BOMBSHELL: Report on N62 Billion suspected fraud from June 2007-May 2011

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Report on N62billion, suspected fraud as identified in The Interim Review of Imo State Accounts from June 2007 to May 2011 under the Ikedi Ohakim Administration.

For those who wear glasses, this is the time to wipe your lenses; for those who studied Accounting, this is the time to bring out your calculator. ; for those browsing on their mobile phone, this is the time for you to head to a cyber cafe and use a big screen to read this post.

If you are beneficiary of the above named administration, this is the time to sharpen your pen in defense of Chief Ikedi Ohakim. Meanwhile, if you are ready to proceed to the post below, grab your popcorn and coke.

 

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We wish to present to you this Report containing the first part of the findings of the EXCO committee on account reconciliation June 2007 – May 20II. It identifies financial transactions where we observed irregularities from government officials, private companies and even banks and which funds are considered recoverable by the State. The total amount of suspected transactions identified as such in this first part amount to about N62,000,000,000.00 (Sixty-two billion Naira). The second part of the reconciliation report will be published in the next report.

CONTENTS

  • Summary of income and expenditure Loans,

  • Bond proceeds

  • Standing overdraft

  • Suspicious contracts / payments

  • Suspicious banking practices

  • Money Laundering 

REPORT FROM THE ACCOUNTS RECONCILIATION COMMITTEE
Background

Since the administration of His Excellency, Owelle Anayo Rochas Okorocha, there have been calls by Imo Citizens and well-wishers for an account of what this administration inherited from the past administration of Chief Ikedi Ohakim. These calls have been predicated on the widespread disenchantment of the people with the past administration particularly it’s handling of the State’s finances.

Over the past Eighteen (18) months, this administration has been focused on the provision of the dividends of democracy to Imo Citizens and has paid very little attention to the strident call by the people for an account of the previous administration’s stewardship. In the past few months, the people have been wondering if in fact any misdeeds were committed by the Ikedi Ohakim’s administration, to the extent that there is growing feeling of frustration with this administration as far as bringing the past administration to account is concerned. In some instances, there has been the ridiculous allegation that, perhaps, this administration was covering up the last administration.

As a responsible administration, this government decided to bring to the public domain our initial findings in the financial transactions of the Ikedi Ohakim’s administration. On behalf of the citizen of this State, this administration pledges to pursue the infractions revealed in the financial transactions with the appropriate authorities to their conclusion.

In order to put things in perspective, we shall begin this report with a summary of the revenues that accrued to Imo State during the four (4) years of the past administration and details of the projects we met on ground when this Government came to office: This would enable the citizens of this state reach their own conclusion on the utilization of their commonwealth by the Ohakim administration.

SUMMARY OF REVENUE RECEIPT


Based on available records, the Ikedi Ohakim’s administration and the local governments received a total of N 420,215,108,265.00 during the four (4) years of the administration. In addition, N18.5 billion of bond proceeds were received by the administration (out of which N 5.1 billion was utilized). Cumulatively, a total of N438.7 billion of the financial resources were available to the state during this period.

Besides paying workers salaries and overheads some of which were outstanding when this administration came to office, the only identifiable capital projects that could be credited to the administration are as follows:

The New Governor’s office building – N690, 000,000.00
Governor’s Lodge Abuja – N426, 885,315.00
Uncompleted Ahiajoku Convention Centre N2, 310,581,763.50
Uncompleted Traditional Rulers Parliament N277, 000,000.00
We noted that the original contract sum for the Governor’s lodge Abuja was N276, 640,510.00 only while about Nl billion naira of the Ahiajoku Convention Center contract had not been paid out.

BORROWINGS


A total loan collected by the administration was N63.9 billion of which N33.3 billion was not repaid and thus the Owelle administration inherited this N 33.3 billion as debts fro unpaid loans alone. Significantly, during the gubernatorial election, Ohakim’s administration yet again borrowed more funds especially N6.2 billon mostly spent as security vote, from UBA. It is strange that this occurred in spite of the well-publicized CBN warnings to all banks to desist from such loans within that election period knowing that such monies would be used to finance elections. This committee also found that some of the loans taken by the previous administration were done without fulfilling the legal requirements designed to protect the state from certain undue exposures, fraudulent utilizations, excess bank charges and failing or no repayments. The result was that Imo State Government we inherited was paying about N2 billion per year in interest and indeed this situation largely necessitated this account examination because we had to act fast to save the situation.

QUESTIONED FINANCIAL TRANSACTIONS

In the course of our review, we identified a number of suspicious transactions some of which are listed below.

1) Borrowing of N6 billion from UBA without authorisation and spending it as security vote
DATE: March 2011. This was 2 months to the end of the Ohakim administration, during the governorship elections without the necessary authorization from the Imo State House of Assembly. Painfully, N3.6 billion naira of the amount was withdrawn in cash and spent as security vote via the accounts of the SSG and Principal Secretary to the governor during the months of March and April 2011 alone curiously coinciding with the very expensive re-election bid of Ohakim witnessed by Imo people and indeed the whole nation.
For instance, as soon as that administration secured the loan, they turned around and withdrew N977, 582, 000 in cash through the Principal Secretary and Nl,738, 000 through the SSG during the 2011 elections. A single cashier alone cashed the sum of N650million from Mbari branch of UBA on the 20th of April alone proceedings the April 26th election. This type of security vote spending gave rise to the Ohakim administration spending N14 billion as security vote against the N9.2 billion budgeted for the entire period under review. The amount of N4.8 billion found to be overspent is therefore believed to be recoverable.

2) Payment of N1.746 billion to Cypress Consult
DATE: Feb.-July 2010
Purpose: Renovation of 27 New Face Health Centres
Comment/Observation: We found no evidence of such job done especially to justify such expenditure.
In the statutory audit carried out by the Auditor General for Local Government Areas; he noted that the project was overvalued, and that “there is no evidence of a contract agreement, certificates and payment vouchers or receipts acknowledging payments” the auditor general further revealed that there were no approval for the project. Surely, at an average cost of N65 million cannot be justified to renovate a 5 room bungalow, many of which centres are even still uncompleted. This amount is therefore believed to be recoverable.

3) Payment of N49,612,500.00 to Engr. Victor Konyeha Managing Consultant Cypress Consult Ld.


DATE: 18 Feb. 2011
The same Eng. Victor Konyeha of Cypress Consults was paid the sum N4 49,612,500.00 for the design of Cottage Industries in the 27 Local Government Areas of Imo State.
Unfortunately, these industries were neither designed nor built and therefore no evidence of Job done. Yet again the statutory audit for Local Governments revealed that there is neither evidence of a contract, contract agreement, scope, certificates, receipts nor prepayment audit.
The Payment was made from LG Funds for no jobs done and without approval and we therefore believe this amount is recoverable.

4) Payment of N3, 385729,888 (N3.4bn) to Brickred Consult Ltd/MD Chief Dan Okehi

DATE: 28/05/2010
Purpose claimed: payment to past political office holders
Comments/observations: In the first place Brickred, a private company promoted by one Chief Dan Okehi (former MD of Bank PHB Insurance) was paid directly from JAAC which itself is an offence since a private company cannot be a line charge let alone a first line charge. Further investigations revealed that out of at least N3.383 billion (so far tracked) paid out of Imo State Local Government fund to Brickred Ltd., N2.6 billion was directly used to purchase foreign exchange in 3 transactions, occurring on the 2nd and 6th October 2008 using Spring Wealth bureau de change and Candour bureau de change both paid by bank transfer through Intercontinental bank. We clearly do not believe Imo State Local Government councilors were paid in dollars and thus we deem this amount to be recoverable.

5) Payment of N126, 000, 000 to FM&T Consulting (MD: Chief Chris Asoluka)
Date of transaction: 20TH OCT. 2010

Purpose: Infrastructural development plan for oil producing Areas. Comments/observation: On the 20/10/2010, in a memo with Ref. No. GH/PL/S.662/11/16 signed by Okey Anyanwu (PS to governor Ohakim) authorizing the then Commissioner for Finance to release N126 million to Chief Chris Asoluka, of F.M.&T Consulting for the infrastructural development of oil producing areas without any contract from the company. There was no process at all and there was no Job done. ISOPADEC confirmed that ISOPADEC awarded no such contract and no such job was delivered to ISOPADEC.

6) N87, 850,000.00 Payment to Chief Chris Asoluka
Date: March/April 2011
Purpose: Printing of Local Economic Empowerment Document.
Comment: One wonders how such a value was reached.
Interestingly this transaction was done towards the Governorship elections when Governor Ohakim was taking loans.
Payment was made without approval of LGAs and there was no evidence of Jobs done.

7) Payment of N55,702,354.00 to Chief Chris Asoluka
Date: 17/8/2010 TO 14/1/2011

Purpose: Payment for retreat at Enugu
Comment/observation: The amount spent on retreat considered to be highly inflated, irregular. It is also observed that the various local government councils also posted huge amounts for this same retreat leading to a suspicion of double payment and therefore according to the statutory audit report it is deemed “recoverable”.

8) Withdrawal of N2.1 billion from Imo Freeway Account at Bank PHB (now Keystone Bank) claimed to have been paid to MCC.

Purpose: No evidence of job done.
Observation: On the 2nd and 3rd of June 2009, funds totaling N2.1 billion were instructed by Ohakim to be moved from Imo Freeway Account in Bank PHB to MCC. Specifically, these funds were narrated in our Bank Statement as having been transferred to MCC Ltd, Investigation, revealed that these funds were rather moved to a special clearing suspense account no. NGN 1402800010006 in Bank PHB. Our investigation furtherrevealed that the suspense account was created for the purpose of fraudulently diverting state funds.
Investigations also revealed that Bank PHB pulled out the entire N2.I billion through the following beneficiaries:
Nelson Jaja
Omala Oko
Pius Uduno

9) Payment of N420 million to E.F Network Corporation

Purpose claimed: Not known/unspecified.

Comments/observation: This company was over paid by N35mil!ion which was purportedly returned through Bank PHB (now Keystone bank) but never entered back into the account of Imo State. We are still investigating over a billion Naira funneled through the account of E.F Networks with Keystone bank for which no clear explanation has been received.

10) Payment of N 119 million to Champion Newspapers

Date: MAY – JUNE 2010 :
Purpose: Production of special edition to mark Chief Ohakim’s 3rd year in office.

Comment: One Mr, Ken Ogaziechi claimed to have paid a newspaper the sum of N119.5 million for the production of a SINGLE EDITION for the commemoration of Third year in office of the Ohakim Government. We found no evidence that such money was paid to Champion newspapers and therefore believe the amount is recoverable.

11) Payment of N1.1 billion to Boliv Ltd


The sum of N1.1 billion was paid to Deliv Limited between March 2009 and May 2011, being payment for Road construction.

Comment/observation: No evidence of award of contract. No evidence of work done to justify such payment.
Investigation revealed that the entire fund to the kobo was transferred to United Arab Emirate via swift no. FBN GB 4L (of 30th March 2009 and through Hameed Idoko Bureau De Change in Port Harcourt.

12) Discrepancy of N1.594 billion in JAAC proceeds to Local Government Areas.

Date: Various
Purpose: Funding of Local Governments Councils
Comment: Although N12.24 billion was approved for transfer to Local Government Councils, only N10.64 billion got to them. The sub-committee on Local government investigations of the Imo House of Assembly on it’s report observed that there is monthly differences between cheque values meant for local government councils and what the Local Governments actually received from the Ministry of Local Government and Chieftaincy Affairs. Between August 2010 and May 2011, the differences amounted toN1.6 billion (10 months).

13) Payment of N1.1 Billion to DDB under various vouchers.

Date: Various
Purpose: For billboards, re-election campaign jingles.
Comment: N1.1 billion was paid to DDB (Nig) Ltd via various payment vouchers mostly for the billboards that the Ohakim administration littered all over the State such as Let’s Do More campaign. The total budgetary provision for media and publicity for the entire 4 yrs of Ohakim’sadministration was N308m and just one company was paid nearly 4 times that amount totalling N1.1billion. So much for extra budgetary spending. So much for the governor’s picture.

14) Payment of N110mill1on to DDB.
N110 million was paid to Mr. Obiajulu Okwuosa, the Lagos Divisional Managing Director, DDB (Nig) Ltd. No. 6, Adeola Hopewell Street, Victoria Island Lagos in April 2010. Being payments for rebranding and restructuring of IRROMA, Operational publicity and erecting of two (2) Nos. of Clean and Green Bill Boards in the 27 Local Government Areas of Imo State.
Comment: Payment vouchers revealed that there is no evidence of ALGON and Tender Board Resolutions, no contract, no agreement and no receipts acknowledging the payments attached to the vouchers and none was produced for audit verification.

15) Payment of N414,555,608.55 to DDB (Nig) Ltd.

N44million was paid to DDB in July 2010 and N370 million in May 2010. These payments were purportedly paid to the principal secretary to theGovernor and DDB (Nig) Ltd. as an advance, I Owe YOU (IOU) and payments in connection to His Excellency’s third Year Anniversary in office.

Comments: In the statutory audit carried out by the Auditor-General for Local Governments, he noted that “The payment vouchers had no resolution attached authorizing the payments. The amounts advanced were yet to be retired or refunded. Also the payment vouchers were not presented tor prepayment audit.”

16) Payment of N50,000,000.00 to the Lagos Divisional MD, DDB (Nig) Ltd. from JAAC for Ohakim’s election jingle
Date: 21/3/2011
Purpose: Payment for Governor Ohakim’s Re-election
Radio campaign.

Comment: The payment voucher (MLGCA/JPA/61/11 of 21/3/2011) revealed that there were no evidence of approval and ALGON resolution authorizing the expenditure. Also there were no receipts attached to the voucher acknowledging the payment. The financing of the former governor’s re-election campaign is the responsibility of the governor and his political party and not the JAAC. The payment is therefore considered irregular.

 

17) Nl .3 billion payment made to Arab Contractors.

PURPOSE: Construction of Ahiajoku convention centre. COMMENT: The Ahiajoku convention hall was awarded to Arab contractors at the cost of N2,310,581,763.50 with immediate advance payment to the contractor of N690m. So far, about NI .3 billion had been paid to the contractor. Our administration met the Job mostly unfinished; no doors, no windows, no external walls, no fittings, no electrical, no air-conditioning, no plumbing, no landscaping etc. Although this project has not been completed, it was commissioned as completed by Ohakim – a clear instance of deception.

18) Payment of N604 million to T.K. Engineering

Date:
Purpose: Payment for Road construction
Comment/observation: Questionable Contract price. The state of construction cannot justify the amount paid.

 

19) Payment of N61,250,000.00 to Mr. Anthony I. Unaegbu, Chairman/CEO, Syndo-Glamour Communications Ltd.

Date: 23/2/2011 TO 20/4/2011
Purpose: Payment for consultancy work on Imo Youth
Empowerment Programme (IYEP).

Comment: The payment is irregular. The Auditor-General for Local Governments In the statutory audit noted that “examination of the vouchers revealed that Due Process was not observed in the award of the contract. There were no evidence of approval, ALGON and Tender Board Resolution, contract agreement or jobbing Order and none was produced for audit verification. Also no receipts from the contractor acknowledging the payments.

20) Payment of the total sum of N29,800,000.00
Date: 28/3/2011

This amount was paid to The Honourable Commissioner of MLG&CA Owerri. Being payment for the Launching of Imo Youth Empowerment Programme and distribution of equipment and materials.

Comment: According to the report of the Auditor General in the statutory Local Government audit, the payment vouchers revealed that there were no evidence of approval and ALGON resolution, authorizing the payment. There were no receipts or invoices, sub-receipts and store receive vouchers (SRV) attached to the voucher confirming payments, purchase and receipts of materials bought for distribution. Please note that this was during the elections.
In view of the above, the report found it “doubtful that the total sum was actually spent on launching of the programme”.

 

21) Fictitious payments of N 152,223,000.00 to sundry Ministry officials and contractors

Date: Between Dec. 2009 and Aug. 2011
Purpose: Not stated/unclear
Comment: No detailed evidence to show that services for which the payments were meant were actually performed for such a large sum. The payment voucher were not audited and signed by thepayees to authenticate there payments.

22) Payments made from the Joint State and Local Govt. project account to the tune of N666,216,313.14

Date:
Purpose: Not identified
Comments/observation: According to the statutory audit report of the auditor general, The total sum of J4 666,216,313.14 in various vouchers listed was paid out from the joint state and local government project account without following due process of the Governor’s approval, ALGON Resolution, Invitation for tenders from contractors, Tender Board Resolution, prepayment audit etc. These sums have already been requested to be returned by the auditor general.

23) Transfer of N6.514,550,000.00 from Skye Bank to Zenith Bank Plc (IN 4 TRANSACTIONS)

Date: Various
Purpose: Not specified
The Auditor-General of Local Government Areas queried their movements, He painfully observed that Payments were made withoutrecords/vouchers or explanation for transfers by Ohakim.

24) Payment of N204m to Linas International Ltd.
Date: 28/05/2010
Purpose claimed: Consultancy for the recovery of money owned the Local Governments by the Federal Government :
Comment: No evidence of funds recovered.
No mandate letter. Direct payment from JAAC account without approval.

25) Withdrawal of N1.3 billion in cash by one Mrs. Augustina Ezeala from State/LG Joint A/C

DATE : Various.
A total of N1.3 billion was withdrawn in cash through a cashier one Mrs. Augustina Ezeala, from the JAAC account an account specifically dedicated to projects owned by the State and Local Government.
Out of that amount, N791 million was “cashed over the counter” in April 2012 alone during the Gubernatorial Election.
PURPOSE: Unspecified/Not disclosed.

Comments:   We also found out that These withdrawals coincided with election dates in 2010 (LGA) and 2011 (Governorship).

26) Donation of N8m ISOPADEC funds To P.D.P. by Chief Emma Nnani

Date of transaction: 24/01/2011
Purpose: Donation toward P.D.P. primaries.
Comments: At the height of Gubernatorial Campaigns, the Commission’s Chairman Chief Emma Nani, authorized a donation to the PDP from ISOPADEC fund to fund a political party.

27) N5m ISOPADEC funds for election of PDP Orlu Zone Apex leader, Chief Goodluck Opia.

Date: Feb 2011
Purpose: To finance election of apex leader.
Comment: The chairman collected money from ISOPADEC as out of pocket expenses for the re-election of the PDP apex leader in Orlu zone, Mr. Goodluck Opia. This is one more case of financing political party and candidates for elections from government purse.

28) Withdrawal of N10, 676,891,730.00 from the Joint State & Local Govt. project A/C

Date: 1/8/2008 TO 30/9/2009
Purpose: Unspecified/Not disclosed.
Comment: In a report by the Auditor General of Local
Government Areas, it was stated that there were no corresponding payment vouchers raised to authenticate the purported withdrawals of such a huge sum of more than ten billon Naira.

29) Movement of N23,309,973,192.76 from the JAAC account


Between 10th October 2008 and 19th of May 2011, a total of N23.3billion was transferred directly out of Imo State JAAC Account. The only narration supplied in the bank statement from Bank PHB was NEFT (Nigeria Electronic Fund Transfer).

Out of the 18 digit NEFT number quoted against each transaction, 12 digits were observed to be date repetitions numbers leaving only 6 digits. The numbers were not generated by NEFT and cannot be used to trace that transaction. Bank PHB is being required to explain each of the transactions.

 

30) N13.5 billion transferred out from UBA


Between Nov. 2009 and June 2010, UBA transferred out from two (2) Imo State Government Accounts the total sum of N13.5 billion using the unconventional banking label DDCC during the Ohakim’s government. There was no explanation for this transfer. The UBA has been requested to provide the details for the transfer.
These amounts totaling about N62 billion are the first tranche of our investigation.

 Several more investigations are well underway and Imo people will be briefed on their outcomes.

 

Beloved  Imolites, what do you have to say?

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