The Ministry of Niger Delta Affairs illegally engaged security officials and cleaners including a supervisor in each of the nine oil producing states at an annual cost of N43 million (N43,740,000) in 2015, the annual report of the Auditor General for the year 2015 has shown.
The report, reviewed by PREMIUM TIMES, showed that the ministry directly engaged, through balloting, the services of 126 security officials and cleaners across the states in the region.
The action of the ministry is contrary to a federal government policy which outsourced the services of this category of employees to private entities, the report noted, adding that it also contravened paragraph 9, Part II of the Federal Civil Service Commission Guidelines for Appointment, Promotion and Discipline, Revised August 2004 edition.
According to the Federal Civil Service Commission Guidelines, “the recruitment of persons into temporary positions by Ministries and Extra-Ministerial Departments is abolished and a breach of this rule shall be an offence which may attract appropriate disciplinary action including surcharge.”
Audit investigation further revealed that engagement letters were not given to the employees to spell out their conditions and terms of engagement, “with the costly implication of absolving them of all contractual liabilities even when they were paid remunerations, free of tax, at government expense.”
Further analysis showed that the expected revenue from Withholding and Value Added Taxes if the services had been contracted to corporate entities, were also lost.
Consequently, the Permanent Secretary in the ministry has been requested to engage the services of a corporate firm for the services of security officials and cleaners in line with federal government policy and discontinue the direct engagement and payment of these security officials and cleaners in all the state offices.
Similarly, the Permanent Secretary has also been requested to explain the reason for the mode of employment which contravenes laid down regulation and extant circulars.
PREMIUM TIMES’ efforts to get the reaction of the ministry to the allegation were unsuccessful.
A mail sent to the ministry’s communication unit was not replied for three days.
A sample of schedules for deduction of Withholding and Value Added Taxes in the ministry also showed that N1.8 billion (N1,848,838,533.64) was generated during the period under review.
On the contrary, however, the supporting receipts of remittance from Federal Inland Revenue Services amounted to N148 million (N148,114,444.86).
Further analysis showed that a difference of N1.7 billion (N1,700,724,088.78) which represents Withholding and Value Added Taxes was generated but not supported with evidence of remittance from the Federal Inland Revenue Service.
ILLEGAL TAX WAIVER
According to the report, in April 2014, a consultancy contract for the management of agitations and grievances by some Ministry of Niger Delta Affairs sponsored ‘grand hands of Marine studies’ was awarded to Messrs Scotchville Industrial Consortium Limited at a total contract sum of N46 million (N46,453,700) with a completion period of two weeks.
But further examination of the payment vouchers and their relevant supporting documents revealed that the contract agreement drawn by the ministry provided that the consultant shall be paid a total contract sum of N46 million (N46,453,700.00) of which N12 million (N12,160,000) only, inclusive of VAT and Withholding Tax, shall be the consultancy fee.
Meanwhile, the agreement signed by the parties stated that N34 million (N34,293,600.00) was to be non-taxable and paid to the consultant for administering the programme, a waiver granted by the ministry without recourse to relevant tax provisions of Federal Inland Revenue Services, FIRS.
The FIRS provision is the relevant tax authority under Nigeria Tax Laws providing for mandatory deduction of statutory Withholding and Value Added Taxes on all contracts, except for such services and items exclusively exempted from VAT such as pharmaceutical drugs, food and water.
“No individual, institution or group has the express power to waive or exempt any contract from tax liability, hence the tax exemption granted in this transaction is not tenable,” the report said.
Similarly, the report revealed that only about N12 million (N12,160,000) instead of the total contract sum of N46 million (N46,453,700) was subjected to Withholding and Value Added Tax deductions amounting to N1.7 million (N1,737,142.86) as against N6.6 million (N6,636,228.57) being the total VAT and WHT due on total contract sum.
This resulted in un-deducted statutory Value Added Tax and Withholding Taxes of N4.8 million (N4,899,085.71) and loss of revenue to the federal government.
It also queried that paying N34 million (N34,293,600) free of tax to a consultant to administer a programme amounted to abuse of public funds as the money paid “is like a cash advance to a contract with no collateral provision for recoupment in the event of breach,” and is not in tandem with public sector accounting practice.
Consequently, the Permanent Secretary has been requested to pay the sum of N4.8 million (N4,899,085.71) to the Federal Inland Revenue Service representing Value Added and Withholding Taxes not deducted from the Consultancy Contract, the report said, adding that evidence of payment should be forwarded to the relevant authority for verification.
PREMIUM TIMES learnt that all the observations were communicated to the Permanent Secretary of the ministry through Audit Inspection Report Ref. No. AUD/AIR/MOND/3/16 dated August 29, 2016 but the ministry’s response is still being expected.
The audit report also recently unearthed unsettling revelations when it said cumulative unremitted revenue from domestic crude oil sales by the Nigerian National Petroleum Corporation, NNPC, stood at about N3.878 trillion as at December 31, 2015.
The report, which formed part of the submissions in the 2015 Annual Audit Report of the Federal Government Account by the OAuGF, said the state–owned oil company withheld about N644.377 billion in 2015 alone.
The report also said that at least 44 assorted arms belonging to the Nigerian police could not be accounted for between 2013 and 2015, raising fears the weapons could have ended up in the wrong hands.