FCT judicial committee flouted procurement law, financial regulations in N866.5m contract awards – Audit report

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The latest federal audit has revealed a series of infractions by the Judicial Service Committee of the Federal Capital Territory (FCT JSC), Abuja, in awarding contracts worth about N866.5 million in 2023.

The report revealed the FCT JSC’s rampant disregard for procurement law, financial regulations and federal government’s policy directives.

According to the just released 2024 report of the Office of the Auditor-General of the Federation (OAuGF), the infractions stemmed from weaknesses in the judicial committee’s internal control system.

In some instances, the auditor general found no evidence of work done for the payments the FCT JSC made to contractors. In other cases, there were no documents to show that the committee awarded contracts to qualified contractors.

According to the report, many of the flagged infractions possibly resulted in the loss or diversion of public funds channelled into the contracts.

The FCT JSC is an institution of the judiciary established by the Nigerian constitution, to oversee judicial appointments, promotion, and discipline, as well as safeguard both the independence of the judiciary and the administration of justice in FCT courts.

One of its key responsibilities is recommending qualified lawyers for appointment to the bench, after conducting, what it called, rigorous evaluation of professional qualifications and experience, background and integrity checks, and consultation with relevant stakeholders.

The body, which its equivalent exists across Nigeria’s 36 states and at the federal level as the Federal Judicial Service Commission, is also mandated to ensure “high standards of ethical conduct and professional integrity.”

But the new 2024 audit report on the 2023 finances of federal ministries, departments and agencies revealed that the FCT JSC, statutorily chaired by the Chief Judge of the FCT High Court and run day-to-day by an executive secretary, hardly played by the rules in a series of contract awards. Justice Husseini Baba-Yusuf, the incumbent chief judge of the FCT High Court and chair of the FCT JSC, has served in those roles since 2021.

The audit report identified five contracts aggregately worth N866.5 million with their litany of issues and the risks they pose to public funds.

The issues include award of a contract worth N302.3 million to non-accredited local manufacturers or assemblers, irregularities in the award of contracts valued at N192.1 million, and infractions in the award of renovation contracts worth N174.2 million.

The two other issues are award of N144.2 million worth of contract and payment to inactive companies without due diligence and splitting of N57.3 million contracts to circumvent procurement/ approval threshold.

The queried contracts summed up to N866.5 million in monetary value. The auditor general’said their handlings by the JSC raised concerns of possible supply of substandard products, diversion of public funds, loss of public funds, award of contracts to unqualified contractors, possible insider dealing and payments for fictitious transactions.

Meanwhile, this amount does not include the N112.6 million in salary vouchers flagged by the audit report as the sixth issue uncovered in the JSC’s financial records for 2023.

All told, the N866.5 million in questionable contract disbursements, coupled with N112.6 million in queried payroll entries, brings the total unaccounted sum at the FCT JSC to roughly N979.1 million for 2023.

The report, titled Annual Report on Non-Compliance/Internal Control Weaknesses in Ministries, Departments and Agencies of the Federal Government of Nigeria for 2024, was submitted by Auditor-General of the Federation (AuGF) Shaakaa Chira to the National Assembly on 17 July.

Volume II of the report covers a section on judiciary institutions, presenting findings on the infractions by the JSC of the FCT for the period between 1 January and 31 December 2023. The Code of Conduct Tribunal is the only other body whose infractions for the year under reference were captured in the section.

The report revealed that the FCT JSC failed to respond to queries on the issues raised.

The audit report flagged a purchase of “motor vehicle” for N302.3 million by the JSC in 2023. The type or the make of the vehicle was not disclosed in the report.

However, it revealed that the committee procured and made payment for the supply of the motor vehicle to contractors “who were not among the list of accredited local manufacturers/assemblers in Nigeria for the procurement of federal government vehicles.”

This action, according to the report, flouted the provisions of the Financial Regulations 2009 and “does not encourage local manufacturer/industrialisation in Nigeria.”

Paragraph 2305 of the Financial Regulations (2009) referenced in the report states, “As much as it is practicable, goods must be purchased from reputable manufacturers or their accredited agents. When goods are obtained through an agent, the procuring officer will satisfy himself that the goods are authentic.”

The report added that JSC’s action infringed on paragraph 1 of the Executive Order No. 3 (2017) which states, “All Ministries Department and Agencies (MDAs) of the FGN shall grant preference to local manufacturers of goods and service providers in their procurement of goods and services.”

It similarly cited paragraph 1 of the Establishment Circular Ref. No. NADDC.NAIDP/S.137/1/36 dated 17 March 2023, which provided an updated list of accredited local manufacturers/assemblers in Nigeria, for the procurement of federal government vehicles.

The report regarded the flouting of the financial regulations and policy documents as “anomalies” that possibly arose from the “weaknesses in the internal control system” at the JSC of the FCT.

These, according to the report, exposed the government to the risks of “supply of sub-standard vehicles” and “diversion of public funds.”

The report also revealed a payment of over N192 million to companies without supporting documents showing the contractors’ qualifications.

The report found that seven vouchers totalling over N192 million were raised and the money was paid in favour of different companies for the provision of services and supply of goods to the JSC.

But the JSC failed to present any documentary evidence such as tax clearance certificate, Corporate Affairs Commission (CAC) certificate of registration, PenCom certificate, Industrial Training Fund certificate, Nigeria Social Industrial Trust Fund certificate, among others, to show that the contractors were qualified bidders.

This lack of compliance, according to the audit report, contravenes Section 16(7) of the Public Procurement Act 2007, which states that “The procuring entity may require a bidder to provide documentary evidence or other information it considers necessary as proof that the bidder is qualified in accordance with this Act and the solicitation documents and for this purpose any such requirements shall apply equally to all bidders.”

Also according to the report, the contractors’ files lacked information about the contractors, pictorial evidence of the work done, or proof that the contractors had been filing their annual tax returns with the Federal Inland Revenue Service (now the National Revenue Service) and that “the company was inactive on the CAC dashboard.”

The committee, by its actions or omissions, the audit report said, violated section 24(1) of the Public Procurement Act 2007 and paragraph 2907 (i) of the Financial Regulations.

Section 24(1) of the Public Procurement Act provides that “Except as provided by this Act, all procurements of goods and works by all procuring entities shall be by way of open competitive bidding.”

Paragraph 2907(i) of the Financial Regulations (FR) (2009), which the audit report said the JSC also flouted, states, “To ensure transparency and accountability, achievement of value for money, economy and efficiency, and equity and fairness, all procurements falling within the Bureau’s thresholds shall be by way of Open Competitive Bidding.”

The report again attributed the anomalies to weaknesses in the internal control system at the JSC.

It added that these pose the risks possible of insider dealing – using internal information to unfairly win public contracts. It also said the funds meant for the contracts could be diverted.

Award of N144 million to companies with inactive CAC and FIRS status

The report also flagged the JSC’s contracts worth over N144 million awarded to eight companies with inactive status on both CAC and FIRS portals.

This violates Section 16(5) and (6) of the PPA, which stipulate that “A supplier, contractor or service provider may be a natural person, a legal person or a combination of the two….”

The audit report also referenced Section 16(6) of the PPA (2007) states, “All bidders in addition to requirements contained in any solicitation documents shall (b) possess the legal capacity to enter into the procurement contract: (c) not be in receivership, the subject of any form of insolvency or bankruptcy proceedings or the subject of any form of winding up petition proceedings; (d) not have fulfilled all its obligations to pay taxes, pensions and social security contributions.”

The auditor general said the infractions, attributable to weak internal control, posed the risk of loss of public funds and diversion of public funds.

The audit also found that the JSC unduly split a N53.6 million worth contract for the supply of computers and laptops into six units.

It observed that the contract was for the supply of the same products and ought to have been awarded as a single contract, but was rather split into six at a price that fell within the approval threshold of the executive secretary.

It added that all six smaller contracts were awarded about the same period in 2023, pointing out that the splitting enabled the secretary to circumvent tenders’ procedures.

Also, the JSC failed to provide documents showing the distribution of the computers/laptops, records of officers to whom they were issued, and details of their respective locations or user departments.

Section 20(2) of the PPA cited as a legal provision the transactions breached, states, “The accounting officer of every procuring entity shall have overall responsibility for the planning of, organisation of tenders, evaluation of tenders and execution of all procurements and in particular shall be responsible for… (e) ensuring that no reduction of values or splitting of procurements is carried out such as to evade the use of the appropriate procurement method.”

The report said the “anomalies could be attributed to weaknesses in the internal control system.”

It added that these transactions posed the risks of payments for “fictitious transactions” and diversion of public funds.

The report also faulted the committee for failing to present 93 salary vouchers totalling over N112.6 million, creating the risk of payments to non-existent staff members and a contravention of paragraph 601 of the Financial Regulations.

This provision mandates that “All payment entries in the cash book/accounts shall be vouched for on one of the prescribed treasury forms. Vouchers shall be made out in favour of the person or persons to whom the money is actually due. Under no circumstances shall a cheque be raised or cash paid for services for which a voucher has not been raised.”

According to the audit report, the committee failed to respond to queries on any of the six infractions.

Therefore, the auditor general recommended that the Secretary of the FCT JSC, Omolola Akindele, account for all the funds, recover and remit them to the treasury and forward the evidence to the Public Accounts Committees of the National Assembly.

Failure to comply attracts sanctions, the report stated.

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