420
Daniel Adaji
The Federal Mortgage Bank of Nigeria (FMBN) has violated key public procurement regulations in the award of contracts worth over N1.2bn in 2021.
This is according to a compliance audit by the Office of the Auditor-General of the Federation (OAuGF).
The audit report revealed widespread violations of the Public Procurement Act (PPA) 2007 and Fiscal Responsibility Act, with the bank failing to provide evidence of due process, engaging in bid rigging, and spending hundreds of millions without proper documentation or approvals.
“Invitation to quotes and how contractors were selected for various contract awards was not disclosed nor the documentary process attached to the payment vouchers as required for transparency and accountability,” the audit stated.
The OAuGF revealed that the bank did not provide required documentation such as Corporate Affairs Commission registration, three-year tax clearance, BPP certification, Nigeria Social Insurance Trust Fund (NSITF), ITF, and PENCOM evidence on contracts totaling N1,202,478,691.95.
The audit also accused FMBN management and contractors of bid rigging amounting to N519,859,922.00. Contractors were found to have used multiple company names to secure different jobs, a practice that undermines fair competition.
“This act committed by the aforementioned individual contractors and Managing Director has constituted ‘Bid Rigging’ which is an offence as stipulated in Part XII, Section 58 sub-section 4(e) of the Procurement Act,” the report stated.
The OAuGF warned that those found guilty of bid rigging are liable to “a term of imprisonment of not less than 5 calendar years without any option of fine.”
FMBN was also faulted for spending N710,320,000.00 on local training without proof of attendance, training reports, or pictorial evidence, contrary to civil service financial rules.
“In the absence of all these documents, the audit team finds it difficult to accept these payments as a legitimate charge against public funds,” the report said.
The OAuGF cited Circular HCSF/CS0/BUD/33/1/38 which mandates that training attendees must provide certificates of participation and reports before funds can be retired.
The bank also spent N150m on international training and conferences without securing required approvals from the Office of the Head of the Civil Service of the Federation.
“There were no records and documents such as letter of invitation, training and conference timetable, or evidence of participation to support the expenditures,” the report stated.
The audit further revealed that software and IT-related procurements worth N328,452,392.52 were executed without clearance from the National Information Technology Development Agency (NITDA), violating FG’s 2007 circular mandating NITDA’s oversight on all IT projects.
FMBN also paid N356,700,200.92 in insurance premiums to brokers without proof that the insurers received the payments, contrary to Section 50(i) of the Insurance Act.
“The receipt of an insurance premium shall be a condition precedent to a valid contract of insurance, there shall be no cover in respect of an insurance risk, unless the premium is paid in advance,” the report quoted.
The audit stated that the sum of N252.7m in contracts were awarded via “national shopping” without Bureau of Public Procurement (BPP) approval. Also, N547.6m worth of store items were not recorded in official registers, raising the risk of diversion.
It added that N43.9m was paid to external solicitors without consent from the Attorney-General of the Federation, N54.5m in unaccounted imprest disbursements to staff without proper recordkeeping or compliance with financial regulations.
Each of these findings raised significant red flags over the bank’s internal controls and adherence to public finance laws.
The audit recommended that the FMBN management should provide explanations for all violations and submit supporting documents where required. It also called for sanctions in accordance with extant laws, particularly in the case of bid rigging and contract inflation.
“Loss of public funds to bid rigging and contract price inflation can occur,” the audit warned, emphasising the need for prudence and accountability in managing public resources.
As of the time of filing this report, the FMBN had not issued a response to the audit findings.