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Government agencies and unauthorised expenditures

Apart from the egregious conduct of the Nigerian National Petroleum Corporation (NNPC) in serially failing to remit such revenues or account for its failure to…

Apart from the egregious conduct of the Nigerian National Petroleum Corporation (NNPC) in serially failing to remit such revenues or account for its failure to do so, over forty government agencies have been found by a House panel to be guilty of the same offence, in respect of both the Federation Account and the Consolidated Revenue Account. The Finance Control and Management Act spells out procedures for collecting and spending such monies. The Fiscal Responsibility Act providing for prudent management of the nation’s resources, ensuring long term macro-economic stability, securing greater accountability and transparency in fiscal operations and ensuring the promotion and enforcement of the National economic objectives, is being observed in the breach.  
A clear case of such breaches came up recently when it emerged that the Federal Airports Authority of Nigeria (FAAN) generated N104 billion in the last three years, but spent the lot without National Assembly’s approval. FAAN officials sought to deflect liability for the constitutional breach by stating that the bulk of the money was spent last year in the “airport remodelling” drive of former Minister of Aviation, Ms Stella Oduah, who was relieved of her cabinet position last month. FAAN falls into the category of government parastatals that are not included in the yearly national budget ritual, but draw their own expenditure from the income they generate and remit a certain amount to government. Even so, the law requires them to seek legislative approval before any major expense can be incurred, principally in respect of capital projects. FAAN admitted to a query by the House Committee on Finance that it breached regulations in not remitting funds into the consolidated revenue account in 2011 and 2012.
The NNPC and FAAN examples seem to underscore a disturbing pattern among government agencies to go solo in spending money without appropriate authorisation. It is instructive that in the case of FAAN, its illegal conduct took place in a period when serious concerns were being raised about how its parent ministry was flouting expenditure rules and spending money without appropriation.  Financial policy regulations require FAAN to remit 25% of their gross earnings. The difference between the 57 billion naira budgeted by FAAN as income from its operations and the 17 billion naira estimated by the Budget Office confirms the financial irregularities. Clearly, budgets have ceased to be a reflection of realistic expenditures, but a scandalous rehash of adjusted old figures.
If every agency goes rogue in spending money that has not been appropriated, government accounts risk running dry, and oversight functions would become irrelevant. The problem has been exacerbated by the fact that practically all agencies operate revenue collection departments. With the advent of information technology systems, it should be possible to revert to a practice that served the country well in the past, when all government revenues were paid into a centrally-managed treasury and a treasury receipt would for them lodged with the relevant agency. The Ministry of Finance of recent has not been active in pinpointing and punishing revenue leakages that are caused by deliberate and illegal conduct, until someone, or an organisation, blows the whistle, as the nation witnessed in recent weeks. That should change. Laws regulating revenue collection and expenditure must be strictly obeyed, otherwise the current climate of anarchy, in which fraudsters get the opportunity to bleed government’s revenue base would bring about economic mayhem for the country.  Officials of public institutions involved in flouting such rules should be punished as a matter of legal routine.  The Accountant General and Auditor General of the federation must be up and doing in ensuring that this is done.

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