Audit Report says N1.9 trillion was diverted from Abia under Ex-Gov. Ikpeazu

A  forensic audit report by KPMG International Nigeria Limited has revealed that a total of N1.9 trillion (N1, 959, 011,334,397) was illegally taken away from the treasury of the Abia State Government under the administration of the immediate past governor of Abia State, Okezie Ikpeazu.

The objective of the audit exercise was apparently to investigate alleged looting of the Abia Government’s resources by the Okezie Ikpeazu administration, according to a report by PREMIUM TIMES.

The administration of the incumbent Governor of the south-eastern state, Alex Otti, contracted the firm to carry out the audit of the state government’s finances between 29 May 2015 and 28 May 2023.

It covered the period Mr Ikpeazu served as governor of the state, under the platform of the Peoples Democratic Party.

Mr Otti was elected Abia governor on 22 March 2023 under the Labour Party ticket. He took office on 29 May of the same year.

Methodology

The 359-page forensic audit report, titled Final Report: Provision of Process Review Services to Abia State Government, was obtained by PREMIUM TIMES a few days after its release.

This newspaper summed all funds allegedly earmarked for projects or taken from the state government’s accounts without due process within the period under the review as indicated in the report.

The report showed that, of the 35 licenced banks in Nigeria, the Abia state government maintained 78 bank accounts in 14 commercial banks in the country within the same period with a “net credit balance of N3,495, 207, 127.14 as of 28 May 2023.”

Some of the funds taken or used without due process included contract funds allocated to non-existent projects, loans released without stated purpose, legally released, but non-utilised credit facilities, un-remitted Internally-Generated Revenue (IGR) due to the state and illegal deductions from the IGR.

Others included payments made before approval, funds allocated to awarded contracts without records of “competitive bids” and funds allocated or withdrawn “without supporting documents and payment vouchers” as well as payment instruction.

Among the figures tallied by PREMIUM TIMES were funds allocated to projects with alleged non-compliance to contractors’ selection process and withdrawals from the state government’s bank accounts, with payment mandates signed by only signatory in at least 132 instances.

The report said the alleged illegal activities violated various sections of the state laws and government’s mandates, including the Abia State Public Procurement Law 2012 and the Abia State Financial Regulations (as amended in 2001).

This N1.9 trillion allegedly taken or allocated without due process does not include values of assets and properties of the state government such as lands, which, according to the report, were allocated to various individuals illegally.

More findings about Abia money

The report said the Abia State Government awarded a total of 560 contracts to 231 contractors during the period under review with a cumulative contract value of N294.8 billion, although there was insufficient information on the values of 40 of the contracts.

The report further revealed that N10 billion of the funds were paid to Ferotex on 25 September 2020 for the “Construction of Abia State Airport,” which was not constructed.

Meanwhile, before the release of the audit report, Governor Otti and his predecessor, Mr Ikpeazu, were engaged in war of words over the governor’s allegation that his predecessor diverted the N10 billion which was earmarked for the construction of the airport in the state.

Mr Otti said he obtained the information from the forensic audit report.

Ikpeazu’s reaction

Mr Ikpeazu, in his first response, through his former commissioner for information, John Kalu, denied the allegation, explaining that the N10 billion originally budgeted for the airport project was re-channeled into other projects following the approval of the then State Executive Council.

The former Abia governor, in another response via a video clip forwarded to PREMIUM TIMES, said, just like his former commissioner, that the funds were rechanneled into road projects in the state after the airport project was suspended.

“Today, when people talk about money for the airport (project), I think they are questioning my decision to change my mind and I have right at that time as governor to say, ‘I don’t want this airport now,’” Mr Ikpeazu said.

He explained that he decided to re-channel the funds for construction of the airport into road projects because there were no good roads that air passengers landing in the state would have used.

“I am happy that today, I finished Eziukwu Road from that (airport) fund. I finished Faulks Road from that fund. Ngwa Road is okay, Osusu Road is okay. So today, you can connect Ariaria (Market) through Osusu Road to Eziukwu Market and connect Eziukwu Market to Ngwa Road Market.

“So, I succeeded in interconnecting all the markets courtesy of that fund which we were supposed to deploy for the airport and (I) thank God we took that decision because if we had gone ahead with that, N10 billion wouldn’t have done an airport. So, I assure you no dime of that money was diverted,” he said.

The former governor said, contrary to his successor’s claim, the funds were paid to over 20 contractors for the various projects, not 32 companies.

He said his administration had published details of how the funds were transferred to the contractors, stressing that he expected the new administration to follow “trail” of the transactions to be sure if the funds were diverted.

“If they follow the trail of that N10 billion…It will be clear that Faulks Road was done by my government from that fund, Eziukwu Road was done, Ejike Lane was done, Milverton was done, Afor Ibeji in Ubakala was done.”

Reaction 

PREMIUM TIMES contacted Mr Ikpeazu’s former commissioner for information, Mr Kalu, to respond to some findings in the audit report such as the alleged allocation of funds to non-existent projects, unauthorised payments, withdrawals and credit facilities not utilised for what they were meant for.

Mr Kalu stressed that, contrary to claims by Mr Otti, what was carried out by the KPMG was financial process review only, not a forensic audit report. He said that the document also contains caveats, including the fact that there were documents they could not access at the time of the review.

The former commissioner said some claims in the report, such as the alleged award of contract without approval, raise questions.

“What KPMG did in that review was simply to lift off all documents they found wherever without checking to do the forensic side which simply involves following the money trail. A proper forensic audit will follow the money trail to the last person who got any dime,” he said.

“If a contract was awarded without approval, as claimed, you also need to find out if the same contract was funded. Where there is funding, then you are wasting readers’ time with an attempt at witch-hunting,” Mr Kalu added.

What we will do with our findings — Abia Govt.

Meanwhile, the Commissioner for Information in Abia State, Okey Kanu, told PREMIUM TIMES that the state government has handed over a copy of the report to the Economic and Financial Crimes Commission (EFCC) for a possible prosecution.

“From all indications, some of the persons who were mentioned in that report have been invited for questioning. So, it is after further investigations or questioning by the anti-graft agency (to determine) if these persons are actually found guilty of any form of financial malfeasance,  then they will be prosecuted by the EFCC,” Mr Kanu said.

The information commissioner said the EFCC commended Governor Otti for ordering the conduct of the audit and that the report has made their (EFCC) job easier.