Finance Ministry probes illegal spending by MDAs


Startling revelations of illegal spending by Ministries, Department and Agencies, MDAs, of tax deductions from contract payments and other deals may have stalled government’s planned closure of the bank accounts of revenue collection agencies.
Investigations by National Mirror confirmed that the Federal Ministry of Finance could not carry out its earlier threat to close some agencies’ bank accounts following discoveries that some MDAs were found to have dipped their hands into fund accruing from deductions from contract payments.
The law requires that the money should be paid to the accounts of the revenue collection agencies for onward remittance to the Consolidated Revenue Fund, CRF.
The key collection agencies are the Federal Inland Revenue Service, FIRS, and the Nigeria Customs Service apart from scores of others that have come under the scrutiny of the finance ministry.
A source familiar with the situation confirmed that the finding that some MDAs were using some of the deductions, including Withholding Tax deductions, to run their entities has angered the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, who has directed an investigation into such deductions in the MDAs with a view to determining the total amount due for remittance by the revenue collection agencies to the fund.
“What has been discovered is that some MDAs even failed to pay what was deducted from payment to contractors like the WHT to the accounts of the revenue agencies.
“Rather, some of them claimed they were constrained to use such deductions to meet urgent financial obligations.
“This is contrary to financial rules of the public service but I don’t know what could happen to the affected agencies. This abuse of due process has constrained the ministry (finance) from going on with the planned closure of revenue agencies’ bank accounts as earlier planned. This is not to say there is any fraud, it is a form of misappropriation,” the source confirmed.
An official in one of the revenue agencies, who did not want his name mentioned, told National Mirror that none of her agency’s bank accounts was closed as at the weekend, adding that “there is no way we can collect revenue without remitting to the banks under the current regime when every payment is being monitored at different stages of our collection processes electronically.”
It was also gathered that rather than pay the spent monies to the revenue collection agencies’ accounts when they receive monthly allocations, some of the chieftains of the MDAs plead for more time on the pretext that what they collected monthly was hardly enough to meet their financial obligations.
Some were said to hold on to such WHT or other deductions for up to three months, making it practically impossible for revenue generating agencies to remit such payments as and when due.
It will be recalled that the Federal Government had about six weeks ago threatened to sanction some revenue agencies generating independent funds to the CRF for failure to remit their collections after several attempts to make them comply had failed.
In order to compel the affected agencies to comply with the existing rules on such remittances, government had set a deadline of Monday, June 17 for their sanctions which may affect their collaborator banks after which they may be prosecuted.
Okonjo-Iweala, had in a statement she signed personally, said such a flagrant disregard of existing revenue collection laws and rules was a conspiracy against national interest which would no longer be condoned.
Specifically, she disclosed that about N58bn which should have been remitted to the CRF are still trapped in the revenue agencies’ accounts in some banks even as several attempts by the government to secure the remittance into the Federal Government coffers were rebuffed by the agencies.
Okonjo-Iweala said: “It has come to the attention of the Federal Ministry of Finance that some Federal Government’s agencies that generate independent revenue, in collusion with some banks, have refused to remit monies to the Consolidated Revenue Fund, CRF, of the Federal Government which they are obliged by law to do.
“We have identified about N58bn of such monies which rightfully belongs in the CRF.
“This unwholesome practice has persisted despite the efforts of the Office of the Accountant- General of the Federation, OAGF, to encourage the agencies and the affected banks to do the right thing.
“Rather than comply, the agencies and banks, through their lawyers, have engaged in all manner of legal subterfuges to ensure that monies which are due to the Federal Government are not remitted.”
She, therefore, declared that effective Monday, June 17, 2013, the OAGF, in exercise of its powers under the extant laws and rules, will close the accounts of agencies involved in this practice in all banks.
The minister noted that the process of systematic closure of the agencies’ accounts in the banks would continue until all monies that should have been remitted into the CRF were retrieved.
It will also be recalled that the Director-General of the Budget Office, Dr. Bright Okogu, had in a document entitled, ‘FGN 2013 budget: Fiscal consolidation with inclusive growth,’ made available to the public in April identified non-remittance of collections by the revenue agencies as one of the challenges threatening the implementation of the 2013 budget.

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