Accountant-General Lists Points of Corruption in Government July 14, 2008 | posted by Mobolaji Aluko (Archives)

 

GUARDIAN

 

Monday, July 14, 2008              

Accountant-General lists points of corruption in govt
From Martins Oloja Abuja Bureau Chief

GORGES from which the country's resources find their way into private pockets have been identified by the Accountant-General of the Federation, Alhaji Ibrahim Dankwabo.

Although Dankwabo listed eight sources of official corruption in the public sector, he rated four of them as more worrisome.

They are insufficient information on activities of the Nigerian National Petroleum Corporation (NNPC) and oil revenues, leakages in tax revenues, differential accounting methods by the Federal Inland Revenue Service (FIRS) and the Central Bank of Nigeria (CBN); leakages in Nigeria Customs Services (NCS) revenues and Federal Government and independent sources.

In a memorandum to the on-going House of Representatives Public Hearing on Non-Remittance of Revenue by Ministries, Departments and Agencies (MDAs) into the Federation Account, Dankwabo also provided possible solutions to the lapses in the revenue collection and accounting system to save the nation from losing its wealth to those given the custody of the resources.

Payments into the Federation Account has recently become a source of inquiry and litigation by concerned stakeholders among them eight state governors, who two months ago sued the Federal Government at the Supreme Court over what they alleged as "non-remittance into and illegal deductions from the Federation Account from 2004 to 2007.

In the suit, which the President has initiated a political solution - to settle out of court with the governors - the state chief executives sought a refund of N546 billion as their entitlements from the national account.

In the legal document obtained by the The Guardian, revenues running into trillions of naira from the excess crude proceeds, signature bonus, sales of government properties, cost of collection from revenue agencies, waivers and concessions, Nigeria Liquefied Natural Gas (NLNG) dividends, privatisation proceeds, education tax proceeds and other dividends and Internally-Generated Revenue (IGR) between 2004 and 2007 were allegedly not remitted into the Federation Account.

But Dankwabo in his presentation said that corrupt public servants exploit loopholes in the public finance system to loot the treasury.

In the memo to the panel, the AGF narrowed the critical graft ways and means into "observed lapses within the system of revenue collection" and "challenges."

According to him, sufficient information is needed for effective monitoring of revenues derivable from crude oil sales by the NNPC to check the graft in the oil industry.

Such information, he said, must include the list of oil producing companies in Nigeria, daily output of each firm, the production category of each company (Joint Venture and Production Sharing Contracts (JV and PSC), and the NNPC pricing policy and sensitivity to market trends.

Others are banks used in connection with sales - both foreign and local, accounting for the sales of the government's share of crude, accounting for the sale of NNPC excess crude from its daily allocation, and the calculation of petroleum subsidy and the method of computation thereon.

On the FIRS and tax revenues, Dankwabo said the agency's delegation of authority to some financial institutions to collect revenue on its behalf was being abused.

He said: "The FIRS has delegated the authority for the collection of CIT, Petroleum Profit Tax (PPT) and Value Added Tax (VAT) to some designated banks. Without proper monitoring, this delegated authority is now creating a problem with result that a lot of money collected by these banks is often said to be in 'transit.' Government cannot utilise transit monies until it is credited to the appropriate accounts."

Turning to the differential accounting methods between FIRS and CBN, the AGF said: "FIRS records tax revenue on gross basis in its cash book while the CBN reports net receipts after deducting commissions payable to the collecting banks. These differential accounting records and methods usually create reconciliation problems."

For the NCS, he also queried its delegation of authority to inspection agents.

"Nigerian Customs Service has also delegated its powers to assess and collect customs duties to inspection agents and some designated banks respectively. The Office of the Accountant-General of the Federation plays little or no role in the monitoring of duty collections by NCS and its agents."

Even the government and independent revenues, Dankwabo said, was not spared of corruption: "It has been found that most Ministries, Departments and Agencies (MDAs) pay little or no attention to critical issues in collection of government revenue such as timely collection and prompt remittance of collections to the appropriate accounts".

On the challenges that aid corruption in public finance system, he said non-scientific estimate was pervasive.

"Estimates of yearly revenue are not based on scientific facts and information i.e. specific basis for arriving at revenue estimates and assessments."

There is also poor tracking and independent revenue; lack of sanctions for poor performance and incentives for high performance, and poor funding of monitoring activities.

He recommended extension of monitoring for big parastatals; mopping up MDAs' bank balances; diversification of the revenue base; enforcement of sanctions; prosecution of offenders; adequate funding of monitoring activities, and recovery of revenue from allocations at source to check the menace.

Dankwabo also recommended that the "the Office of the Accountant-General of the Federation should be empowered to extend its revenue monitoring machinery to include other high income yielding government agencies not presently covered."

He said revenue accounts should be non-chequing while arrangement should be reached with commercial banks to mop up all MDAs' current account balances into the Consolidated Revenue Fund (CRF). The mopping up should be done monthly for revenue accounts.

"The present over-dependence on oil is a hindrance to adequate revenue generation for service delivery to the entire nation. The revenue base should be diversified into areas such as solid minerals, agriculture, cottage industry, etc to enable the full benefits of a robust cash and treasury management to be realised. Ministries, extra-ministerial departments and agencies should be requested to make proposals to the Budget Office on how they can increase revenue from their existing sources as well as how they can raise new sources of revenue.

"Revenue collecting agencies like the NNPC, NCS, FIRS, Department of Petroleum Resources (DPR) should be properly monitored and supervised for information on production quantities, pricing policy, sales value, receipts and payment into the Federation Account to ensure more transparency and accountability in the management of oil revenues.

"Loss of revenue through corruption and illegal bunkering of crude oil is partly responsible for our underdevelopment and offenders should continue to be prosecuted.

"There should be sanctions for revenue diversion, failure to remit collections, delayed remittance and revenue consumption without appropriation. There should also be sanctions for low revenue collection without justification while MDAs that surpassed expectation should be rewarded, he said.

He also canvassed that "the Office of the Accountant-General should be authorised to deduct at source the revenue collected by an MDA, which is not remitted on time. Authority should similarly be given to the OAGF to request the CBN to debit the account of any collecting bank that failed to remit monies collected by it on behalf of the government."