[ii.] That there has been sharing of money among council members.
[iii.] That the sum of N400, 000,000 (Four Hundred Million Naira) was paid to the past president of the Council.
[iv.] That wages, training and IT expenses were overstated.
1.10 Our findings on some of the expense classifications reveal that:
a) There were questionable payments of productivity bonuses to Council members and members of staff.
b) Questionable business travel expenses which were in some instances reclassified to other expense lines;
c) Questionable staff training expenses which were in some instances reclassified to other expense lines:
d) Questionable market development and public enlightenment expenses which were in some instances reclassified to other expense lines;
e) Questionable contracts awarded to companies owned by members of staff (or companies in which members of staff owned shares);
f) Duplication of payments;
g) Purchase of assets by the NSE which either disappeared from the books of ‘the company or were subsequently written off the books under questionable circumstances;
h) The use of funds belonging to the NSE for the personal use/maintenance of staff members and their residences.
1.11 Questionable Transactions (I) The Long Service Award The Long Service Award does not appear as a budget item in 2007 and 2009. The documents reviewed indicate that the Long Service Award (“the Award’) took place in the year 2008. Our review indicates that the sum of N397, 974,573.82 (Three Hundred and Ninety Seven Million, Nine Hundred and Seventy Four Thousand, Five Hundred and Seventy Three Naira and Eighty Two Kobo) was reported as the actual expenditure in respect of the Award.
However, upon reviewing the ledger we observed that contrary to NSE’s report, the sum of N592,974,573.82 (Five Hundred and Ninety Two Million, Nine Hundred and Seventy Four Thousand, Five Hundred and Seventy Three Naira and Eighty Two Kobo) was actually expended prior to reclassification of N195,000,000.00 (One Hundred and Ninety Five Million Naira) to market development expenses. The Corporate Affairs Department of the NSE led by Yinka Idowu was responsible for organizing the Award. Our review also indicates that the sum of N342, 378, 428 (Three Hundred and Forty Two Million, Three Hundred and Seventy Eight Thousand, Four Hundred and Twenty Eight Naira) was received by Candy Floss Limited.
This sum represented the budget of the NSE for the Staff Long Service Award and was paid as sundry expense in respect of the Long Service Award. Our search at the CAC reveals that Candy Floss Limited is owned by Yinka Idowu. Our review further shows the following:
a) That a boat (yacht) shown in the accounts of the NSE to have been purchased for the sum of N37, 000, 000.00 (Thirty Seven Million Naira) for the stock exchange in early 2008 was written off the books at the end of the same year by its allocation to the Long Service Award account as a gift. Currently we have not seen any documentation which shows who was presented with the said boat. Our review of the Award Ceremony documents shows no boat presentation, we enquired from Mr. Fidelis Imiehiakhe and Mr. David Oleka (both of whom attended the ceremony) if there was such a presentation they had no recollection that a boat was awarded during the ceremony. There are however indications (which we are currently investigating) that either Yinka Idowu or the former DG was presented with the boat.
b) That at the beginning of 2008 the NSE expended the sum of N45, 000,000.00 (Forty Five Million Naira) in purchasing 64 Rolex watches for presentation to employees who had served the NSE for 10 years, that later in the same year Candy Floss Limited was given N95, 000,000.00 (Ninety Five Million Naira) for an additional purchase of 91 Rolex watches and subsequently after the award ceremony another 10 Rolex watches at the cost of N46, 000,000.00 (Forty Six Million Naira) were purchased. We observed that the Award Ceremony document shows that only 73 out of the 1 65 Rolex watches purchased were actually presented to the awardees which means that 92 Rolex watches valued at N99, 500,000.00 (Ninety Nine Million, Five Hundred Thousand Naira) are unaccounted for. We further observed that the ‘schedule containing the list of staff members eligible for long service awards only contains 63 names’ suggesting that 10 additional and unauthorized people received presentations.
c) In the same vein Candy Floss Limited was given N100, 000,000.00 (One Hundred Million Naira) for the purchase of 14 cars to be presented to employees who had served the NSE for 25:- 30years, at the same time 3 cars purchased by the NSE in January and March 2008 far the total sum of N59,000,000.00 (Fifty Nine Million Naira) (1 land cruiser jeep purchased for N30,000,000.00 (Thirty Million Naira) and 2 Lexus cars purchased for N29,000,000.00 (Twenty Nine Million Naira) were written off the books at the end of the same year by their allocation to the Long Service Award account as part of the gifts given during the ceremony. However, the Award Ceremony document shows that only 7 people were presented with cars compared to the 14 cars which were to be purchased by Candy Floss Limited and the 3 additional cars written off, meaning that 10 Cars valued at approximately N66, 142,857.00 (Sixty Six Million, One Hundred and Forty Two. Thousand, Eight Hundred and Fifty Seven Naira) are unaccounted for.
d) It was again noted that although Candy Floss Limited was given the sum of N50, 000,000.00 (Fifty Million Naira) for the special presentation to employees who had worked with the NSE far 25 – 30 years, another sum of N55, 000,000.00 (Fifty Five Million Naira) was again disbursed in respect 0f the special presentation which was to include a luxurious jeep and a special gift of the former Director General’s choice. This suggests that there was a duplication of payment and a double purchase of a luxury car for the former Director General’s choice.
e) It was further noted that although Candy Floss Limited was given N6,000,000.00 (Six Million Naira) for the purchase of 20 plasma televisions, only 13 plasma televisions were awarded whilst although Candy Floss Limited was also given N5, 400,000.00 (Five Million, Four Hundred Thousand Naira) for the purchase of 45 deep freezers only 33 were awarded thus 7 televisions and 12 deep freezers valued at N3, 540,000.00 (Three Million, Five Hundred and Forty Thousand Naira Only) are unaccounted for.
f) Also noted is the fact that Articles 52 of the Employee Handbook for Management and Senior Staff as well Article 55 of the Employee Handbook for Junior staff limits the value of gifts/cash that can be given to employees for the long service award. We observed that the gifts awarded/presented far exceeded the value stated in these handbooks.
g) These Articles further stated that these awards should be presented to only members of staff, but we observed that former members of staff were also given awards.
Further investigations to be carried out in respect of the Long Service Award will focus on determining the following among others:
- Whether any payments were made by Candy Floss Limited or its agent/officers to the accounts of officers of NSE including the former D.G, ADG e.t.c.
- Whether the amount received by Candy Floss was justified when compared with the market value of services rendered at the time under reference.
- Whether there was council approval for the purchase and subsequent use of the boat as a long service award gift.
- Whether the writing off of the boat in this manner by the NSE was in contravention of corporate governance principles, the code of conduct in operation at the NSE and/or other rules, regulations or legislation.
- Whether the transaction was in contravention of corporate governance principles, the code of conduct in operation at the NSE and/or other rules, regulations or legislation.
- Whether the 74 Rolex watches were actually purchased by the NSE and if there is any relationship between the NSE and the companies from whom they were allegedly purchased.
- What formed the basis for the amounts spent on purchasing each of the gifts presented?
- Why former staff members were awarded gifts in breach of the provisions of the Staff Handbook.
- Confirm whether the presented items were ever purchased and if they were where they are presently.
- Possible causes of action, if any, against Yinka Idowu and other associated persons
(II) Business Travels Overseas In the year 2007 the reported expenditure for the expense classification, Business Travels Overseas (“BTO”) was N450, 000,000 (Four Hundred and Fifty Million Naira) as against an annual budget of 60, 000,000 (Sixty Million Naira) indicating that the sum of N390, OOO, O0O: 00 i.e. 650% was expended in excess of the annual budget. We were unable to verify the actual expenditure reported for 2007 as we were informed by officers of the IT department that the ledger accounts had not been computerized in 2007.
In the year 2008, the reported expenditure for BTO was stated to be N615, 736,301.62 (Six Hundred and Fifteen Million, Seven Hundred and Thirty Six Thousand, Three Hundred and One Naira, Sixty Two Kobo) after reclassification. Our investigations reveal that the total sum expended on BTO in 2008 prior to reclassification was, N 1, 900,000,000 (One Billion and Nine Hundred Million Naira). The sum =N=l, 300,000,000 (One Billion and Three Hundred Million Naira) was reclassified under different expense description/classes. For instance, the sum of N953, OOO, OOO (Nine Hundred and Fifty Three Million Naira) was moved to the expense classification “Software Upgrade” and immediately expensed as opposed to being capitalized.
In the year 2009 the reported expenditure for BTO was stated to be N297, 000,000.00 (Two Hundred and Ninety Seven Million) after reclassification as against the actual budget of N321, 000,000.00 (Three Hundred and twenty One Million). Our investigations reveal that the total sum expended on BTO in that year prior to reclassification was N782, 135,835.40 (Seven Hundred and Eighty Two Million, One Hundred and Thirty Five Thousand, Eight Hundred and Thirty Five Naira, Forty Kobo) The sum of N485, 034,833.74 (Four Hundred and Eighty Five, Thirty Four Thousand, Eight Hundred and Thirty Three Naira, Seventy Four Kobo) was reclassified under different expense heads.
One of the questionable transactions we observed in the 2008 ledger was that the lump sum of N65,670,360.00 (Sixty Five Million, Six Hundred and Seventy Thousand, Three Hundred and Sixty Naira) was paid out from NSE’s First Bank of Nigeria account on two separate occasions but in respect of the same purpose. The first disbursement was made on 29 April 2008 while the second disbursement was made on 14 May 2008. Upon reviewing the documentation in support of the two disbursements we noted the following:
- The disbursement of 29 April 2008 was approved by only the ADG while ‘”that of 14 May 2008 was approved by the DG alone. Our inquiries reveal that although each disbursement may have been approved by only one of the two approving authorities, it would have been impossible to issue a cheque in respect of either payment without the signature of both the DG and ADG on the cheque. Our inquiries also suggest that at the time of signing the cheques, each of the signatories would have had the opportunity of sighting/reviewing documents supporting the request for payment.
- The disbursements were in respect of the same event i.e. an international road show held between June 22 and 3 July 2008.
- The internal memoranda by which the request for each of the disbursement was made was issued by the same person – Yinka Idowu.
- The same staff members were listed as attendees on both occasions.
(v) While the first disbursement was supported by handwritten document detailing the sums to be paid out to each attendee of the road show, the second disbursement was only supported by a photocopy of the initial documents used to support the first disbursement. We intend to conduct an interview with one of those nominated to attend the international road show and with the officer that was responsible for collecting and disbursing the funds on one occasion. The immediate steps which we intend to take in further investigation of this transaction are to schedule an interview with Yinka Idowu and conduct a search on her accounts.
(III) Maintenance of Staff Quarters In the year 2007, the reported expenditure for Maintenance of Staff Quarters (“MSQ”) was N 127, 000,000.00 (One Hundred and Twenty Seven Million Naira) as against an annual budget of N126, 000,000.00 (One Hundred and Twenty Six Million Naira) indicating that the sum expended was N1, 000,000.00 (One Million Naira) below the annual budget. We were unable to verify the actual expenditure reported under the expense classification in 2007 for the same reason stated in respect of the BTO in 2007.
In the year 2008 the reported expenditure for MSQ was reported to be N239,521,403.16 (Two Hundred and Thirty Nine Million, Five Hundred and Twenty One Thousand, Four Hundred and Three Naira, Sixteen Kobo). In the year 2009, the reported expenditure for MSQ was stated as N70,781,874.79 (Seventy Million, Seven Hundred and Eighty One Thousand, Eight Hundred and Seventy Four Naira, Seventy Nine Kobo) after reclassification as against the actual budget of N 113,000,000 (One Hundred and Thirty Million Naira) suggesting that actual expenses were N39,000,000 (Thirty Nine Million Naira) below budget.
Our investigations reveal that the total sum expended on Maintenance of Staff Quarters in that year prior to reclassification was N 135, 067,773.39 (One Hundred and Thirty Five Million, Sixty Seven Thousand, Seven Hundred and Seventy Three Naira, Thirty Nine Kobo), the sum of N64,285,898.60 (Sixty Four Million, Two Hundred and Eighty Five Thousand, Eight Hundred and Ninety Eight Naira, Sixty Kobo) was reclassified under different expense heads. For instance, the sum of N45, 250,000.00 (Forty Five Million, Two Hundred and Fifty Thousand Naira) was reclassified to website hosting expenses ledger. We have conducted a detailed review of major expense items under the MSQ Nigeria Stock Exchange Status Update/Report ledger for the years 2008 to 2009.
We have also conducted an oral interview with an officer of the NSE in respect of this ledger account. Our inquiries to date reveal the following:
- Contrary to the title of this ledger, expenses recorded in this ledger relate to private residences of the DG, ADG and senior management;
- Sometimes, the expenses (especially in respect of diesel supplies) were for houses of persons who were not officers of the NSE. Several supplies were made to houses of former staff of the NSE.
- The sums expended and recorded in this ledger were not deducted from the allowances due to the DG or ADG or other staff members on behalf of whom the expenses were incurred.
- The alleged justification for these purchases is that in the DG’s remuneration package, utility is “FREE”. It is however questionable whether the expenses incurred can be classified as Utility.
(i) In the month of January 2008, diesel expense under this expense classification was in the sum N 10, 433,000.00 (Ten Million Four hundred and Thirty Three Thousand Naira). During one of the interviews conducted, we were informed that the diesel expenses in respect of the NSE building are not recorded in this ledger and that the ledger only contains supplies made to private residences. There is nothing in the NSE records so far reviewed that indicate the actual residences to which the supplies were made. We have requested to speak with the person contracted by the NSE to supply diesel to these “quarters”;
(ii) In the same month, the sum of N2, 200,000.00 (Two Million Two Hundred Thousand Naira) was spent- 01.1 purchasing a glass cabinet for the quarters. We sighted an invoice in respect of this expenditure indicating that the kitchen cabinet purchased was for the DG’s house. A treadmill was bought at the cost of N347, 500.00 (Three Hundred and Forty Seven Thousand Five Hundred Naira) from Mega Plaza and we sighted the invoice to this effect and same was authorised by the DG.
(iii) In February 2008 the ledger reveals that personal items such as duvets, bathroom accessories were purchased on this account and in March 2008 the sums of N3, 300,000 (Three Million, Three Hundred Thousand Naira) and N2, 513,140 (Two Million Five Hundred and Thirteen Thousand One Hundred and Forty Naira) were expended on the purchase of furniture from Heroes Furniture and Leatherworld respectively. We were furnished with the invoices for the expenditure but we have not been able to confirm who the furniture was purchased for or if they were delivered.
(iv) In April 2008, an additional sum of N25, 000,000.00 (Twenty Five Million Naira) was spent on furniture for the “quarters”. There are no documents to support this expense. A Generator was also purchased for the sum of N5,040,000.00 (Five Million and Forty Thousand Naira). We sighted an invoice issued by the Company that supplied the generator (“Etco”). The invoice reveals that the generator was purchased for the residence of the Assistant Director-General (“ADG”). Diesel purchases for the “quarters” in the month of April totalled N4, 771,500.00 (Four Million Seven Hundred and Seventy One Thousand and Five Hundred Naira).
(v) In the month of June, Mercilia Limited was paid the sum of N2, 063,375.00 (Two Million, Six Three Thousand, Three Hundred and Seventy Five Naira) for the renovation of the ADG’s house in Omole Phase II. In the same month, Mercilia Limited supplied the ADG’s new 81 KVA generator for the sum of N3, 861,600.00 (Three Million Eight Hundred and Sixty One Thousand Six Hundred Naira). There is however no indication of where the generator was supplied and installed. Mercilia Limited was again paid the sum of N2, 388,360.00 (Two Million Three Hundred and Eighty Eight Thousand Three Hundred and Sixty Naira) for the renovation of a building. However, the description and ownership of the building in respect of which the renovation was made is not yet known. Furthermore, certain items were purchased from Adam and Eve to the tune of N2, 087,400.00 (Two Million and Eighty Seven Thousand Four Hundred Naira). These items include beddings, toilet items and window blinds.
(vi) In the month of November 2008, Mercelia Limited was paid the sum N5,440,320.00 (Five Million Four Hundred and Forty Thousand Three Hundred and Twenty Naira) for the “electrical installation and repair of generator”.
(vii) In the month of December, Adam and Eve was paid a total of N7,300,230.00 (Seven Million Three Hundred Thousand Two Hundred and Thirty Naira). We sighted the invoice for purchases totaling this amount. The invoices relate to household items and were approved by the DG. We also sighted an invoice from Liiyaz Qee Ventures for the sale of Panasonic air conditioner for the sum of N8, 500,000.00 (Eight Million Five Hundred Thousand Naira}. We have not been able to verify where this air conditioner was supplied.Overall, we note that Mercilia Limited featured prominently in expenses relating to this MSQ ledger. We are currently conducting a search on the said Company at the CAC and will also review movements to and from its accounts. Further investigations will focus on ascertaining the actual persons to whom these items were delivered, where not already ascertained.
(IV) Staff Training In the year 2007, the reported expenditure on staff training was N463, 000,000.00 (Four Hundred and Sixty Three Million Naira) as against a budget of N80, 000,000.00 (Eighty Million Naira) indicating that the sum of N383, 000,000.00 (Three Hundred and Eighty Three Million Naira) was expended in excess of the annual budget. We have not been able to verify the actual expenditure stated for 2007 for the same reason stated above. In the year 2008, the reported expenditure for staff training was stated to be N523, 864, 125.30 (Five Hundred and Twenty Three Million, Eight Hundred and Sixty Four Thousand, One Hundred and Twenty Five Naira, Thirty Kobo) after reclassification as against the actual budget of N 123,864, 165.30 indicating that the sum of N400, OOO, OOO.00 was expended in excess of budget.
In the year 2009 the reported expenditure for staff training was stated to be N283, 000,000.00 (Two Hundred and Eighty Three Million Naira) after reclassification as against the actual budget of N212,000,000.00 indicating that the sum of N71,000,000.00 was expended above budget. We have reviewed all staff training expenses above the sum of N5,000,000.00 (Five Million Naira) within the year 2007 to date. Some of these expenses include the following: (l) ASEA Exeo MEETING: In a memo dated 5 February 2009, captioned “Re ASEA Exco Meeting” the following people were proposed as delegates to attend the ASEA Exco Meeting scheduled to take place in Cairo, Egypt on 23-24 March 2009: Prof Ndi Okereke Onyuike, Mr. Musa Elakama; Mrs. Yinka Idowu and Mr. Farooq Oreagba.
The following endorsements were made on the memo as representing expenses for the trip: DG/CEO – R/Ticket $10,500 - Estacode $10.000 - Warm clothing – $5,000 ADG – R/Ticket $10,500 - Estacode $8,000 - Warm clothing – $3,000 Rate of conversion used was N155 to $1 Total expenditure for this trip was N11, 687,000.00 (Eleven Million Six Hundred and Eighty Seven Thousand Naira). The sum for the return ticket for the delegates appears to be high especially in view of the fact that it was in respect of a trip to Cairo.
Source:http://www.galaxytvonline.com/
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