes coming from the budget to provide water for these communities and somebody embezzles the money or a contractor gets a particular fund and he doesn’t utilise the fund judiciously in that value for money spent were not derived, these are the issues the Economic and Financial Crimes Commission (EFCC) and Independent and Corrupt Practice Commission (ICPC) need to look at.

“The EFCC and ICPC must ensure that they take a look into it and investigate the matter and bring the contractors, where they have defaulted to book. Some of the staff of MDAs who are caught in diverting public funds should also be penalised and sanctioned appropriately according to the codes that govern their works,” he added.

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