In 2013, nine councillors in the local government petitioned the Lagos State House of Assembly over alleged financial impropriety of Tajudeen Ajide, the council boss.
The Executive Council of Surulere Local Government in Lagos State was involved in numerous financial irregularities, including awarding millions of naira worth of non-executed contracts in 2012, official documents seen by PREMIUM TIMES have shown.
An audit examination of the books and records of the council revealed that the local government obtained N10 million as term loan and N57.6 million as vehicle loan without appropriate approval, in violation of the Lagos State Public Finance Management Law 2011.
In 2013, nine councillors in the local government petitioned the Lagos State House of Assembly over alleged financial impropriety of Tajudeen Ajide, the council boss.
The councillors, who passed a vote of no confidence on Mr. Ajide, had accused the council boss of monumental graft and a “high level of incompetence, callousness, and total disregard for all democratic principles.”
The councillors also accused the council boss of abuse of office by seeking to witch-hunt them for performing their statutory oversight duties.
Mr. Ajide had repeatedly kept mum in the face of all the allegations despite several efforts to reach him including PREMIUM TIMES’ visits to the council secretariat.
A report of the Auditor-General for Local Governments on the accounts of the council, made available to PREMIUM TIMES, reveals series of official graft by the Executive arm of the local government.
Several official queries sent by the Auditor-General to the local government were not responded to, the report stated.
365 Days of ‘GRAFT’
The audit, for the year ended December 31st 2012, was carried out in compliance with the provisions of Section 50 subsections 1-4 of Lagos State Local Government Administration Law No.7 of 1999.
A financial overview of the council’s revenue for the year under review revealed a total revenue of N726.8 million, broken down into Balance brought-forward on 1st January 2012 of N19.7 million; Federal Statutory Allocation N433.7 million; Internally Generated Revenue (IGR) N57.5 million; Wharf Landing Fees N24.2 million; LASAA (Lagos State Signage and Advertisement Agency) N16.9 million; State Grant (Project Fund) N107.2 million; and Loan and Sundries N67.6 million.
The total expenditure under review was N729.7 million, comprising of Non-Pensionable Cost N86.9 million; Overhead Cost N444 million; and Capital Expenditure N198.8 million.
The debt profile for the year under review totalled N186.7 million.
The report stated that the examination of the Departmental Vote Revenue Accounts Book for the year showed that the local government realized an IGR of N98.6 million, compared to the annual internal revenue budget of N128 million.
“Further investigation of sub-heads disclosed Internal Revenue Shortfall totalling N48.9 million recorded under three heads and 13 sub-heads,” said the report.
“Out of the estimated revenue of N95.4 million, a total sum of N46,501,636.96 only was actually collected. This is a 48.7% shortfall contrary to F.M.1:8(2) which states that ‘Seeing that all revenue due to the Local Government is collected promptly and properly and paid promptly into the Local Government Funds.”
The report also stated that an audit inspection of the performance of Revenue Contractors revealed that a colossal amount, such as a N10 million uncollected market stallage fees, expected to be remitted to the Local Government during the period under review was not paid.
“Audit examination of payment vouchers for the period under review revealed payments totalling N906,416.00 was incurred on workshops, training and conferences.
“Audit further observed that the expenditure was devoid of transparency and accountability since credible documentary evidences such as certificates of attendance, hotel accommodation bills and course fees receipts were not attached to the payment vouchers,” the report stated, noting that the penalty for such offence was to surcharge the defaulting officers.
The report further stated that an examination of Deposit Ledger and payment vouchers revealed that the Local Government did not remit the statutory deduction from contract awarded totalling N16.8 million in respect of PAYEE and others to the appropriate agencies.
The report also revealed that the council awarded a N42.8 million contract to DEXTER FORTE LIMITED for the construction of coloured LED Display Solution Screen at Masha Road, Lagos State Water Corporation Junction in Surulere.
“It was agreed that the sum of N12,840,000.00 being 30% of the contract sum be paid as mobilization for the project while the 70% balance payment of the contract sum shall be spread over six(6) months.
“Audit investigation carried out revealed that the sum of N17,847,600.00 has been paid to the contractor…
“However, despite the release of the sum of N17,847,600.00 to the contractor, the project has not taken off since February2011 when the agreement was signed,” the report said, adding that an audit query sent to council requesting an explanation was not responded to.
The report also stated that an examination of the imprest account revealed that a total sum of N2.6 million was paid to the Chairperson between November 2011 and February 2013.
“The following observations were noted: (a) The monthly payments were receipted by the Personal Assistant to the Chairman, Mr. Mukaila Ishola, contrary to F.M 14.8(6) which states that ‘the payee named on the voucher is the person entitled to the payment due.
(b) The imprest was unilaterally increased from N150,000 to N250,000 without appropriate authority as audit was not availed the approval for the increment.
(c) The payment was not transparently accounted for. The identity of the beneficiary could not be ascertained as all efforts to liaise with her proved unsuccessful.”
In the review of the financial statements for the year under scrutiny, the report noted that the Cash flow statement for the year ended 31st December, 2012, presented in the Financial Statements did not show the true cash flow trend of the Local Government.
“The review of the Cash flow Statement revealed that the closing cash and its equivalent figure of N25,146,792.50 differed from the opening cash and its equivalent for the year under review,” said the report.
“The Deposit account balance of N16,880,343.92 shown in the Statement of Asset and liabilities for the year under review could not be certified correct because, a total sum of N67,664,000.00 which was the amount of loan taken was included in the figure.
“Audit revealed that part of the loan has been paid, and that loan should be separately disclosed,” the report added.
PREMIUM TIMES learnt that the audit report and other allegation of graft against the council boss are being investigated by the Economic and Financial Crimes Commission, EFCC.
The officials of Amuwo-Odofin local government were indicted for “unauthorised excess expenditure” running into millions of naira.
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The Executive Council of the Amuwo Odofin local government spent
millions of naira in “spurious expenditure” and non-executed contracts
in the council in 2012, according to official documents seen by PREMIUM
TIMES.The officials of the local government, and those of its offshoot, Oriade Local Council Development Area, LCDA, were indicted for “unauthorised excess expenditure” running into millions of naira.
An audit examination of the books and records of the council for the year ended December 31, 2012, revealed that the local government’s awards of contracts were littered with irregularities.
A report of the Auditor-General for Local Governments on the accounts of the council, made available to PREMIUM TIMES, revealed a series of official graft by the Executive arm of the local government.
Like their counterparts in other local governments, several official queries sent by the Auditor-General to both Ayodele Adewale and Joseph Sanusi, the council bosses of Amuwo Odofin and Oriade local councils respectively, were not responded to, according to the report.
It is not only auditors that have accused Mr. Adewale of graft. In 2010, he was accused by the councillors in his local government of misconduct and maladministration, and was impeached in a unanimous vote.
The impeachment was, however, controversially reversed a few months later on the orders of the Lagos State House of Assembly.
‘Spurious expenditures’ in Amuwo Odofin
During the year under review, the local government generated an internal revenue of N107.4 million (inclusive of LASAA, Wharf Landing and Land Use Charge) while the annual revenue budget amounted to N105 million.
Further investigations of heads and sub-heads by the auditors disclosed Internal Revenue Shortfall totalling N6.3 million recorded under four heads and eleven sub-heads. Out of the estimated revenue of N24.3 million, about N18 million was actually collected.
“This is a 26.04 per cent shortfall which is contrary to F.M. (Financial Memoranda) 1.8(2) which states that ‘seeing that all revenue due to the Local Government is collected promptly and properly and paid promptly into the Local Government Funds,’” the report stated.
The examination of the expenditure records showed a total expenditure of N1.3 billion of the annual budgeted expenditure of N3.84 billion.
“Further investigation of heads by heads showed excess expenditure amounting to N18,235,153 recorded under five heads and five sub-heads,” said the report.
An inspection of the payment vouchers of the local government revealed that payments totalling N41.2 million were expended on various projects whose contracts were fraught with irregularities.
Some of the irregularities included violation of due process, no evidence of registration of the contractors with the local government, tender procedures not adhered to, and performance bond from financial institution registered not produced before mobilisation fees were paid.
“This is contrary to F.M 17.10 which states that ‘except where approval has been given under Financial Memoranda 17.5 all transactions for works, services, materials and stores for ordering supplies at intervals over a period or for current works and services to be undertaking or supplied over a period must go to open tender contract,’” the report revealed.
The report noted that the sanction for the offence include recovery of the amount involved and removal of the officer from the schedule.
A further examination of the council’s books showed that a contractor, Amuwo Sowapo Nigeria Limited (a Revenue Contractor), failed to remit N1.5 million to the local government for the period under review.
Also, the revenue items contracted to Fortress Valley Consulting were not specifically stated.
“Also, books and records being used for the acknowledgment of money received from the contractors were also not made available. Therefore we were unable to examine and ascertain performance of the contractors during the period under review,” the report stated. “Audit examination of revenue books and records revealed that the Local Government failed to bond its revenue officers, which is contrary to F.M. 42.3, which states that ‘The Local Government shall require all staff whose duties involve the handling of Local Government funds are adequately bonded. The Executive Chairman, Council Manager, Council Treasurer, and the Legal Officer should be held liable for any contingent loss of fund arising there from.”
Audit examination of the council’s payment vouchers revealed that it defrayed expenditure for the N13 million for various purposes without proper accountability.
Also, N3.5 million was paid to some council functionaries to enable them defray sundry expenses on behalf of the local government during the year under review.
“It was observed that the expenditure was spurious, lacking transparency and not supported by credible documentary evidences to substantiate. It was extremely difficult for audit to ascertain that the amounts involved were actually expended for the intended purposes,” the report said.
The examination of payment vouchers disclosed that N8.4 million was incurred on the grading of roads. However, an audit inspection of the roads with the Council Engineer revealed that some of the roads were partially graded while some were not graded.
From the deposits ledger and records, N189 million deducted from contracts in respect of withholding Taxes and Value Added Taxes was not remitted to the appropriate agencies.
“No genuine reasons were given for delay in remitting these sums of money,” the auditors noted.
Also, despite repeated demands by the auditors, the council failed to produce for audit 59 payment vouchers amounting to N22.3 million paid and entered into the combined Cashbook.
“It was extremely difficult for audit to ascertain whether the payments were properly authorized, reasonable and judiciously expended,” said the report.
The auditors further noted that the statement of Cash Flow Analysis presented in the council’s Financial Statements did not reflect the true cash flow trend of the local government for the year ended 31st December, 2012.
‘Irreconcilable cash flows’ in Oriade
While the debt profile of Amuwo Odofin local government stood at N457.7 million for the year under review, that of Oriade LCDA totalled N97.5 million.
During the year under review, Oriade LCDA had a revenue budget of N62.6 million but actually collected N89.5 million.
“This showed that the Local Council underestimated her revenue. The Local Council should take this into consideration in the preparation of year 2013 revenue estimate,” the audit report noted.
Audit examination of revenue books of accounts and records revealed that the LCDA contracted commercial motorcycles (Okada) and commercial tricycles (Keke Marwa) to various revenue contractors without valid contractual agreements while record of performance of the franchised revenue contractors was not maintained by the local council.
“In the light of the above, it was extremely difficult for the audit to ascertain whether revenue due was collected promptly and properly paid into the local council’s account.
“Audit query No LGA/INSP/ORLCDA/Q.11/2012/F4 of 6th February, 2013, issued was not responded to,” he report added.
The auditors further examined the deposit ledger and payment vouchers of the council and discovered that N48 million, being deduction levy from various contracts, was not remitted to appropriate agencies.
“No genuine reasons were given for the delay in remitting this amount. The local council should produce evidence of remittance to this office for verification. Audit query No LGA/INSP/ORLCDA/Q.15/2012/F4 of 6th February, 2013, issued was not responded to,” the report said.
According to the auditors, the statement of Cash Flow analysis presented in the financial statements for the year under review showed “irreconcilable” cash flow trends of the local council.
When PREMIUM TIMES visited the Oriade LCDA secretariat, a staff at the Council Treasurer’s office said that the council had already responded to all the queries in the audit report.
“It took me three months to prepare that report,” said the official who declined to say his name. “It’s only the executive chairman that can respond to your questions because it is his name that was written there, unless he directs us to talk.”
Repeated efforts by PREMIUM TIMES to speak with Ibrahim Sanusi, the council boss, were unsuccessful.
Three weeks ago, when PREMIUM TIMES first visited the secretariat, Rosemary Uneanya, the council’s Head of Information Unit, said that Mr. Sanusi had just returned from the All Progressives Congress, APC’s convention in Abuja.
She promised to arrange an interview with Mr. Sanusi. However, subsequent phone calls by PREMIUM TIMES to get an audience with the council boss failed to yield any result.
At the secretariat of Amuwo Odofin local government, Olusegun Ajayi, the Council Manager, said that they had submitted their response to the queries raised in the audit report to the Public Accounts Committee of the Lagos State House of Assembly.
“Public Accounts Committee is the final arbiter. I hope you know that a query is not an indictment,” Mr. Ajayi said. “For example, on the issue of unremitted tax, if we have outstanding taxes from previous governments and we are faced with challenges of fixing roads, we’d fix the road first, and then when we have extra money, we can then pay the outstanding. Also on revenue shortfall, if in January we budget a particular sum, and then Okada is banned, it would affect the revenue coming to the local government. It is only when the Public Accounts Committee releases their report that you can know who is actually guilty,” Mr. Ajayi added.
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