Ministry of Niger Delta Perm Sec Caught Red-Handed in N482M Contract Fraud

Secrets Reporters

A financial audit has unearthed a significant “duplication of contract” within the Federal Ministry of Niger Delta, leading to a potential loss of over ₦482 million in public funds. The report, which was obtained by SecretsReporters, casts a shadow over the ministry’s financial management and raises questions about its internal control systems. The audit findings center on two separate contracts for the rehabilitation of the same road in Edo State.

The document highlights the two contracts awarded for the 5.5km Idota-Iyora Road in Estako West. The first contract, awarded on April 29, 2021, to M/S Kelasco Resources Nig Ltd, was valued at ₦279,999,997.55. According to the ministry’s management, this was a remedial works contract to “urgently address critical conditions of the road.”

Less than a year later, on February 3, 2022, a second contract for the “complete rehabilitation and construction” of the entire 5.5km road was awarded to the very same company, M/S Kelasco Resources Nig. Ltd. This time, the contract sum was significantly higher at ₦1,492,777,948.22.

The audit’s central finding is that the scope of work outlined in the Bill of Engineering Measurement and Evaluation (BEME) for the first contract was not a simple patch-up job. Instead, it covered a substantial 4.388km of the road, including clearing, earthworks, and drainage. This substantial overlap led the auditors to conclude that a significant portion of the work was duplicated.

Auditors meticulously analyzed the second contract, discovering that the first contract’s scope was effectively incorporated into it. The report specifies that the sum of ₦482,885,773.91 was identified as the value of this duplicated work, leading to what auditors describe as an irregular payment.

The audit report references Paragraph 415 of the Financial Regulations (FR), 2009, which states that government officials must “exercise due economy” and money must not be spent merely because it has been voted. It also cites Paragraph 708, which prohibits payment for services not yet performed or goods not yet supplied.

When confronted with the findings, the ministry’s management responded by stating that the first contract was for Phase 1 work and was a separate remedial effort. They noted that this work had been “substantially completed and paid for.” The second contract, according to management, represented the full award for Phase 2.

However, this explanation failed to satisfy the auditors. The audit evaluation states that the management’s response was “not satisfactory” and that the findings remained valid. The auditors concluded that the anomalies could be attributed to “weaknesses in the internal control system at the Ministry of Niger Delta Affairs.”

The report outlines a series of stringent recommendations to address the issue. The Permanent Secretary is to be requested to account for the sum of ₦482,885,773.91 to the Public Accounts Committees of the National Assembly.

Furthermore, the auditors recommend that the ministry take immediate action to “recover and remit to the Treasury” the duplicated payment of ₦482,885,773.91. The audit also demands that the ministry forward evidence of this remittance to the Public Accounts Committees of the National Assembly.

Finally, the report states that if the recommendations are not implemented, sanctions relating to irregular payment, failure to manage public funds effectively, and gross misconduct, as prescribed in paragraphs 3106, 3115, and 3129 of the Financial Regulations, 2009, should apply.

It is germane to add that Kelasco Resources NIG LTD was incorporated in Owo, Nigeria with Registration Number 1024593. It was registered on 10th April 2012 and its current status is unknown. The company’s registered office address is 48, Oke-Ogun Street, Owo, Ondo State.