Header Ads

Thursday, 3 August 2017

KPMG AND THE VICE-PRESIDENT - By Bashorun J.K. Randle, OFR, FCA

Vice-President Professor Yemi Osinbajo S.A.N. deserves commendation for the immense time, energy and other resources he has committed to discharging his onerous duties most creditably. Being the Vice-President is no easy task.
Here is how various occupants of the post (and other commentators) have defined the job description of the Vice-President of the United States of America:
The Vice President of the United States (VPOTUS) is the second-highest position in the executive branch of the United States, after the President. The executive power of both the vice president and the president is granted under Article Two, Section One of the Constitution. The vice president is indirectly elected, together with the president, to a four-year term of office by the people of the United States through the Electoral College.   The vice president is the first person in the presidential line of succession, and would normally ascend to the presidency upon the death, resignation, or removal of the president. The Office of the Vice President of the UnitedStates assists and organizes the vice president's official functions.
The vice president is also president of the United States Senate and in that capacity only votes when it is necessary to break a tie. While Senate customs have created super majority rules that have diminished this constitutional tie- breaking authority, the vice president still retains the ability to influence legislation; for example, the Deficit Reduction Act of 2005 was passed in the Senate by a tie-breaking vice presidential vote. Additionally, pursuant to the Twelfth Amendment, the vice president presides over the joint session of Congress when it convenes to count the vote of the Electoral College.
While the vice president's only constitutionally prescribed functions aside from presidential succession relate to their role as President of the Senate, the office is commonly viewed as a component of the executive branch of the federal government. The United States Constitution does not expressly assign the office to any one branch, causing a dispute among scholars whether it belongs to the executive branch, the legislative branch, or both.The modern view of the vice president as a member of the executive branch is due in part to the assignment of executive duties to the vice president by either the president or Congress, though such activities are only recent historical developments.
However, in the case of Professor Osinbajo he has demonstrated fierce determination to make a success of his assignment by loyalty, steadfastness, and diligence.  Added to these is his versatility as the “Captain”/Chairman of the Economic Team of the President charged with dealing with the most challenging financial and economic problems our nation has ever been confronted with.  He makes no excuses for being a lawyer (and a very eminent one too) by profession.  Rather, he has been championing dialogue with various stakeholders all over the country and beyond.  This is no easy task and it behoves us all to wish him success.
Recently, at a dialogue in Lagos, the Vice-President revealed that several studies had revealed that Nigeria ranks very low (right at the bottom of the league) in the “Ease Of Doing Business Index” compiled by the World Bank; International Monetary Fund; European Economic Commission etc.  Therefore, the Nigerian Government had set up a Presidential Committee to be headed by the Chairman of KPMG to deal with this formidable obstacle to our nation’s progress to economic prosperity.

Ironically, the retired partners of KPMG who are still awaiting their gratuity and pension have submitted a memorandum as evidence that doing business in Nigeria has not been difficult at all for the cowboys and gangsters.  Here is the witness statement provided by the front page of “The Nation” newspaper of August 13, 2016.
Bashorun J. K. Randle
“The Presidential Committee on Audit of Defence Equipment Procurement (CADEP) has traced about N2billion, meant for the purchase of vehicles for the Nigerian Army, to the accounts of five children of a former Chief of Army Staff.
The accounts were said to have been frozen as at the time of filing this report.
Also, the panel discovered that about 42 units of Armoured Personnel Carrier (APC) rejected by Iraq were resold to Nigeria to fight Boko Haram insurgents.
It said the poor equipment accounted for the loss of lives and soldiers in the North-East.
The panel’s findings are contained in a brief which was obtained by The Nation.
The outcome of the panel’s investigation suggested that the children of the ex-Chief of Army Staff allegedly used two companies for the deal.
The panel said: “The committee reviewed the procurement carried out by Chok Ventures Ltd and Integrated Equipment Services Ltd, two companies that shared the same registered office, had one name as common controlling shareholder and sole or mandatory signatory to the various bank accounts of the companies.
The committee further established that between March 2011 and December 2013, the two companies exclusively procured various types of Toyota and Mitsubishi vehicles worth over N2,000,000,000.00 for the Nigerian Army without any competitive bidding.
Most of the contracts awarded to the companies were also split, awarded on the same date or within a short space of time at costs and mobilization higher than the prescribed thresholds.
“For instance, on February 13 and 15, the two companies were awarded contracts worth N260,000.000.00 and N315,000,000.00 respectively for supplies of various vehicles. The Nigerian Army could not justify the exclusive selection of these vendors against other renowned distributors of the same brands of vehicles procured.
More seriously, the committee found no credible evidence of delivery of the vehicles by the two companies as there were no receipt vouchers, but only unauthenticated delivery notes, invoices and waybills that were purportedly used for the deliveries.
Nevertheless, the vendors were fully paid based on job completion certificate authenticated by the then Chief of Logistics, Maj Gen D.D. Kitchener (rtd). The payments were also made without deduction of Withholding Tax (WHT). Furthermore, analyses of the various bank accounts of the two companies showed transfers to individuals, some of whom are believed to be children of the army chief.
Thus, the committee recommends further investigation to determine delivery of the vehicles and the relationship of funds beneficiaries with the former COAS and the two companies. Furthermore, the panel said that Lt Gen O. A. Ihejirika (rtd), Maj Gen D. D. Kitchener (rtd), Col A. M. Inuwa and Mr Chinedu Onyekwere should be held accountable for the issues arising out of the contracts.”
The panel observed that the award of contracts in the Nigerian Army was fraught with irregularities.
It said a company was registered on November 17, 2014 and awarded $125,179,299.10 on the same day.
It also said: “The Nigerian Army, between April and August 2014, entered into four contract agreements with Societe D’Equipmenteux Internationale (SEI Nig Ltd)  for procurement of Cobra Armoured Personnel Carriers, Shilka Self-Propelled Artillery Guns, Armoured Fighting Vehicles (AFVs) as well as various ammunition and spares funded by the ONSA.
The contracts for the Cobra APCs and Shilka Guns were not executed as they were not funded. However, the costs for procurement of the AFVs; ammunition and spares were $398,550,000.00 and $484,765,000.00 respectively totalling $883,315,000.00.
In November 2014, the ONSA awarded a contract to Conella Services Limited for procurement of 72 various arms and ammunition that included MRAP vehicles, Mi-17 helicopter at the cost of $125,179,299.10.
“The committee observed that the company was registered in Nigeria on 17 November, 2014 and awarded the contract on the same date, while the EUC for the procurement was issued a day later on 18 November, 2014. Furthermore, the ONSA paid$36,996,530.00 and N2,209,582,296.00 to the vendor between November 2014 and 15 April, 2015.
 However, the Nigerian Army denied receipt of any procurement from Conella Services Ltd.
Similarly, the committee tried in vain to reach officials of the company to confirm execution of the contract. There is, therefore, the need for further investigation of Conella Services Ltd.
The committee observed that SEI and its two associated companies, APC Axial Ltd and HK-Sawki Nig Ltd, were incorporated in May 2014 with two Nigerien brothers, Hima Aboubakar and Ousmane Hima Massy as the only directors.
Between May 2014 and March 2015, the ONSA mandated CBN to release various sums totaling $386,954,000.00 to SEI and the two associated companies for ‘procurement of technical equipment’, without tying the money to particular items of procurement.
Thus, the allotment of the funds was left at the discretion of the vendor without input or consultation with ONSA or the Nigerian Army.
Furthermore, some of the funds transferred preceded the formalization of SEI contracts with the Nigerian Army. There was also no evidence of any contract to justify the payments made by ONSA to the SEI associate companies. Consequently, The committee’s interactions with the field operators revealed that although the platforms and ammunition procured by SEI were deployed for the NE operations, some of them were aged or expired, lacked spares and were prone to breakdown without immediate recovery equipment.
Therefore, failure to carry out pre-shipment inspection and inadequate training resulted in procurement of some unreliable equipment that reduced the capacity of the Nigerian Army in the North East operations and resulted in the loss of lives and equipment.”
On some payments to SEI on T-72 Tanks, the panel said the company made about $93,000,000.00 profit without paying the mandatory 5 per cent Withholding Tax(WHT).
It said: “SEI submitted a document to the committee reconciling the items it delivered to the Nigerian Army vis-a-vis the payments made to it by ONSA.”
According to SEI, the total value of the contracts it executed amounted to $909,065,824.00 and not the $883,315,000.00 reflected in the two contract agreements it signed with Nigerian Army.
Furthermore, SEI claimed that it delivered goods worth $697,718,168.00 whereas only $198,289,672.00 was paid to it by ONSA.”
In order to further buttress their case the retired partners of KPMG have added as an annexure the report of the Presidential Committee on Abandoned Projects under the Chairmanship of Architect Bunu Sheriff.
Here are extracts from the report:
CHAIRMAN, Federal House of Representatives Committee on Media and Public Affairs, Zakari Mohammed, yesterday confirmed  the submission of the House’s report on the probe of the Federal Government petroleum subsidy programme to the Presidency, Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices Commission (ICPC) and the Federal Attorney General’s Office.
Besides, the Director General of the Securities and Exchange Commission (SEC), Ms Atunma Oteh is to face the Samson Osagie-led House Panel on Ethics and Privileges, to explain the N44 million bribe allegations she leveled against Herman Hember, who was forced to step down as Chairman, House Committee on Capital Market and Institutions.
Fielding questions on the in-house probe into the bribery allegations yesterday in Abuja, Zakari asserted that all the mentioned agencies have also confirmed the receipt of the report.
“We have received acknowledgement of the delivery of the report, so we are not aware of any agency of government that is supposed to, and has not gotten the report. I am confirming that we have sent the report to the appropriate offices and we are expecting that we will be on the same page on the implementation of the outcome of that investigation,“ he declared.
Meanwhile, Speaker of the House, Aminu Tambuwal has sought the support of the United States of America’s parliament on the House’s fight against corruption in the country. Receiving the American Ambassador to Nigeria, Mr Terence Macaulay, who paid him a courtesy visit yesterday, Tambuwal said the American parliament and those of other countries in the West could help Nigeria and other third world nations by enacting legislations that “prohibit the receiving of suspicious wealth into your country.”
Macaulay, who spoke on the long standing diplomatic relationship between Nigeria and America, also said he was in the Speaker’s office to discuss matters of bilateral relations, Tambuwal’s views on the current insecurity in Nigeria and issues relating to the oil and gas sector, especially as they relate to the Petroleum Industry Bill.
Also, the House has urged the Acting Inspector General of Police, Mohammed Abubakar to urgently unveil a strategic plan to tackle the rising wave of kidnapping and killings prevailing in the South Eastern part of the country. This followed the adoption of a motion of urgent national importance brought by a member, Chris Azubogu, whose father was a victim of kidnapping. Azubogu blamed what he described as the increasing wave of insecurity in the area on the removal of Police Check Points.
The House has also moved to investigate the level of execution of various projects by government ministries, departments and agencies from 2009 to date, with a view to ascertaining how many of the approved ones as contained in the respective annual budgets had been successfully executed, the on-going as well as the abandoned ones.
In a resolution on a motion moved by Deputy Majority Leader, Leo Ogor yesterday, the House directed all its standing committees to, within 60 days, provide comprehensive reports on all such projects within their purview. This, the House said, would prepare the parliament for the 2013 budget expected presented in September.
In the same vein, the House has also urged the Secretary to the Government of the Federation, Anyim Pius Anyim to, within two weeks, furnish it with a copy the report of the Architect Ibrahim Bunu Sheriff’s Committee, set up to verify the number of abandoned federal government projects in the country.”
As confirmation that doing business in Nigeria, especially in the Niger-Delta is very easy, we have the report of “ThisDay” newspaper dated August 24, 2016:
Headline:      “OVER N700 BILLION BUDGETTED FOR NIGER-DELTA IN          SIX YEARS YIELDS ONLY 8% IMPACT ON REGION
·        Audit Committee uncovers 90% uncompleted projects
·        Minister says Federal Government may recover huge unaccounted funds.
A total of  N700,538,741,691.30 budgeted for the Ministry of Niger Delta Affairs between 2009 and 2015 with 60 per cent disbursement, has yielded only eight per cent impact in the region, a development that may have continued to ignite the seemingly unending violent agitations by youths in the area.
A Technical Audit Committee set up by the Minister of Niger Delta Affairs, Pastor Usani Uguru Usani, which turned in its report yesterday, said the total cost of projects within the period was N700,538,741,691.30, excluding services (security, rent and facility management).
According to the committee headed by Yerima Bulama, a cumulative sum of N446,421,385,864.41 was certified for payment but N423,172,256,347.84 was paid, leaving an outstanding of N32,111,887,779.32.
In other words, between 2009 and 2015, about 60 per cent of 425 projects awarded were paid for, but approximately 40 per cent of work was practically achieved, the report said
The Bulama committee said there was evidence of repetition of programmes and conflict of projects in the region by the Niger Delta Affairs Ministry, Niger Delta Development Commission (NDDC), Niger Delta Amnesty Programme, state and local governments. It reported a violation of contract award process right from the cycle of procurement planning to contract award as inconsistencies with the provisions of vital aspects of the Procurement Act were rife.
It also found out cases of indiscriminate award of contracts by initiating and benefiting departments without the leading and guiding role of the procurement department. Contract awards also never took cognisance of availability of funds and annual appropriation provisions, the report said, adding that the structure and content of some contract agreements were loose for checks and balances, and hardly protected the interest of the ministry in case of disputes.
On delivery and capacity, the Bulama committee noted  that the imminent picture of abandoned and uncompleted projects was as disturbing as the retinue of projects that extremely exceeded the dates of completion.
“This manifestly emanated from inconsistency in government annual budgetary provision and lack of capacity to deliver especially where funds released do not correspond with performance. Most contracts were awarded with specific dates of completion but were not captured in subsequent appropriations.
“This further exacerbated contractors’ poor performance and inability to achieve project objectives.
Consequently, no capital project was completed within the stipulated time frame,” the report said.
It added that it was obviously revealing that the ministry and its consultants alike had neither well-structured nor coordinated monitoring nor evaluation (M&E) mechanisms, which ought to have been pre-scheduled and followed tenaciously.
“In some cases, Engineers Representatives (ER) and the consultants as well as the Planning, Research and Statistics Department (PRSD) have broad discrepancies in performance, certification, dimension and quality of delivery. As a matter of fact, the ministry’s state coordinators had little or no knowledge of the scopes and locations of projects.
“Cost and performance: Generally, the cost of projects in the ministry were relatively higher than those obtained in other establishments, like the (NDDC) which also operate in the same region. One which calls for serious scrutiny is the cost of roads. For instance, there was no standard to determine the cost of a kilometer in a two-lane, three-lane or four-lane roads,” it said.
Bashorun J.K. Randle is a former President of the Institute of Chartered Accountants of Nigeria (ICAN) and former Chairman of KPMG Nigeria and Africa Region. He is currently the Chairman, JK Randle Professional Services. Email: jkrandleintuk@gmail.com

No comments:

Post a Comment

Powered by Blogger.