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Tag: forensic audit

  • Forensic audit of NNPC claims underway, says Edun

    Forensic audit of NNPC claims underway, says Edun

    A forensic audit of the Nigeria National Petroleum Corporation (NNPC) subsidy claims is underway, Finance Minister and Coordinating Minister for the Economy, Olawale Edun, has said.

    He broke the news on Wednesday at the ongoing IMF/World Bank Spring Meetings in Washington DC.

    Edun, who spoke during the Nigeria Investor Presentation organised by JP Morgan in Washington DC, said:  “There’s a forensic audit of NNPC underway so that we can really understand what has happened in the past. As for now, there’s a reconciliation exercise going on..

    “Part of that burden shifted from the government’s budget to NNPC. So, they have a legitimate claim and they have some arrears that need to be given to them.

     “But then it’s a two-sided thing. There’s a reconciliation on underway. And the most important thing is that NNPC needs to come to the table with more oil production, more dollar revenue, and indeed, more revenue to the federation. That’s the mandate they have been given and I think they will deliver.”

    He disclosed that government is also targeting seven per cent growth, from around three per cent at present.

    According to the Minister,  the growth is expected to come from accelerated activities in the agricultural sector, infrastructure building and financial sectors transformation, in terms of efficient payment and banking sector stability.

    He said investors are getting more confidence on the currency and in investing in the economy. “I am confident that if we continue in the direction we have gone so far, we will continue to see progress in what we are doing,” he said.

    The Minister said petrol subsidy removal, efficient forex market system have led to industrialisation of the economy.

    He said that government’s target was not to achieve growth, but to achieve substantial growth that will begin to lift people out of poverty.

    He said government is also interested in reducing debt service and boosting trade to support the growth plan.

    He said: “We want to open the agric sector and have enough availability of food and close the food supply gap. Between agric, infrastructure and financial reforms, we will put the economy on 7% growth”.

    Edun said government has awarded 1,000 kilometres of road for construction, including rural road and created huge opportunity to woo private sector.  

    He said the economy boasts of over 300 million strong ECOWAS population, and ability to boost the manufacturing sector.  

  • Stakeholders call for forensic audit of Lafarge Africa

    Stakeholders are seeking a forensic audit of Lafarge Africa PLC to determine the fairness and propriety of its management’s decision, and allay fears of increase of LafargeHolcim’s majority shares in the company under several guise, writes Capital Editor TAOFIK SALAKO

    Shareholders and concerned capital market operators have called on the capital market authorities to undertake a forensic audit of Lafarge Africa Plc to determine the fairness and propriety of the cement group’s management decisions to the Nigerian share-holders.

    They alleged that Lafarge Holcim, the majority core investor in Lafarge Africa, used subterfuges under the guise of financial engineering and group restructuring to unduly overleverage the Nigerian company, propped up Lafarge Holcim’s failing South African business and in the many cycles of capital restructuring and share issuances, increase Lafarge Holcim’s majority shareholding in the Nigerian company.

    The Nigerian Stock Exchange (NSE) at the weekend listed Lafarge Africa as the latest company with a free float deficiency, after Lafarge Holcim increased its majority shareholding to 83.3 per cent from about 71.4 per cent. The NSE flagged Lafarge Africa as a company “below listing standard” with a free float of 16.13 per cent, 3.87 percentage points below the minimum 20 per cent free float for companies listed on the main board of the Exchange.

    Free float, otherwise known as public float, refers to the number of shares of a quoted company held by ordinary shareholders other than those directly or indirectly held by its parent, subsidiary or associate companies or any subsidiaries or associates of its parent company; its directors who are holding office as directors of the entity and their close family members and any single individual or institutional shareholder holding a statutorily significant stake, which is 5.0 per cent and above in Nigeria.

    Under the existing rules, companies listed on the premium board are required to have 20 per cent free float or more than N40 billion of their capitalisation in the hands of general investing public. Companies on the main board are required to have a minimum free float of 20 per cent of their market capitalisation, implying that 20 per cent of the companies’ shareholdings must be available for minority retail shareholders. However, companies on the Alternative Securities Market (ASeM) are required to have 15 per cent free float.

    Stock markets generally maintain minimum public float to prevent undue concentration of securities in the hands of the core investors and related interests, a situation that can make the stock to be susceptible to price manipulation and illiquidity.

    Shareholders and capital market operators who spoke to The Nation called on authorities at the Securities and Exchange Commission (SEC) and NSE to investigate the decisions of the board and management of the company and its operations in the past five years, alleging that the foreign majority shareholder, which controls the management, set out deliberately to short-change minority shareholders.

    They raised several posers for consideration by the regulatory authorities including what due diligence informed the group strategy launched in 2014 and the sudden decision to backtrack from the strategy after Nigerian minority shareholders had suffered heavy losses in built-up negative earnings and reduction in shareholding? Why did Lafarge Holcim opt for self-advanced loan rather than equity recapitalisation only to turn around for conversion of such loans to equities under rights issues? They noted that Lafarge Holcim historically built up its controlling shares in the Nigerian company using the same approach of overleveraged recapitalisation. They called for investigation of related-party transactions by Lafarge Holcim and directors of the company in order to determine that decisions were taken in the best interest of the company rather than pecuniary interests of the directors and the major shareholders.

    The Mobolaji Balogun-led board of directors of Lafarge Africa has put five resolutions to authorise the sale of Lafarge Africa’s South Africa’s business, Lafarge South Africa Holdings (Pty) Limited (LSAH), to Lafarge Holcim as part of the special business at the company’s annual general meeting later this month. The flagship of the cement group, Lafarge Cement Wapco Nigeria Plc, which transmuted to Lafarge Africa, had in 2014 bought the South African business from LafargeHolcim under a new growth strategy to create a leading Sub-Saharan Africa building materials giant.

    Under the transaction, Lafarge Group transferred its direct and indirect shareholdings in Lafarge South Africa Holding Limited of 72.4 per cent and its equity stakes in three other cement companies in Nigeria-United Cement Company of Nigeria Limited, 35 per cent, Ashaka Cement Plc, 58.61 per cent and Atlas Cement Company Limited, 100 per cent to Lafarge Wapco for a cash consideration of $200 million and the issuance of some 1.4 billion Lafarge Africa shares to the Lafarge Group.

    Specifically, Lafarge Africa had paid $200 million cash and additional allotment of 724.76 million ordinary shares to acquire the 100 per cent stake in LSAH in 2014. Lafarge Africa had paid the cash and shares allotment to Financiere Lafarge SAS, a wholly owned subsidiary of LafargeHolcim Group.

    President, Association for the Advancement of Rights of Nigerian Shareholders (AARNS), Dr Faruk Umar, said the 2014 growth strategy was the beginning of problem for the Nigerian company.

    While agreeing that the decision to quit LSAH might be a good development for shareholders who had groaned under mounting losses, Umar called for investigation of the circumstances surrounding the deals and decisions in recent years.

    According to regulatory filings and shareholders’ notice, LafargeHolcim proposes to acquire LSAH through a $316.3 million inter-group loans swap. The boards of directors of Lafarge Africa and Lafarge Holcim have signed on to the deal and are recommending approval of the transaction to shareholders.

    Under the proposed sale, LafargeHolcim agreed to take over 100 per cent equity stake of Lafarge Africa in LSAH in exchange for a set-off of all the outstanding amounts due by Lafarge Africa to Caricement under the inter-group loan agreements at the closing date which is July 31, 2019. Caricement is a wholly-owned subsidiary of Lafarge Holcim.

    According to official reports, the value of the consideration at the closing date is $316.289 million being the sum total of the principal sum of $293 million and all accrued interest of $23.289 million as at July 31, 2019.

    “We will call on SEC to investigate the transaction and if necessary do a forensic audit to protect Nigerian shareholders,” Faruk said.

    He said Lafarge Africa must halt further right issues and reconsider its business growth strategy if shareholders will benefit from their investments in the company.

    “There is also a need to reconstitute the membership of the board of directors if any meaningful progress is to be made,” Faruk said.

    Capital market operators, who spoke under condition of anonymity, said Nigerian capital market authorities should do critical reassessment of Lafarge Africa in recent years.

    A leading dealing member at the Exchange said the disposal of LSAH is just portfolio restructuring and financial engineering by LafargeHolcim, adding that the transaction is a possible case for forensic audit.

    The dealing member said institutional investors such as pension funds should lead the charge for forensic audit bemoaning the propensity of many minority shareholders to trade key corporate decisions for pittances at general meetings.

    President, Constance Shareholders’ Association, Mr. Shehu Mikail, claimed that the complex transactions were part of a game plan by LafargeHolcim in collaboration with some Nigerian operators to short-change Nigerian minority shareholders.

    According to him, there is a need for forensic audit to ascertain the truth, transparency and accountability of the deals and to unearth the motive for the buyback of LSAH by LafargeHolcim.

    “This calls for proper investigation,” Mikail said, expressing worries that Nigerian shareholders would be short-changed in the ensuing transactions.

    Despite the promises of synergies across the markets, the South Africa’s subsidiary has since been a drag on the performance of Lafarge Africa, which reported a net loss of N10.37 billion by the third quarter of the 2018 business year.

    According to the cement group, LSAH’s operations have been subjected to shrinking demand in South Africa. The competitive environment, slow recovery and struggle to defend market share have heightened market pressure to reduce prices, significantly impacting LSAH’s operating margins in recent years.

    As part of its audit exercise with respect to the 2018 accounts, KPMG Professional Services as auditors of the company, had informed Lafarge Africa’s management that, based upon its assessment of the 2018 performance of LSAH, the valuation of LSAH in the accounts of Lafarge Africa would have to be impaired to a tune of N70 billion.

    The board thus delayed the approval of the 2018 accounts whilst seeking the optimal resolution of the impairment which had a potential major impact on shareholders’ value of the company.

    “During deliberations by the board on this matter, various options were considered including exit from South Africa, the board then arrived at the conclusion that the disposal of LSAH as the best option for halting the potential impairment. In addition and based on well considered metrics and the very limited time to explore other options, the board concluded that a buy-back by LafargeHolcim was the most appropriate means of deriving the best value from the proposed sale in the interest of all stakeholders and most especially the minority shareholders. Understanding the implication of the potential impairment on the company, LafargeHolcim acted timeously by entering into negotiations with the company with respect to the potential sale,” Lafarge Africa explained in a regulatory filing at the Nigerian Stock Exchange (NSE) yesterday.

    According to the board of Lafarge Africa, the proposed sale is expected to enhance the value of shareholders’ investments in Lafarge Africa.

    The board noted that following the conclusion of the proposed sale, Lafarge Africa’s shareholder loan of $293 million as at July 31, 2019, which represents the only existing foreign currency loan in the books of the company will be completely extinguished.

    This full repayment of the shareholder loan is expected to protect and preserve Lafarge Africa’s net Income and cash flows considering the resulting decrease sums to be applied towards debt service while the overall company’s debt will be reduced by N115 billion and an additional N47 billion by the eventual deconsolidation of LSAH.

    “The improvement in cashflow and net income, resulting from the reduction in debt service outflows, will enable Lafarge Africa to consider additional investments in cement production capacity to improve its market share in Nigeria. The sale is expected to boost the company’s profitability, through positive cash flow generation,” Lafarge Africa stated.

    Lafarge Africa had had on November 24, 2017 launched an offer to raise N131.65 billion through a rights issue of about 3.1 billion ordinary shares of 50 kobo each at N42.50 per share. The new shares were pre-allotted to shareholders on the basis of five new ordinary shares for every nine ordinary shares held as at the close of business on November 1, 2017. The acceptance list opened on Friday November 24, 2017 and ran till the close of business on Friday, December 15, 2017. Lafarge Holcim, using debt-for-equities conversion deal, picked up its rights fully and further subscribed to the un-allotted shares, thus raising its percentage shareholding by 4.97 percentage points from pre-rights issue position of 71.35 per cent to 76.32 per cent after the rights issue.

    Lafarge Africa also launched another rights issue in December 2017 offering 7.43 billion ordinary shares of 50 kobo each at N12 per share. The rights were pre-allotted on the basis of six new ordinary shares for every seven ordinary shares held as at the close of business on Tuesday, December 4, 2018. Acceptance list for the N89.2 billion rights issue, which had opened on Monday December 17, 2018, closed on Monday January 28, 2019. The N89.2 billion rights issue was also structured like the November 2017 rights issue, including a convertible deal that allowed LafargeHolcim to convert its debts to equities. This further increased LafargeHolcim’s majority stake.

  • Forensic audit: Court excludes CBN’s officials from Hasal Bank’s probe

    A Federal High Court in Abuja has directed two senior officials of the Central Bank of Nigeria (CBN) – Dr. Okwu J. Nnanna, Mr. Emmanuel Zakari – “not to participate, interfere or supervise” the forensic audit ordered by the CBN to be carried out on the books of Hasal Microfinance Bank Limited.

    The court, in a judgment by Justice Binta Nyako, agreed that the CBN has the requisite statutory powers to order the audit, as contained in its letter of December 16, 2016 and February 14, last year, following complaints by Hasal’s shareholders and directors.

    The court particularly said: “That an order is made directing the 2nd and 3rd defendants (Dr. Nnanna and Mr. Zakari) not to interfere directly or indirectly, participate or in any manner, supervise the audit of the 4th defendant (Hasal).”

    The judgment was on a suit marked: FHC/ABJ/442/2017, with former Nigerian Stock Exchange director-general, Prof. Ndi Okereke Onyuike (as plaintiff) and the CBN, Dr. Nnanna, Mr. Zakari and Hasal (as defendants).

    The court, which held that the CBN’s directive for the conduct of the audit on Hasal’s books was within the apex bank’s regulatory powers under Section 33(1)(e)(i) of the Banks and Other Financial Institutions Act (BOFIA), compelled the CBN to ensure the audit within 21 days.

    The audit, the plaintiff claimed, was directed by the CBN following a petition by directors of Hasal, who expressed reservation about the manner the bank’s management was running its affairs and demanded that the apex bank exercised its supervisory functions, including examining the bank’s books.

    The plaintiff stated that the CBN, in response to the petition by Hasal’s directors, directed Dr. Nnanna and Zakari to supervise the forensic audit to be carried out on Hasal to ascertain the nature of the fraud allegedly perpetrated by the bank’s management.

    It claimed that rather than proceed to conduct the audit as directed by the apex bank’s governor, the two senior officials of the CBN allegedly frustrated the conduct of the audit, a development that informed the suit and the prayer for their exclusion from the exercise.

    The CBN is said to have since appealed the judgment given last February 9, a copy of which was obtained last week.

    The decision by the CBN to appeal the judgment, which upheld its directive for the conduct of a forensic audit on Hasal, has raised suspicion among the bank’s shareholders about the sincerity of the apex bank in the whole exercise.

    Reacting to the development, an aggrieved director of Hasal said: “There are serious questions over the ordering of the forensic report by the apex bank and its sudden appearance to appeal the position of the Abuja High Court over the audit.

    “Investors are worried that the court agreed with the governor of the CBN’s order for forensic audit, and then, the CBN turned around to appeal the judgment, after the court has ruled and granted the prayers of the plaintiff who was initially encouraged by the CBN.

    “From the ongoing, it is worrisome to investors as to why the apex bank prefers the court as solution to a purely regulatory problem which alleged cases of official misdemeanour have been levelled against its key officers.”

     

  • ‘Oando shareholders to bear cost of forensic audit’

    ‘Oando shareholders to bear cost of forensic audit’

    Shareholders of Oando Plc will bear the cost of the N160 million forensic audit the Securities & Exchange Commission (SEC) will carry out on the firm.

    An official of Oando said over the last six months, the company has watched the Securities & Exchange Commission (SEC) investigation into Oando Plc play out in the media contrary to best practice and consequently, the investment of over 270,000 Nigerians depreciate drastically.

    “The Commission saddled with the responsibility of protecting investors and maintaining orderly and efficient markets, has been called-out on doing the contrary with regards to this investigation.

    The SEC finally publicized the acclaimed findings of its six months long investigation into Oando in the past week, with steep penalties which the company has rebutted in a press statement. Amongst other things, the company has been slammed with a 160 million naira bill to enable the SEC conduct a forensic audit on its financials. This penalty begs the question, is thisthe most effective use of shareholders money? How independent and objective is the process?

    According to Oando, the cost implication of the forensic audit which is to be borne by the Company is onerous, unnecessary and irresponsible in light of the above submissions and not the best use of shareholder funds at this time.

    SEC has already selected a five company panel of forensic auditors. However, Oando is fighting back this decision. Oando has confirmed that they weren’t carried along on the panel selection, they have not received a scope of work and timeline for the audit and accordingly a justification for the N160 million bill.

    Oando’s most recent statement states: “Having declared to the public that it has acted drastically to suspend the shares of Oando PLC due to its “weighty” findings in the course of its investigations, SEC then concludes that a forensic audit is necessary in order to investigate whether its findings are true. This is a clear contradiction.’

    Oando questions how the SEC has arrived at its findings if it cannot be sure of the veracity or otherwise of those findings and how did it ascribe the appropriate level of weight to be given to those findings, enough to warrant an immediate suspension followed by a technical suspension of the shares of the Company, if those findings are still mere allegations at this point.

  • Forensic audit of N30b given to ASUU coming

    Forensic audit of N30b given to ASUU coming

    Fed Govt says action illegal

    Strike grounds universities

    ASUU’s grouse

    •Non-licensing of the Nigerian Universities Pension Commission (NUPEMCO) to manage contributory pension which has hit over N1b
    •Non-payment of Earned Academic Allowances of N128 billion
    •Non-remission of N880b to upgrade infrastructure of universities since 2013

    UNIVERSITY teachers are likely to return to work soon, going by some steps taken yesterday by the Federal Government.
    •Minister of Labour and Employment Chris Ngige met with representatives of the Academic Staff Union of Universities (ASUU); and
    •The meeting agreed on the forensic audit of the N30 billion given to ASUU in 2010. There will be monthly remittances while the audit lasts.
    A statement by Samuel Olowookere of the ministry said the meeting would resume today to take a significant step towards a quick resolution of the “total, indefinite and comprehensive” strike and welfare of teachers and funding of university education as contained in the 2009 agreement.
    Said the ministry: “The Minister hence wishes to assure members of ASUU, indeed all Nigerians, that government is already at work to resolve all outstanding issues in line with the resolve of the present administration to cast any form of disruption of universities’ academic calendar into the dust bin of history.”
    The minister had earlier declared that the lecturers breached labour law with the way they declared the strike.
    According to Ngige, there is an ongoing renegotiation of the 2009 agreement between the Federal Government and ASUU by the Babalakin Committee.
    “The Federal Government set up the Babalakin Committee on 13th Feb. 2017, which is already addressing the issues raised by ASUU.
    “Though the Federal Government did not wish to apportion blame, it is important to note that ASUU did not follow due process in the declaration of the industrial action as it did not give the Federal Government the mandatory 15 days’ notice as contained in the Section 41 of Trade Disputes Act, Cap T8, 2004.
    “In fact, it was on 14th Aug., 2017 that the Office of the Minister received a letter dated 13th Aug. 2017 from ASUU, that is, one full day after it commenced the strike.”
    Olowokere noted that the letter was to inform the Federal Government that ASUU had begun a strike, adding that this is not a declaration of intention to go on strike as contained in the Trade Dispute Act, 2004.
    He said that since the case was being conciliated, it was against the spirit of Social Dialogue and Collective Bargaining Agreement (CBA) for ASUU to embark on strike as enunciated in the International Labour Organisation (ILO) Convention.
    “The Federal Government therefore wishes to appeal to ASUU to consider students who are currently writing degree and promotion examinations. Please, call off the strike and return to the negotiation table.’’
    The minister added that the Ministry of Labour and Employment would ensure that a time frame is tied to the negotiations.
    Ngige assured that ASUU that the “Babalakin Committee was ever ready to continue the negotiations, indeed, has all the necessary ingredients for fruitful social dialogue as well as adequate powers to negotiate and make recommendations to the Federal Government”.
    He noted that the ingredients for fruitful social dialogue as well as adequate powers to negotiate and make recommendations to the Federal Government had been put in place.

  • ‘Conduct forensic audit on empty houses’

    Chairman, National Oracle Magazine, Blessing Agbom-here has called on the Minister of the Federal Capital Territory (FCT), Mallam Muhammad Bello to conduct a forensic audit of empty houses in Abuja.

    He said any house built but left unoccupied ýfor six months should be scrutinised.

    At a briefing on a planned award for the National Leader of the All Progressives Congress (APC), Chief Bola Ahmed Tinubu in Abuja, Agbomhere said house owners should be invited to do a biometric registration of their homes.

    According to him, the audit would reveal that most vacant homes are owned by corrupt civil servants such as former Permanent Secretaries and Federal Directors in Ministries, Departments and Agencies (MDAs).

    However, he revealed a plan to give award to current President of the African Development Bank (AfDB), Drý Akinwumi Adesina who was former Nigerian Minister of Agriculture and Rural Development. He said the award was to recognise outstanding patriots who contributed immensely to development of the country.

    According to the organiser, Tinubu made an indelible impact in the political history of Nigeria by transforming an opposition party to a ruling government.

    He said: “Man of the Year Award goes to Bola Ahmed Tinubu. The award is to celebrate him because of the role he played in bringing change to the country. He also seems to be the change agent because he stood in the opposition and was able to transform the opposition into a ruling party. For that, he deserves our honour.”

    However, he urged the APC National Leader to drive the change agenda to meet expectations of the people.

    He stated that 28 other patriots would be recipients of various awards, including former Governor of Central Bank (CBN), Sanusi Lamido Sanusi who is currently the Emir of Kano and current Comptroller-General of the Nigeria Customs Service (NCS), Hamid Ali for his anti-corruption campaign in the NCS.

    The event would be organised in partnership with Gatekeepers Foundation, Nigerian Youth Movement for Change and Nigerian Christian/Muslim Association.

    “Nigerians should emulate Sanusi for exposing corruption in the oil and gas sector despite being appointed by his government. He stood by

    his allegation against the former Minister of Petroleum Resources, Diezani Alison-Madueke and that is what is expected of Nigerians. We should not harbour corruption,” he said.

  • Resident doctors to Fed Govt: undertake forensic audit of health institutions

    The National Association of Resident Doctors (NARD) yesterday urged the Federal Government to institute a forensic personnel audit of federal tertiary health institutions.

    The President of NARD, Dr Dan-Jumbo Prince, spoke at a news conference in Lagos.

    Prince said that this would assist in appraising the level of spending and development in the nation’s health sector.

    He said that this was part of the resolutions of the association at the end of its National Executive Council (NEC) meeting held at the Obafemi Awolowo University Teaching Hospital Complex, Ile-Ife, Osun.

    Prince said, “we reached some resolutions and one of them is that the Federal Government should immediately institute a forensic personnel audit of the federal tertiary health institutions.

    “The aim of the audit is to establish the true personnel spending, plugging of all leakages and reinvesting for the manpower and infrastructural development in the sector.’’

    He said fund was not allocated for residency in the 2015 budget, urging the Federal Government to make provisions for residency training in the 2016 budget.

    Prince also spoke on the incessant strikes in some tertiary health institutions.

    He said: “There are pockets of strikes in various Federal and State hospitals across the country.

    “This is due to the refusal of some Chief Medical Directors/Medical Directors to implement the directive of the Federal Government on the Adjustment of Grade of doctors according to a Dec.19, 2013 letter.

    “The refusal of these CMDs/MDs to obey the directive of the Federal Government has caused untold hardships to many Nigerians in accessing affordable health care.

    “NARD directs her local centres on strike to immediately engage their various hospital managements with the circular with reference C.2262/T/111 and dated July 29.

    “This is with a view to restore services as soon as the managements commence implementation of the directives.’’

  • Forensic Audit Report Prepared without Bank Statement, says PwC

    Forensic Audit Report Prepared without Bank Statement, says PwC

    The forensic audit report on Nigerian National Petroleum Corporation (NNPC) compiled by PricewaterHouseCoopers (PwC) was done without bank statements, the report said.

    The Central Bank of Nigeria (CBN), according to the report, shunned the auditors’ request for the bank statements.

    PwC stated in the revenue section of the report that “up till the time of writing this report, our request for bank statements from CBN was not responded to,” PwC said in the revenue section of the report, which depicts the NNPC as an organization with chaotic procedure.

    As a result of this “limitation”, PwC said it “relied on the account statements obtained from other stakeholders to carry out our independent check on the remittances made”.

    PwC was engaged to carry out the forensic audit with a letter dated 5 June, 2014 by the Ministry of Finance in the wake of the missing $20 billion allegation by the former governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, who is now the Emir of Kano.

    The audit report, though called “forensic”, may not be considered a detailed financial audit of Nigeria’s carbon deposit industry activities because PwC was quick to state that it  “examined crude oil production records only rather than crude oil and gas as per the signed contract”.

    This review addressed three key areas, namely the outcome of the Senate Committee hearings, the total crude oil liftings by NNPC from all terminals in the period and the total revenue generated from crude oil from January 2012 to July 2013.  The audit report disclosed that the activities of the NNPC led to the under-valuation of $32,909,590 relating to 13 liftings (equity and domestic crude) during the review period.

    These differences, the report noted, resulted in value loss to the federation. One of such differences is the under-valuation of $1,503,540.

    PwC stated that “of the $33 million, Crude Oil Marketing Division  (COMD) of the NNPC agreed that for two liftings (with an under-valuation of $1,503,540), they had made valuation errors by computing the amounts due using a different pricing option in one case and a wrong Official Selling Price (OSP) in the other”.

    The auditors added that there was another under reporting to the Federation Account Allocation Committee (FAAC) of $2,107,275. According to the report, ”for four other liftings with differences totaling $2,107,275, the unit prices on the schedule received did not agree with our recomputation. We checked the liftings to COMD’s valuation documents and observed that the prices agree with our recomputation but were just different on the schedule provided. However, the different valuations on the schedule were also used in the monthly FAAC reports; as such, the errors resulted in lower remittances to FAAC”.

    There were other accounting infractions discovered by the auditors. According to PwC, “the total cash remitted into the Federation accounts from crude oil liftings for the period under review amounted to $50.81 billion”. “We were able to trace $49.33bn of this amount to the FGN bank accounts. The balance of $1.48billion was also traced to the FAAC report for subsequent months. $3.81billion is the difference between $50.81billion and the $47billion amount reported by the Senate Reconciliation Committee. This difference was as a result of the following:

    FIRS remittance – We verified additional $1 billion revenue generated by FIRS, which was not reported by the Reconciliation Committee. We also traced the payment of this amount to the CBN/FIRS JP Morgan account.

    Other third party financing remittance – $1.37billion was received from the third party financing arrangements. The arrangement with TEPNL resulted in the payment of $211million to the Federation from the USAN Field TMP project which represents Royalty and Profit oil, while the sum of $1.16billion was received from MPNL from the Satellite Field and Reserve Development projects.

    NPDC remittance – Cash payments of $1.7billion representing Petroleum Profit Tax and Royalties had been remitted.

    Equity crude and DPR royalty oil remittance – The remittance received from Equity crude sales, and in favour of DPR royalty oil, was $0.16 billion higher and $0.42billion lower than the Senate Reconciliation Committee figures respectively.”

    The forensic audit report noted that “Mobil Producing Nigeria Limited, in its submission to the Senate, reported revenue figures of $518million and $859million in respect of the Reserve Development Project (RDP) and Satellite Field Development Project (SFD) respectively. Total E&P reported a revenue figure of $1.053 billion7 in respect of the USAN project. These amounts represent royalty and profit oil due to the Federation Account from these third party financing arrangements. The total revenue generated from third party financing arrangement was $2.43billion and not $2 billion reported by the Reconciliation Committee.”

    With regards to undisclosed remittance to the Federation Account, out of the total revenue reported by MPNL, $1.158billion had been remitted to the Federation Account as at November 2013. This was confirmed by the Office of the Accountant General of the Federation at the presentation to the Senate Committee.”

    However, PwC traced these payments to the CBN/NNPC JP Morgan account. The total of $858,750,972 relating to SFD had been remitted while $300,000,000 out of the $518,069,354 relating to RDP had been remitted. The balance of $218,069,354 was withheld to service the project finance cost and subsequent remittance of the net amount, in accordance with the contract terms.

    In respect of the USAN project handled by Total E&P Nigeria Limited, $193,478,061.15 and $17,943,616 totaling $211,421,677, being Royalty and Profit Oil was remitted to the Federation account.

    There were cash payments of $863 million by NPDC to FIRS not captured by Reconciliation Committee. PwC noted that “NPDC was yet to be assessed for tax by the FIRS. However, the company made several cash payments during and after the period which amounted to $863million. These payments were confirmed by FIRS to have been received. We also traced the payments to CBN/FIRS bank statements with JP Morgan.”

    “For the period under review, NPDC made several payments to DPR based on self-estimated royalty. We traced several cash payments made by the company to CBN/DPR JP Morgan account statement,  to the tune of $839 million but this was also not captured by the reconciliation committee.

  • PDP demands forensic audit of CBN’s account

    The Peoples Democratic Party (PDP) has demanded a detailed forensic audit of all the accounts and financial activities of the Central Bank of Nigeria (CBN) from 2009 till date.

    The PDP, in a statement by its National Publicity Secretary, Chief Olisa Metuh , also demanded that the audit must establish and publish all movement of monies from the CBN accounts such as contract sums, donations and other extra budgetary spending under the suspended CBN governor, Sanusi Lamido Sanusi.

    The party said the audit will reveal all contracts awarded by the apex bank within the period, the beneficiary companies and persons behind them as well as the value of the contracts and their status of execution.

    It said facts available to it, some of which have already been published by the Financial Reporting Council, show that within the period, the apex bank inflated contracts through which over N680 billion CBN money was frittered away.

    Stating that the beneficiaries of the contracts consist of persons who have been hiding under the toga of anti-corruption crusaders and whistle blowers to syphon the nation’s resources, the PDP said it has been established that there were huge infractions on the management of the bank’s funds which made it impossible for it to properly prepare its financial statements since 2012 using the International Financial Reporting Standards (IFRS).

    The PDP insisted that the audit must expose the true beneficiaries of the over N150 billion doled out as developmental donations, especially as some of the institutions listed as beneficiaries, such as the Bayero University Kano (BUK), have denied receiving the sums recorded against their names by the CBN. It noted that BUK was widely reported to have announced that it received only N1billion as against the N4 billion claimed by the apex bank.

    “Our great party as well as other well-meaning Nigerians are particularly worried by allegations that such funds may have actually ended up as financial support to clandestine groups working against the unity and corporate existence of the nation,” the statement said.

    It added that the “forensic audit will provide answers to how the apex bank under Sanusi spent N20.202 billion on ‘legal and professional fees’ in 2011, as well as the N1.257 billion spent on

    ‘private guards’ and ‘lunch for policemen’ in 2012.

    “It will explain to Nigerians how the sum of N23 million and N50 million were spent just to renovate the official residence of the CBN governor, while solving the puzzle of N848 million claimed to have been spent on the purchase of a property from the National Planning Commission even without any transaction agreement.”

    The party said the discrepancies noted in the 2011 and 2012 CBN account regarding the Nigerian Security Printing and Minting Company (NSPMC) wherein the CBN claimed to have paid a total of N38.233 billion to the company in 2011 for printing of banknotes whereas the NSPMC declared a total turnover of N29.370 Billion for all its transactions with all clients (including the CBN) were grave issues of corruption that no responsible government will sweep under the carpet.

    According to the PDP, this financial recklessness was capped by impudence in the illegal acquisition without the knowledge of the President or the CBN Board, of seven per cent shares of International Islamic Liquidity Management Corporation of Malaysia to the tune of N0.743 Billion in a in clear violation of the CBN Act.

    “The issue of prudence at the apex bank borders cardinally on the health of the economy, the growth and well being of the entire nation. Our demand for a forensic audit therefore tallies seamlessly with our firm position on due process and rule law, bearing in mind the imperative of straightening the records and bringing offenders to book, failure of which will catalyse a furious denudation on the confidence of Nigerians in governance, while emitting wrong signals to the international communities, especially, the development partners.”National Publicity Secretary