News
Heads To Roll As FG Uncovers Multi Billion Naira Fraud In University Of Ibadan
A financial audit of the University of Ibadan (UI) ordered by the Office of the Accountant-General of the Federation (OAGF) has exhumed a welter of financial misconduct and brazen disregard of fiscal regulations by the management of the country’s first university. The audit, according to the its report dated 10 November 2016 and exclusively obtained by SaharaReporters, spanned six financial years (2010-2015). Titled “University of Ibadan Interim Process Audit Report,” the document is an anthology of spectacular sharp practices. The scope of the audit, stated OS Professional Services, the firm hired to conduct it, included a critical review of the university between 2010 and 2015), confirmation of the sources and quantum of the funding received from the Federal Government and reconciliation of same with the OAGF records. Also stated as part of the scope is the identification of constraints and areas of improvement, review of revenue sources to the university and the effectiveness of revenue generation and accounting. The audit similarly set out to establish the cost of income ratio of operations and make appropriate recommendations for the management of the university. OS Professional Services stated that its work was impeded by, among other things, shoddy book-keeping, which manifested in the non-availability of financial statements for years ended 31 December 2013, 2014 and 2015, as they were yet to be prepared at the time the audit was concluded. The firm also stated that the relevant books of accounts of the university were not updated for the above stated period. Another impediment was the unwillingness of the heads of the university’s bursary to release relevant information and documents for review by the firm. According to the audit firm, the University of Ibadan did not produce monthly, quarterly or yearly management accounts between 2010 and 2015 despite having over 300 accounting staff in its bursary department. This anomaly, said OS Professional Services, entitles the bursary department to investigation by OAGF. The audit firm observed that, very curiously, cash balances of over N1.25 billion were written off from the university’s bank balances after bank confirmation letters were received in respect of bank
balances for the 2010/2011 financial audit. This was done without documented valid approvals. In another case, N36 million and N1 million got written off as petty cash in 2009 and 2010, respectively. The auditors also observed a major cash difference of N300 million between the Central Bank of Nigeria CBN capital account cashbook position and the trial balance in 2011. Curiously, this was written off as cash adjustment by the external auditor without adequate investigation. On the basis of its ropey book-keeping, the audit firm concluded that the University of Ibadan is unprepared to adopt the International Public Sector Accounting Standards (IPSAS) for its financial reporting process. The auditors reasoned that UI should have converted to cash basis IPSAS by 1 January 2014 and accrual basis IPSAS by 1 January 2016, as dictated by the time table of the Federal Government. A major issue with the university, said the report, was that of inadequate control over cash. In many instances, it stated, updating of cash books were found to be many months in arrears. As a result, bank reconciliation statements were never up to date, with many of the bank accounts yet unreconciled before the introduction of the Treasury Single Account (TSA) in 2015. This also ensured that the accuracy of the balances transferred could not be ascertained. Another symptom of the financial malaise was found to have manifested in flagrant disregard for the banking procedures in the university’s approved accounting manual. The university’s chief cashier serially failed to adhere to the rule of daily banking of daily cash takings. “For instance, the sum of N760,000 for 11 June 2013 was banked on 12 June 2013. We also observed that there was an instance of unbanked receipts (N24million) being carried forward from July 2009 to June 2011 on Miscellaneous Account – Wema Bank, Bodija Ibadan,” said OS Professional Services. Many revenue heads were found to have been omitted from the TSA e-Collection Platform. The omission was discovered during the auditors’ detailed review of Remita TSA Online Platform. They further observed numerous instances where cash collections were undertaken by the bursary instead of using the e-collection platform. This was in spite of the fact that the university has been migrated to TSA e-collection platform. Evidence of the rot was similarly noticed in the university’s Grants Unit, which is said not to maintain an up to date cash book, limiting prepared bank reconciliation statement to the last update of the cash book. The auditors observed that decreases and increases in the value of quoted investments were not captured in the university’s books. For instance, the report said, a quoted investment made at N77 million still appeared in the account at the cost of purchase despite a dip in its market value. The institution’s bursary favored cash collections and deposits into various bank accounts with Deposit Money Banks (DMBs) despite e-collection platform provided by Federal Government. This was being done in contravention of directives that all Federal Government parastatals and agencies must migrate revenue and cash collections to e-collection platform on the TSA platform. Many instances of such were captured in the audit. The auditors observed that bank accounts operated by the university with First Bank, Skye Bank, for example, were operated up to March 2016 and in clear contravention of Federal Government directives on TSA that all bank funds should be mopped up and all accounts closed, with monies transferred to TSA account with CBN “From the schedules provided, it was confirmed that the balances over N2 billion from 22 bank accounts of deposit money banks (DMBs) were not credited by CBN. Although there was no valid documentation from the authorities of UI protesting this anomaly to the representative deposit money banks and CBN, we are, however, circularizing the CBN and the DMB accounts involved to verify and confirm this development,” the report said. In addition, the university management was found to have breached TSA documentation procedures for transfer of funds to CBN. While these require notification to the OAGF, the university management refused to follow them. Deposit account balances not transferred to the CBN were found not to have included fixed deposit accounts and those related to accounts domiciled with the U.I Micro Finance Bank Limited. The closing balance of the institution with CBN (TSA CBN Account 10034303000101),prior to TSA transfer mandate, the auditors said, could not be determined. Neither could the university management provide bank reconciliation of the account. “We could not validate the balances on this account at 15 September 2015. We are circularizing for confirmation,” said OS Professional Services. Unauthorized overfunding was found to have been part of the repertoire of financial misconduct of the University of Ibadan management. The university, noted the auditors, received total budgetary personnel cost allocation of N60.53billion and spent N55.10b on personnel emoluments. The total overfunding of N5.1billion was done for the period reviewed. The first four years, noted the report, recorded an over funding of N1.50billion, N1.40 billion, N1.90billion and N1.16billion respectively. Two years, 2014 and 2015, recorded underfunding of N.396 billion and N404 million, respectively. The overfunding of N5.95 billion for 2010-2013 was carried out by the university management without relevant government approvals. Relatedly, the sum of N2.1billion on earned allowance was paid between 2013 and 2014 outside payroll system and the relevant Pay-As-You-Earn tax deductions were not made before payments to the university staff. A glaring absence of senior management review of receivables, debtors and cash advances was observed. The audit firm noted that these are neither reviewed by any senior officer in the university’s bursary nor is there a designated officer with the responsibility for the collection of overdue balances owed to the university. The audited financial statement (AFS) as 30 June 2012, said OS Professional Services, indicated that cash advances rose from N1.294 billion to N1.657 between July 2011- June 2012, an equivalent of 91.49% of debtors and advances balance for the period. Their report also recorded that sum of N1.036billion in debt has been static since 2008. The major constituent of this balance, said the report, are student departments, salaries and wages control, bursary loan account and sundry deductions for which the university respectively has N89 million, N432 million, N104 million and N292 million as balances. The university equally has a static balance of N83.17 million since 2008. Of this sum, N40.9 million, it was noted, represents the difference on foreign exchange and the balance of N42.2 million various internal accruals. Yet another item in the portfolio of rule breaches by the university management is non-compliance with statutory payments. According to the audit report, total creditors and accruals balances for Financial Year (FY) 2010, 2011 and FY2012 stood at N 0.848 billion, N1.4 billion and N1.5 billion respectively. Over 80% of the aggregate amount, said the auditors, represents statutory deductions for Pay-As-You-Earn tax, Value Added Tax, Withholding Tax, Industrial Training Fund and unified pension contributions. The audit firm, however, stated that it could not carry out further review for subsequent years owing to absence of financial statements. It stated that it planned to write to the statutory creditors to confirm outstanding liabilities. One of such creditors is the Oyo State Board of Inland Revenue (OYBIR), with which the university is involved in a legal dispute over on outstanding tax liabilities hovering between N3 and N4 billion. Despite spending N12.5billion between 2010 and 2015 on capital assets financed through Federal Government budgetary allocations, Tertiary Education Fund and internally generated revenue, the university could not boast of a fixed asset register for its fixed assets. What the auditors found was the practice of over-insurance and under-insurance of assets such as buildings, equipment, furniture and fittings. An insurance policy taken by the university on buildings, equipment, furniture and fittings in 2010 cost N2.4 billion in 2010. Three years later, it rose to N6.8billion and curiously had the same value in 2014, 2015 and 2016. “The university’s asset register was not updated. Neither was an assets revaluation carried out. Therefore, the sum insured is very much lower in our estimation than the value of the items insured,” explained OS Professional Services. The lack of transparency was visible in many of the Public Private Partnership (PPP) agreements entered into by the University of Ibadan management, the auditors further disclosed. They include the provision of private hostels and 10 Megawatts solar power generation capacity. While the auditors admit that the PPP agreements have the potential to impact on student-related income and internally generated revenue of the institution, they, however, said the management of the university’s bursary failed to make available any of the PPP agreements for review. As such, they could not assess and comment on the revenue sharing arrangements. Touring advances granted to university staff for local and overseas travel were found to be the subject serious abuse. The grant process, the report said, lacks proper accountability, as there is no effective expenditure retirements. Such advances are said to have been used as sources of unauthorized staff loans/credit because the unretired funds ended up being deducted over a long time from staff salaries. One Mr. A. O Sokubi, a staff of the Animal Science Department, was found to be having an outstanding balance of N2,611,500 since 24 November. He was subsequently granted an additional N600,000 and N2,000,000 on 11 July 2013 and 18 November 2013 despite carrying an unretired balance of N2,611,500 since 2012. He is said to be paying back the sum of N30, 000 from his monthly salary. Similar lack of fidelity was evident to the auditors in the university’s procurement processes. The audit team, for instance, had no access to records for micro supplies and services contracts. This, they noted, is contrary to Public Procurement Framework and Guidelines issued by Bureau of Public Procurement (BPP), which emphasize that procurement of goods and services must conform with the public procurement guidelines. “Micro procurements at various academic units and service points were not in compliance with BPP guidelines and documentations are not kept in line with Public Procurement Act requirements for procurements falling within such thresholds,” the report disclosed. Closely related to this are contract splitting and other contraventions of of Public Procurement Act 2007. The university’s Public Procurement Committee and Tenders Board was found to have engaged in contract splitting in a number of major contracts, a breach of Section 58(4) of the Act, which criminalizes the splitting of contract for goods and services in order to remain within the approval thresholds of less than N250 million. The practice also spills into bid rigging and tender evaluation manipulation. The review of the tender processes by the auditors showed that the same crop of contractors has been winning bids and are engaged to execute projects for which they have no expertise. According to the auditors, this puts a big question mark on the transparency of the tender evaluation process. Budget and Variances not measured Equally deemed flawed is the university’s budgetary control mechanism, which was said to be characterized by improper transactions recording and accounting entries in the expenditure control cards. The auditors were unable to find actual budget performance reports for 2010-2015 in the university. What was found during a review of financial information was overspending on a number of vote items. OS Professional Services said it was informed by the bursary management that this was due to re-allocations between vote items. “Virement without due government approval is prohibited in the Federal Government financial regulations,” said the auditors.
credit: sahara reporters
News
Panic As Governor’s Official Car Got Stolen
Confusion and fear was the order of the day at one of the Government houses in the Southwest some days ago when one of the official vehicles of the Governor, a bullet-proof jeep allegedly disappeared from the garage.
The SUV which is said to be one of the three bullet-proof vehicles being used for the Governor’s official assignment was discovered missing.
The Governor who was out of the country on a short, rest leave was claimed to have been disturbed when he was alerted.
Sources claimed it wasn’t the first time things would get missing at the Governor’s private residence.
‘There had been series of thefts, ranging from missing cash, phones and other expensive items, it’s usually swept under the carpet. Indiscipline is the order of the day here’, a source confirmed this to papermacheonline.
The State Governor, a quiet individual who is spending his second time in office was said to have been disturbed by the occurrence that he had to cut short his leave and return home. One of his closest aides was also kidnapped recently.
Business
Former First Bank Employee Accuses Oba Otudeko, Bisi Onasanya Of Massive Fraud
A former First Bank of Nigeria Limited employee, Adesuwa Ezenwa, has accused billionaire industrialist Oba Otudeko and former Managing Director Bisi Onasanya of massive fraud during Otudeko’s tenure as chairman of FBN Holdings Plc.
In court documents filed at the National Industrial Court of Nigeria, Ezenwa alleges that unsecured loans of approximately N12 billion were granted to a company in which Otudeko has significant investments, disguised as loans to Stallion Group of Companies.
Ezenwa, who was summarily dismissed in October 2016, is seeking redress for her termination and demanding N500 million in damages and N25 million in legal costs. She claims that she was made to bear the consequences of granting unsecured loan facilities worth billions of naira to companies linked to Otudeko and Onasanya, while her superiors who approved the credit were not penalized.
Ezenwa joined First Bank in 2002 and became a relationship manager in the corporate banking division in February 2016. She alleges that her superiors, including Abiodun Olatunji and Cecilia Majekodunmi, who worked closely with Onasanya, were involved in the fraudulent activities.
“As a relationship manager, I worked under the supervision and direction of my branch manager and group head and signed official correspondence only after they had approved and/or signed same. I had no independent authority in relation to the grant or disbursement of loans or other banking facilities,” Mrs Ezenwa said.
According to the claimant, she executed a large number of documents while she was still employed by First Bank, but only after approval by her bosses and on their direction.
She said she was summoned on 25 August 2015 to appear before a credit disciplinary committee reviewing facilities availed to a company known as Supply and Services Limited, a subsidiary of Royal Ceramics Group, one of the major customers of the bank.
The plaintiff said the committee could not determine whether she had a personal interest in any of the loans granted or whether she made any gain related to her duties. She said she was, however, blamed during proceedings for not whistleblowing on some of the deals endorsed by Mr Olatunji and Mrs Majekodunmi.
“The admonition was most unfair and unwarranted as I was in no position to whistleblow on my superiors … The persons to whom these reports would have been made were the very persons who were the perpetrators of the misdeeds,” she said.
A litany of allegations against Mr Otudeko
Mrs Ezenwa disclosed that unsecured loans of roughly N12 billion were availed, on one occasion, to a company in which Mr Otudeko has significant investment even though the facility was masked as loans granted to Stallion Group of Companies, which later spotted the false entry in its statement of account and complained.
In one case in 2012, she further alleged, an unsecured credit estimated at N2 billion was granted to Broadwaters Resources Company Nigeria Limited, which ended up being a conduit pipe used by Mrs Majekodunmi and Mr Onasanya to siphon monies from the bank. The claimant said the loan was never repaid.
“Out of the N12 billion camouflaged as lending to the Stallion Group, N8.21 billion was transferred through various accounts to a final destination account belonging to a company known as V-TECH LTD, which belongs to the chairman of FBN Holdings, Oba Otudeko, while the sum of N4.45 billion out of the same fictitious facility was transferred to Ontario Oil and Gas. The facility remains unpaid to date,” Mrs Ezenwa said in court fillings.
According to her, several similar loans were granted by Mr Olatunji and Mrs Majekodunmi, including to Supplies and Services Limited, which were “subsequently sublet and disbursed in smaller bits to several customers on more profitable terms to both officers.”
Swap Technologies and Telecomms Plc, Orbit Cargo, Netconstruct Nigeria Limited, and High-Performance Distributions Limited were among the companies named as beneficiaries of the loan disbursement.
Mrs Ezenwa disclosed that such loans could not have been granted without the involvement of the board of First Bank, considering that the amounts involved were huge and above the approval limits of the executive directors, the vice president and the managing director of the bank.
According to the complainant, her dismissal by the bank brought her into disrepute, threatening her chances of securing employment in reputable companies in future.
“The action of the defendant (First Bank) has consequently caused the claimant untold mental distress and is all the more damaging as the claimant is in her thirties and has simply been made a scapegoat for the malfeasance of some of the lapses of the management of the bank,” she said.
Among other demands, Mrs Ezenwa is urging the court to declare that there was no basis for the bank to dismiss her.
“She is being made a scapegoat for a lot of questionable transactions within the bank, which she is claiming innocent of,” Seyi Sowemimo, the claimant’s lawyer, told PREMIUM TIMES on Saturday. “So far, the trial has started. We have subpoenaed the EFCC, and we have subpoenaed the central bank to bring the audit reports of the bank,” Seyi Sowemimo, the claimant’s lawyer, told PREMIUM TIMES.
The allegations have sparked a legal battle, with Ezenwa seeking justice for her dismissal and damages for the fraudulent activities she claims to have uncovered.
Business
“AMCON MD In Trouble Over Keystone Bank Acquisition By Father In-law”, Isa Funtua
Why Bank Customers Are Making Panic Withdrawals…
Following the controversy generated by the leading opposition party, the People’s Democratic party, PDP, over the alleged acquisition of Keystone bank and Etisalat by Alhaji Isa Funtua and the CEO of AMCON, Ahmed Kuru, President Muhammadu Buhari has ordered probe into the alleged fraud.
A highly placed source at the headquarters of the Economic and financial crimes Commission, EFCC yesterday told daybreak that the President was thoroughly embarrassed with the allegations linking him to the transactions.
According to the source, a discrete panel will be set up soon comprising of the Chairman of the EFCC, representative of the DSS, ICPC, federal ministry of Justice to look into the allegations.
The source further added that, both Isa Funtua, Ahmed Kuru, the governor of the central bank of Nigeria, CBN, Chief Godwin Emefiele and management Staff of the Keystone Bank and 9Mobile will be quizzed by the operatives of the EFCC for some interactions.
Recently, a mindboggling scandal broke out to public knowledge about how Keystone Bank and 9Mobile were acquired in controversial circumstances by the business interests of one Alhaji Isa Funtua, a close friend of President Muhammadu Buhari, via the instrumentality of Asset Management Corporation of Nigeria (AMCON).
The PDP challenged the federal government to come out clean on what could be a serious dent on its anti-corruption stance, there is indeed no smoke without fire.
The leading opposition party also confirmed fact that the son-in-law of Isa Funtua, Ahmed Kuru, is the current CEO of AMCON.
Before him, the previous CEO, Chike Obi, was a first-class gentleman and technocrat who was strangely removed from office before the expiration of his term and was replaced with Kuru, the son-in-law of Isa Funtua.
Now, let us get into the insider details of how Funtua bought Keystone Bank and 9Mobile in the most bizarre of dealings that circumvent the laws of the land. Keystone Bank was sold by the current CEO of AMCON to his father-in-law, Funtua, without any AMCON Board’s approval and with the active connivance of CBN and NDIC at a grossly undervalued price of 25 Billion Naira. To put things in context, let us recall that Enterprise Bank was sold for over 60 Billion Naira and Mainstreet Bank was sold for over 100 Billion Naira under the former CEO of AMCON.
Before the sale of Keystone Bank to Isa Funtua, all bad debts in the books of the Bank were taken over by AMCON. So, it was a clean Bank with all the Assets and no Liabilities that was sold to the Buyers.
The Executive Management of AMCON was coerced into approving the transaction and those who were willing to submit a much higher bid were disqualified under a most opaque, suspicious process that lacks all transparency. The process was just manipulated in favour of the father-in-law of the AMCON CEO.
The Corrupt Payment for Keystone Bank The most disgusting part of the entire sale of Keystone Bank is how the 25 Billion Naira sales price was paid to AMCON.
The Isa Funtua Team paid 5 Billion Naira to AMCON, and then the balance of 20 Billion Naira was later paid through the most criminal and corrupt approach ever perpetrated by AMCON in favour of the Buyer. What happened was that AMCON moved 20 Billion Naira of their own funds as a fixed deposit at GTBank to Heritage Bank. Heritage Bank then paid the 20 Billion Naira on behalf of the Funtua Group to AMCON. In other words, AMCON used their own funds as a collateral for a loan to the Funtua Group for 20 Billion Naira!
When the Funtua Group took over Keystone Bank, they went borrowing immediately at the Interbank Market for 20 Billion Naira to refund AMCON’s funds. This has left a hole in Keystone Bank’s Balance Sheet and makes the Bank one of the most undercapitalized Banks in the Country as at today. The evidence of this highly compromised acquisition process can be obtained from the current and former staff of AMCON, from NDIC, CBN and from the current staff of Keystone Bank itself.
Another suspicious acquisition scandal surrounding the Funtua Group is about the untidy way 9-Mobile, formerly known as Etisalat, was bought. It is Mr. Adrian Wood of Teleology Holdings, a very sound telecoms professional, who collaborated with the Funtua Group for the acquisition of 9-Mobile.
The problem with their bid was the lack of a qualified Operator to support the bid which was one of the minimum conditions of NCC. Adrian Wood alone was not a substitute for an Operator.
The Nigerian Communications Commission (NCC) gave several conditions that must be met by the Ultimate Buyer of 9-Mobile to ensure the protection of shareholders value, prevent loss of jobs, protect the telecoms industry from slipping into a crisis and ensure transparency and professionalism in the post-acquisition entity.
The conditions listed by NCC that must be met by the Buyer are Strong Telecoms Operating Experience, Strong Financial Capabilities, Strong Technical Knowledge and Strong Administrative Skills.
The first thing that happened once Teleology was announced as the preferred winner was that the Funtua Group edged Adrian Woods out of Management and turned him to an Insignificant Shareholder.
The second development was that the Funtua Group raided Keystone Bank again and forced the Bank to Pay 50 million Dollars as down payment for the acquisition of 9-Mobile.
The third issue was that Teleology Nigeria replaced Teleology Holdings to remove any influence of Adrian Woods from 9-Mobile totally. The fourth step taken the Funtua Group was to borrow 260 Million Dollars from African Exim Bank.
The fifth thing was to coerce NCC to approve the sale at all cost without meeting 90% of the conditions set up ab-initio by the NCC.
The sixth strange action of the Funtua Group was to force the board of NCC to approve the sale through the influence and pressure from the Presidency. And the seventh Funtua infraction was to use the influence of CBN to force the Banks to the table and waive their own conditions of sale of 9-Mobile to the Teleology Nigeria group.
Efforts to reach the acting Head media and publicity of Economic and financial crimes Commission,EFCC, Mr. Tony Orilade to confirmed the latest developments proved abortive as his lines were not connecting.
Source; The Capital
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