Abia Governor Otti Unveils Forensic Report Exposing Financial Malfeasance, Shows N12.8bn Paid To Ghost Contractors

After weeks of altercations with his predecessor, Governor Alex Otti has finally made good his promise to make public the forensic report showing financial malfeasance by the immediate past administration.

The 359-page report prepared by KPMG, which was engaged for the job on July 13, 2023, was released on Tuesday, by the State Commissioner for Information and Culture, Mr. Okey Kanu, shortly after briefing journalists on the outcome of this week’s meeting of the State Executive Council.

Part of the report revealed that N12,800,851,500.00 was paid to four contractors, “for contracts that do not appear to exist, per available records and discussions with relevant officials.”

According to the report the alleged phony contracts included N10,000,000,000 paid, “to Ferotex on 25 September 2020 for the “construction of Abia State airport.

“N2,000,000,000.00 (was paid) on June 6, 2022 and September 1, 2022, to Logistics De-Luke, for the “delivery of 22 different brand-new vehicles” while N9,279,800,000.00 was paid to seven contractors “with no records that the contracts were executed, per schedules of contracts provided and discussions with relevant officials”.

Kanu, said Governor Alex Otti meant everything he had said about the payment of N10 billion for Abia airport that is not seen to exist anywhere in the state, as well as other phony contracts awarded and paid for by the past government.

According to him, the release of the forensic report for public view would give the people of Abia, Nigerians and indeed the global community an idea of how Abia State was mercilessly raped by those entrusted with authority to pilot its affairs between May 29, 2015 and May 28, 2023.

The report dated March 2, 2024, signed by partner, enterprise risk services, Saheed Olawuyi, was addressed to the Abia State Accountant General, Dr. Njum Onyemenam, after the process review covering May 29, 2015 to May 28, 2023.

It showed that the immediate past government paid the sum of N131,877,519,592.0622 to 231 contractors, through three means, namely Contractor Finance Facilities, government bank accounts and procuring MDAs – Ministry of Works and ASOPADEC .

While reviewing sample payments of N107,234,358,515.21 of the N131,877,519,592.06, it was discovered that N15,936,522,309.43 was paid to 6, 324 contractors, “with no supporting documents maintained by the Cash Office, Office of the AG (Accountant General).”

The forensic report also identified instances where contracts were awarded in disregard to Section 24 of Abia State Procurement Law and Section 3303 of the Abia State Financial Regulations.

To substantiate this claim, the forensic auditors cited payment of  N4,000,000,000.00, with substantial upfront payments (i.e. 92% of contract value) that was made to Track Care Global Construction for six projects.

The financial recklessness of the period under review, the report noted, showed that the then Governor approved 3,535 contracts amounting to N83,382,082,143.10, with no records of evidence in line with the state government’s practice.

“Ministry of Works awarded N2,831,458,377.40 worth of contracts to Arab Contractors for the ‘Reconstruction of Aba Road Umuahia from Enugu – Port Harcourt Express way junction to Railway Crossing at Old Umuahia’, without records of competitive bids, contrary to Section 26 (1) of the State’s Procurement Law.”

It also alleged that the, “Ministry of Works awarded N1,418,714,000.00 contract for the “Construction of Itukpa to Ossa Ukwu; Mgboko-Obete to Iheorji Road in Obingwa LGA” to Gemp Engineering, despite Gemp Engineering submitting bid after the due date of the ITT(invitation to tender).”

On the rate of non-compliance to due process relating to the selection of contractors and award of contracts, the forensic report scored the Ikpeazu government 64 percent.

In arriving at this score for non-compliance to due process, the auditors reviewed a sample of 95 contracts (85 contracts valued at N157,344,353,425.87 through tendering and 10 contracts valued N5,000,683,974.00 through Direct Labour.

The cited instances of non-compliance to due process include six MDAs that, “did not provide  ‘Certificate of No Objection’ from the Bureau of Public Procurement for 8,232 contracts worth N156,759,362,425.87, contrary to Section 21 (h) and Section 18 (4) of State Public Procurement Law.”

Another six MDAs did not provide record of bid evaluation for 7, 234 of the 85 sampled contracts with a cumulative value of N98,570,680,828.07, contrary to Section 24 of the Abia State Procurement Law and Section 3303 of the Abia Sate Financial Regulations

On the utilisation of funds from Federation Accounts Allocation Committee (FAAC), the report stated that Abia earned N468,356,645,293.64, excluding reversals of N28,963,869,442.72, during the eight years of Ikpeazu administration.

Out of the total net inflows from FAAC accounts the former government allegedly spent N465,991,676,382.39, with a consolidated closing balance of N2,169,406,016.88, as at 28 May 2023.

The auditors reported that an expenditure of  N462,219,772,748.67 comprising loan repayments, inter-account and inter-bank transfers, as well as payments to FIRS, “appear to be legitimate.”

But it pointed out that N3,294,788,036.80 (68 payments) paid to MDAs, Government House (and some Officials) and contractors, “were without supporting documents and contrary to the expected outflows from the FAAC accounts (inter-account/inter-bank transfers, loan repayments, and contractor finance facilities, CFFs, or bank charges).

In the award of contracts and payments, the KPMG report identified, “possible conflicts of interest involving 10 government officials, who are directors in seven companies, adding that the said companies benefitted from contracts awards to the tune of N203, 625,000.”

The Abia State Board of Internal Revenue(ASBIR) was allegedly not without its own state of financial misdeeds, according to the forensic report, in the collection and utilisation of internally generated revenue.

The report revealed that ASBIR reported IGR collections of N81,103,735,120.95 instead of N82,610,062,727.79 for the period from 1 June 2015 to 31 May 2023, though the N1,506,327,606.84 not reported was however noted in the bank statements.

According to the report, “Interswitch did not remit N27,164,671.09 IGR collections due to the State while N1,653,922,058.57 vendors’ fee paid/deducted from IGR, had exceptions.”

The identified exceptions were listed to include N649,787,065.21 representing over-payment to Atolok, contrary to the appointment letter dated 17 August 2020,(which), “instructed Interswitch to settle five percent and 6.7 percent of the total IGR Collections to Atolok on 30 December 2020 and 12 February 2021 respectively”.

The instruction in the said appointment letter meant that Atalok was paid above the stipulated payment, “instead of the 1.7 percent of total IGR collections and five percent in excess of N600,000,000.00 contained in the appointment letter dated 17 August 2020.”

In addition, there was the case of  N503,552,134.36  for ByteWorks, covering October 1, 2022, to March 31, 2023, which, “was not supported with a contract agreement.”

Nonetheless, the ASBIR Secretary, was said to have stated that, “ByteWorks rendered the service during the period”.

Still on Abia IGR, the report stated that,  “N500,582,859.00 was deducted and paid to Marabef, without any Letter of Instruction supporting the deduction.”

The bazaar also included N2,279,572,500.00 (covering 105 payments) that were, “based on release letters from the Office of the Governor to certain individuals, contractors and MDAs without other documents supporting the payments.”

The Special Adviser to the Governor on Media and Publicity, Mr. Ferdinand Ekeoma, said the anti-graft agency, the Economic and Financial Crimes Commission (EFCC), was already asking questions and seeking explanations from government officials and firms that colluded in the plundering of Abia resources.

Emmanuel Ugwu-Nwogo

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