Audit federation account or face the law - Falana tells auditor-general

Lagos lawyer Femi Falana (SAN), has given the auditor-general of the federation till March 17 to audit the accounts of the federation and those of offices and courts.

He said he would begin proceedings against the auditor-general if he failed to meet his demand.

Falana

“Take notice that if you fail or refuse to accede to our demand on or before March 17, we shall not hesitate to initiate legal proceedings against your office at the Federal High Court with a view to compelling you to carry out your constitutional duties,” Falana said.

The ultimatum was contained in a letter dated March 7, titled: “Re: Request For Audit of the Federation” and addressed to the auditor-general of the federation.

He was responding to an earlier letter of the auditor-general dated February 19, on the same issue in which he (the Auditor-General) cited constitutional impediments as reasons for his inability to audit the federation accounts.

The Lagos lawyer declined to accept the explanations given by the Office of the Auditor-General and his claim that “there have been some ethical and professional threats working against the capability of the OAuGF to carry out the SAI’s mandates for which an audit Bill is before the National Assembly.”

He reminded him that his request for the audit of the federation account was necessitated by the controversy generated by the allegation credited to the suspended Governor of the Central Bank, Mr. Sanusi Lamido Sanusi, to the effect that the Nigeria National Petroleum Corporation (NNPC) failed to remit the $49.8 billion or $12 billion or $20 billion to the federation account.

Falana argued that unlike the accountant-general of the federation, the constitution provides for the function of the auditor-general of the federation and it is in Section 85(2) of the constitution.

It reads: “The public accounts of the federation and of all offices and courts of the federation shall be audited and reported on by the auditor-general, who shall submit his report to the National Assembly.

“The subsection is so clear as to what finances the auditor-general can audit and they are the public accounts of the federation and of all offices and courts of the federation.”

The Lagos lawyer said 20 well trained workers from the Office of the Auditor-General are conducting periodic checks of the accounts of the NNPC.

“In view of the binding duty on the Federal Government to promote transparency and accountability, your office ought to publish the report of such periodic cheques of the NNPC. If you are not inclined to make the report public, we shall apply for a certified true copy under the Freedom of Information Act.

“In the light of the foregoing, you will agree with us that if you had discharged your aforesaid constitutional duties outlined in Section 85 of the Constitution, the alleged withholding of huge funds from the federation account by the NNPC would have been detected by your office.

“Notwithstanding the dereliction of duty, which has been blamed on ethical and professional threats, we are compelled to reiterate our request for the audit of the federation accounts without any further delay,” he said.

The activist advised the auditor-general to study the Supreme Court judgment in the case of Attorney-General of Abia State v Attorney-General of the Federation (2006) 16 NWLR ( Pt 1005) 265 to guide him in the performance of his duties.

“Although the Senate usurped the functions of your office by embarking on the audit of the accounts of the federation, it discovered in the course of the exercise that it does not have the expertise for the audit. It therefore resolved that the accounts of the NNPC be subjected to a forensic audit.

“You have since informed the National Assembly that your office is not required by law to audit the NNPC accounts. However, by virtue of Section 85 of the Constitution, the office of the Auditor-General is required to approve external auditors for the NNPC and comment on their reports. In addition, your office is under a constitutional duty to conduct periodic checks of the NNPC accounts,” Falana said. (0)

Audit federation account or face the law - Falana tells auditor-general

Why i can"t audit NNPC, says Audit General

The Auditor-General of the Federation (AGF) has said the Constitution bars him from auditing the account of the the Nigeria National Petroleum Corporation (NNPC).

He spoke at the resumed hearing of the Senate Committee on Finance’s public hearing on the allegation made by suspended Central Bank of Nigeria (CBN) Governor Mallam Sanusi Lamido Sanusi that $20 billion has not been accounted for by the NNPC.

Ukura said Section 85 (2) (3) of the Constitution barred him from auditing NNPC’s account.

He said the Constitution empowered him to list qualified auditors out of which those to audit NNPC could be selected.

Ukura told the committee that 20 of his officials were in NNPC, conducting periodic check on the corporation’s revenue and expenses. He said it included expenses on subsidy.

The Chairman of teh committee, Ahmed Makarfi, mandated Ukura to confirm in writing that he was conducting check on the NNPC and that the checks cover all items identified by the committee, including subsidy issues.

On the $2 billion third part financing, the Group Managing Director of NNPC, Andrew Yakubu, said the submission to the committee gave a detailed account of the fund.

Yakubu said the details included Reserved Development Projects, Satellite Oil Field and others.

He said what NNPC is accounting for is the total oil lifting on behalf of the Federal Government.

On the controversial $6 billion said to have been paid to the Nigeria Petroleum Development Company (NPDC) by the NNPC, the Acting CBN Governor, Sarah Alade, told the committee that it depended on what the law provides.

Mrs Alade noted that they noticed that $6billion was on the operations of NPDC but “we don’t know what they are to actually remit” because “it depends on what the law says.”

She recalled that Sanusi stated at the public hearing that the law would determine what would go to the Federation Account of the $6 billion.

On reconciliation with NNPC, she said since they left the public hearing last week, they have not been invited for further reconciliation.

Mrs Alade said: “The new figure, after reconciliation, we have not been invited to any reconciliation. On the second issue, which is the $6bn, for NPDC, we don’t know the portion to be paid to the Federation Account.

“The legal opinion, according to the governor, would determine what part should go the Federation Account.”

Makarfi said there was need to be specific instead of building figures.

He added that without being specific some people would continue to assume that the $6 billion was supposed to have been paid into the Federation Account.

He noted that though it was wrong to assume that $6 billion should go to the Federation Account, the committee would determine what part of the $6 billion should go to the Federation Account. But Makarfi said the NNPC ought not to have stated that $2 billion went to third party arrangement.

The committee chairman said his total calculation amounted to about $1.3 billion.

He said the committee was interested to know how much went to each of the financiers, including Exxon Mobil and Total Nigeria, out of the 67 billion lifting.

As the disagreement continued, Makarfi asked NNPC GMD whether he wanted to withdraw his submission to rework it.

He noted that it was obvious that if the entire figures provided by NNPC are calculated, they cannot add up to $2 billion.

Yakubu said the governing structure of the third party arrangement explained what went to the parties.

Makarfi insisted that the calculation did not still add up to $2 billion.

Yakubu noted that “in view of the confusion, there is the need to further clarify and align all figures.”

Yakubu also said on the $2bn third party financing of some projects, Reserve Development Project between January 2012 to July 2013 cost $1.53bn; remittance to FAAC is $211m and $700bn went back to third party financing arrangement.

The NNPC GMD added: “It is good that we have this opportunity to drill down to the dynamics of these funds and that is what we have been saying all along.

“We cannot take it on the face values without looking at the details. Now we are going into detail disbursements of these money.

“A substantial frame has gone back to the Federation Account and that is what we have been saying that if we had been patient enough to go into the details, we would be able to see them.

“Yes, we captured $2bn but we are seeing clearly in our details that it was actually $2.4bn and a substantial part of it had gone back to the Federation Account.

“The governance structure of the third party financing is what we will take back to see how we can have a detailed explanation to the distinguished committee to see how the third party financing governance is done.

“The escrow account system, and how it is managed from the beginning of the project to the end. When you borrow money from the bank or any financial institution, you have governance structure you will adhere to and when you have an escrow account, that means you will have some money trapped until the end of the obligation.

“These are some of the details that are beginning to come out and we have the opportunity to go back now to give a detail explanation including how the funds are being managed and then we would be able to account for every stream that is being managed within the third party financing.”

Petroleum Product Pricing Regulatory Agency (PPPRA) Managing Director, Farouq Ahmed, said in 2012, the total quantity delivered by the marketers that qualifies for subsidy claims was 7, 714, 735, 580.71 litres which corresponds to N461.40.7bn .

For 2013 (other marketers), he said the total volume delivered which qualified for subsidy claims was 8,997, 776, 652.81 litres which corresponds to N467, 620 ,657, 674.24.

He put the total claims for the two years at N928, 668, 365, 37.70.

He said in October 2011, the total volume of PMS based on the certificate granted to NNPC in terms of volumes delivery of PMS was 520, 464, 371 litres corresponding to N40, 385, 473, 266.32 while the volume for HHK is 171, 515, 288 litres and the total naira value for the two components (PMS and HHK) is N17, 643, 898, 129.01.

He said: “There is also one for October of the same year which is classified as October arrears and its for HHK alone.

“The volume is 18, 240, 866 litres corresponding to a value of N1, 935, 691.442.2. PMS volume delivered in November 2011 was 431, 755, 629 litres corresponding to N34, 63, 432, 840.66.

“Volume delivered for HHK was 129 209, 34 litres with the value of N13, 504, 495, 477.84. For December 2011 batch A, PMS in terms of volumes 960, 674, 907 litres corresponding to N77, 006, 459, 517.65.

“For HHK December 2011 batch A, volume was 94, 564, 678 litres corresponding to N10, 135, 880, 308.08. December batch B, volume delivered was 144, 961, 484 litres corresponding to N11, 318, 805, 386.1. December batch B for HHK the volume delivered was 88, 643, 792 litres corresponding to N9, 576, 977, 84.55.

“The total of PMS delivered in the first quarter of 2011 by the NNPC is 2, 057, 856, 391 litres corresponding to N162, 774, 171, 10.73 while the HHA was 504, 173, 658 litres corresponding to N52, 786, 942, 442.3.

“Therefore the total certification granted to NNPC by the PPRA for 2011 (PMS and HHK) was N215, 561, 113, 453.03.”

The committee directed the Nigeria Petroleum Development Company (NPDC) to submit in writing what it received from the NNPC and part of the $6 billion that went to the federation Account.

The Committee asked the Department of Petroleum Resources (DPR) if it received $869.9 million from NPDC.

The DPR told the committee that when companies pay money, it takes them some time to confirm the payment.

The agency, however, confirmed receipt of $415,239,365.66 and another $722,943,664.

The Federal Inland Revenue Service (FIRS) confirmed the receipt of $863 million from NPDC.

The committee asked NPDC to hasten the payment of the balance to FIRS since it (NPDC) accepted the liability of the balance in their submission.

Makarfi said the committee would start technical session after yesterday’s sitting.

He said the Senate had approved the appointment of a consultant while the executive was free to conduct its forensic audit.

He said the work of the consultant would enrich the submission of the committee to the Senate. (0)

Why i can"t audit NNPC, says Audit General