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 Accountant General of the Federation, Mr. Jonah Ogunniyi Otunla



* States boycott FAAC meeting over unpaid arrears

By Kunle Aderinokun, Obinna Chima, Ndubuisi Francis and  James Emejo


The federal government Thursday ordered the closure of bank accounts of errant government agencies that have failed to remit their revenues to the Consolidated Revenue Fund (CRF) of the federation as stipulated by section 80 of the 1999 Constitution, as amended.

It has therefore directed the Accountant General of the Federation, Mr. Jonah Ogunniyi Otunla, to close the bank accounts of the affected agencies by Monday.

Also Thursday, the Forum of Commissioners of Finance of Nigeria (FCFN), which has representatives from the 36 states of the federation, stormed out of the monthly meeting of the Federation Accounts Allocation Committee (FAAC), which was conveyed to share the federally collected revenue for May over allegations of unpaid arrears amounting to about N160 billion.

A statement Thursday by the Coordinating Minister for the Economy and Minister of Finance, Dr. Ngozi Okonjo-Iweala, put the outstanding revenue not in the CRF net at N58 billion, adding that the closure order was necessary to promote accountability in the system.

The statement was however silent on the errant agencies.

Okonjo-Iweala condemned the fact that the agencies had been conspiring with some banks not to remit the stipulated funds into the CRF, which they were obliged by law to do.
The Fiscal Responsibility Act, 2007 (FRA) states that each corporation shall establish a general reserve fund and shall allocate thereto at the end of each financial year, one-fifth of its operating surplus for the year.

The Act also requires that the balance of the operating surplus shall be paid into the CRF not later than one month following the statutory deadline for publishing each corporation’s accounts.

The minister said: “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.”

The minister pointed out that the objective of the act, which she stressed was against the national interest, was clearly to keep government monies indefinitely in accounts earning interest for individuals at the expense of the federal government and Nigerians.

“This is totally unacceptable and the Federal Ministry of Finance is determined that this practice must end forthwith.  Starting 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.

“This process of systematic closure will continue until all monies that should be in the CRF are retrieved,” she added.
When contacted on the development, Otunla, who declined to list the affected agencies, said virtually all the banks were involved.

Speaking in a telephone interview with THISDAY, the AGF said:  “I think we have been a bit lenient with agencies in terms of remitting their revenues to us. The FRA 2007 states that they should remit 80 per cent of their operating expenses to the CRF, but they have been frustrating us by always escalating their expenditure and reducing their operating expenses.

“So we wrote the banks where they kept these monies and we found out that most of these monies were kept in fixed deposits. So that is not acceptable and by Monday, we are going to close down those that fail to comply.”

According to him, such unwholesome practices would frustrate the Single Treasury Account that was adopted to consolidate the federal government revenues.

A report of an investigation conducted by the House of Representatives Committee on Finance last quarter had earlier shown that some agencies failed to remit their revenues to the CRF.

The lawmakers had last November directed its Committee on Finance to investigate independent revenue generation and remittances by federal government agencies.

The House has indicted about 60 government agencies, including the Nigerian National Petroleum Corporation (NNPC), Central Bank of Nigeria (CBN) and Nigeria Ports Authority (NPA) over non-remittances of revenues.

Meanwhile, representatives of the 36 states of the federation yesterday boycotted the FAAC meeting over alleged unpaid arrears amounting to N160 billion.

The finance commissioners’ forum said their resolve to boycott the plenary session of the committee followed the non-implementation of the previous decisions or resolutions taken in most of its meetings.

It argued that the FAAC plenary session, particularly in May, was inconclusive because the arrears of February had not yet been paid, while there was no clue on when it would be disbursed to states.

Chairman of FCFN, Mr. Eze Echesi, alongside his colleagues from other states told reporters Thursday in Abuja that the reason for the boycott was to take “this message to the state governors so that they will put heads together to meet with the president (Jonathan) and every other well-meaning entities of the federation so that these problems will be resolved once and for all”.

The commissioners said the delay in disbursing the arrears had caused hiccups in fund flow of the states and their local governments resulting in their inability to pay contractors and take care of workers.

Ezechi said the augmentation which had been passed “by our resolution last month is not paid and no clue as per the payable period”.

“Even this month, based on returns we have from our respective and collective accountants general of the states, it appears to be rather shabbier than the previous ones.

“We have taken a lot of disappointments from the administration of FAAC, which by all intent and purpose, had become to a great extent, very ineptitude. 

“The essence of this press conference is to tell the world, the federation especially and our respective citizens from local governments and states the reason behind our boycotting the FAAC session,” he said.

THISDAY gathered that the alleged arrears might have arisen from the differences between the 2012 and 2013 benchmark for distribution.

It was further learnt that the federal government had been wary of making deductions from the Excess Crude Account (ECA) to offset the arrears as that could further deplete the account.

THISDAY’s attempt to have the Minister of State for Finance, Alhaji Yerima Ngama, react to the boycott did not yield result as neither the minister nor his media adviser would answer calls put through to their mobile phones.

“We defer to the president of the Federal Republic of Nigeria with every respect but the situation has gone to the extent that he and the governors must hear what has been happening and which we have been hiding. It is our unanimous resolution and decision,” the chairman added.