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N62.555 Billion Fraud uncovered In Nigeria Social Insurance Trust Fund – See shocking details

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The administrative panel constituted by the Federal government to investigate the financial state of the Nigeria Social Insurance Trust Fund has uncovered about N62.555 billion fraud in the agency, saying the money was spent without proper accounting procedures being followed.
The panel finding is contained in a report submitted to government on Wednesday just as the Minister of Labour and Employment, Senator Chris Ngige said any member of staff indicted by the report will be made to face the law in accordance with extant laws and the provisions of the civil service rules.
Chairman of the Administrative Panel, Ishaya Awotu said while presenting the final report of the panel to the Minister of Labour and Employment, Senator Chris Ngige that the financial book of the fund has not been fully audited since 2011.
The panel discovered that several unauthorized allowances were paid to the staff and management of the fund while over sea trips and training were carried out without the necessary approval from the office of the Secretary to the Government of the Federation as required by the civil service rules.
The Minister of Labour and Employment had, in February 2018 inaugurated the panel to investigate the finances of the fund following a damning report from the Economic and Financial Crimes Commission indicting former Board members of the fund.
Some senior management staff of the fund was also sent on compulsory leave to allow the panel carry out its assignment without any interference.
Awotu said that the panel noticed weaknesses In the operation of the Fund, adding that even though the Fund had External Auditors for the period 2011 to 2015, the audited financial statements and the management letters for year 2011, 2012, 2013 and 2014 were submitted to the Management, but were not concluded reports.
He said “As at the time of forwarding this report, none of the years audited accounts has been concluded while the audit reports remained unsigned. The basis for Management’s re-appointment of the External Auditors for the auditing of 2015 Accounts could not be ascertained;
 
“The Fund does not have Financial Operational Manual to guide in its financial activities while compliance with the provisions of the Financial Regulations in carrying out their financial transactions was very weak;
 
“Bank reconciliation of most of the bank accounts of the Fund was not carried out. Without the reconciliation of the bank statements, irregular payments and fraud committed on the accounts cannot be detected. Furthermore, financial statements prepared from unreconclied accounts cannot be reliable. Non-reconciliation of bank accounts violates section 716 of the Financial Regulations;
 
“The internal Audit function of the Fund was ineffective. The Panel observed that for the period 2013 to 2017, the internal Audit Department did not audit the cashbooks of the various bank accounts at the Headquarters of the Fund, books and records of Investments and Treasury Department, Procurement Processes, Registration of Employers and payment of contributions by the Employers, Enforcement and Inspection activities, Fixed Assets etc. The lack of effective auditing of the Fund’s accounts and records violates section 1701 of the Financial Regulations;
 
“It was observed that the Fund was operating with incomplete books of accounts. Several bank statements of the various bank accounts, cashbooks, etc were not submitted for audit examination and sighting. Financial statements (accounts) produced from such accounting system cannot be reliable;
 
“There were several transfers of funds in between bank accounts without authorization and approvals. The sum of N15,737,757,697.91 (Fifteen Billion, Seven Hundred and Thirty Seven Million, Seven Hundred and Fifty Seven Thousand, Six Hundred and Ninety Seven Naira, Ninety One Kobo) was transferred from one account to another. Evidences to show the approvals and payment vouchers authorizing the transfers were not presented to the Panel;
 
“The Panel observed that the sum of N2,990,184,262.77 was expended on computerization and other related lCT equipment. Despite this expenditure, not (much was achieved on computerization of the Fund defeating the purpose of the expenditure;
 
“It was also observed that Oversea Tours and Trainings were undertaken by the Fund without the approval of the Secretary to the Government of the Federation;
 
“Contrary to the provisions of Financial Regulation 402 the Fund does not maintain Expenditure Vote Control Books required for the monitoring and control of the various sub-heads. None maintenance of the vote-books made it impossible for the Fund to control extra budgetary spending.
 
“The sum of N2,650,731,225.93 (Two Billion, Six Hundred and Fifty Million, Seven Hundred and Thirty One Thousand, Two Hundred and Twenty Five Naira, Ninety Three Kobo) deducted from various payments in respect of Withholding Tax, Pay-As-You-Earn (PAVE), Value Added Tax, Pension and National Housing Fund were no remitted to the relevant Authorities.
 
“Irregular allowances totaling N5, 744,968,834.13 were paid to Staff and Management of the Fund. These allowances were paid without the approval of National Salary, incomes and Wages Commission for allowances being paid to its staff and management.
 
“Some of the allowances such as Management Staff Allowance, Staff Education Allowance. DSTV Subscription Allowance, Dressing Allowance, Generator and Motor Vehicle Fueling Allowance paid to staff and management were not provided for in the Condition of Service of the Fund.
 
“Payment vouchers in the sum of N27,056,598,053.92 (Twenty Seven Billion, Fifty Six Million, Five Hundred and Ninety Eight Thousand, Fifty Three Naira, Ninety Two Kobo) were not presented to the Panel for audit examination and sighting;
 
“Payment vouchers in the sum of N8,376,083,789.72 (Eight Billion, Three Hundred and Seventy Six Million, Eighty Three Thousand, Seven Hundred and Eighty Nine Naira, Seventy Two Kobo) were without adequate supporting documents”
The panel recommend that the Management of the Fund should without further delay conclude the External Auditors’ Reports for the period 2011 to 2015, while another set of External Auditors should be appointed with immediate effect to audit the accounts of 2016 and 2017 financial years as audited accounts for 2017 financial year ought to have been submitted on 30th May, 2018 in accordance with the Financial Regulations.
The panel also said that NSITF should carry out full reconciliation of assets acquired and recorded in the cashbooks against the Fixed Assets Register, saying “Schedules to the Fixed Assets should be updated to correspond with fixed assets balances in the general ledger. Henceforth, the Fund should endeavor to update their Fixed Assets Register and schedules as the assets are acquired .
 
“The Fund should ensure that Accounting Operational Manual is prepared to guide in carrying out its financial activities. In the interim (before the Accounting Operational Manual is put in place), the Fund should be guided by the relevant sections of the Financial Regulations;
 
“The Staff Condition of Service should be reviewed, with immediate effect, to correct lapses contained therein. There is also the need to review the investment Policy Document of the Fund;
 
“A Professional Firm of Accountants should be engaged to carry out in-depth examination of transfers in-between the accounts to ensure that the transfers of N15, 37,757,697.91 (Fifteen Billion, Seven Hundred and Thirty Seven Million, Seven Hundred and Fifty Seven Thousand, Six Hundred and Ninety Seven Nalra, Ninety One Kobe) were properly accounted for.
 
“The Firm should also canyout the bank reconciliation of the accounts of the Fund from its inception to date to assure that there are no financial losses resulting from the non-reconciliation of the accounts;
 
“The Fund should be asked to produce the payment vouchers in the sum of N27,056,598,053.92 (Twenty Seven Billion, Fifty Six Million, Five hundred and Ninety Eight Thousand, Fifty Three Naira, Ninety Two Kobe) that were not presented to the Panel for audit examination and sighting;
 
“The Fund should also produce the relevant supporting documents. For the various payment vouchers with total monetary value of N8,376,083,789.72 (Eight Billion, Three Hundred and Seventy Six Million, Eighty Three Thousand. Seven Hundred and Eighty Nine Naira, Seventy Two Kobe) to substantiate the payments.
 
“The Staff should be trained on the utilization of the acquired it. Equipment to add value to service delivery. Henceforth, all approvals for Overseas Tours and Trainings should be obtained from the Secretary to the Government of the Federation in line with extant circulars before they are undertaken.
 
“The Fund should prepare a financial plan on how they intend to remit the N2, 650,731,225.93 deducted from Staff salaries to various Authorities to avoid sanctions that may lead to going concern (non continuity) of the Fund.”
Receiving the report, Minister of Labour and Employment, Senator Chris Ngige assured that the report of the panel will be implemented fully and the lapses identified corrected.
He said “Those findings especially about over sea trips which are unauthorized will be dealt with because they are actions that breached public service rules. It is not true that parastatals are exempted from public service rules. This report will be fully implemented and areas of lapses corrected. So many government organizations have gone under because of situations like this.”
 
He said further that “Following the whistle blowing policy of this administration, the EFCC moved into the place and did some forensic auditing of the accounts of the agency.
 
“After reading the EFCC report, we felt it was necessary to set up this administrative panel to find out why the internal audit mechanism broke down in such a way that the N62 billion contributed cannot be seen.
 
“No good investment, no bank reserve and failing to carry out their responsibilities to their workers to the extent that the PAYE deducted, the pensions, and the National Housing Funds deducted were not remitted to the appropriate authority and the money is no where to be seen in the account. These are very strong financial misapplication and misappropriation.
 
“You have helped us to create a new NSITF that will be financial ok. It was I lieu of this that the Ministry did not want to be stampeded to put in place a new Board especially because the EFCC report indicted some members of the former board.
 
“Those indicted included those nominated by the Nigeria Labour Congress and the Nigeria Employers Consultative Association. So. We were not in a hurry because we needed to give the new board a new lease of life because you don’t put new wine in old wine skin.
 
“I am very happy because this is a water shed in the history of NSITF and I want to assure you that we are taking notes of the financial infractions mentioned here and we are also in position of the schedule that will help us look at what has been done, the road map you have been drawn will be implemented to the later.”
-Culled from The Nation

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