Audit Uncovers N4.64 Billion Financial Irregularities in Nigeria’s Ministry of Works (Housing Sector)

An audit report by the Auditor-General for the Federation has unveiled financial irregularities exceeding N4.64 billion within the Federal Ministry of Works (Housing Sector), sparking grave concerns over systemic non-compliance with financial regulations and procurement laws.

The findings, detailed in the Auditor-General’s Annual Report, cover the period between 2020 and 2021, during the tenure of Babatunde Fashola as Minister of Works and Housing.

The report highlights alarming lapses in internal controls, including payments made without proper documentation, extra-budgetary expenditures, excessive mobilisation fees, and contracts awarded in contravention of due process.

Key Findings of the Audit Report

Unauthorised Payments and Lack of Documentation: A staggering N1.08 billion was disbursed from the Government Integrated Financial Management Information System (GIFMIS) account without payment vouchers, violating Paragraph 601 of the Financial Regulations (2009).

Additionally, N546 million was transferred to project accounts without requisite documentation or budgetary provisions. The absence of proper records raises the risk of fund misappropriation and loss.

Extra-Budgetary Expenditures: Extra-budgetary expenditures totalling N2.89 billion were unearthed, including N1.88 billion spent without legislative approval.

Over N1 billion was paid to contractors for road projects in Katsina State, despite these projects only appearing in the 2017 Appropriation Act. These expenditures breach Section 80(4) of the 1999 Constitution, which mandates legislative authorisation for withdrawals from public funds.

Contracts to Unregistered Companies: Contracts worth N493.97 million were awarded to companies not registered with the Corporate Affairs Commission (CAC).

Of this, N170.36 million was paid to unregistered entities, and one contractor awarded a contract in 2016 was only incorporated in 2019. These actions contravene the Public Procurement Act (2007) and the Companies and Allied Matters Act (2020), raising concerns about the potential for fraud and non-execution of contracts.

Irregular Mobilisation Fees: In Oyo State, the ministry paid N110.81 million, representing 22.61% of a total contract sum, as mobilisation fees—well above the 15% threshold prescribed under Paragraph 2933 of the Financial Regulations. The contract was also awarded on a Sunday, further casting doubts on procedural integrity.

Non-Adherence to Procurement Processes: A contract worth N46.31 million for classroom construction in Edo State was awarded without adhering to due process, with N40.83 million – 88.18% of the contract sum – paid to the contractor upfront.

Similarly, five contracts valued at N27.84 million were awarded without soliciting bids from at least three unrelated contractors, as mandated by the Public Procurement Act.

Recommendations and Consequences

The Auditor-General’s report attributed these anomalies to weak internal control mechanisms within the ministry. It recommended that:

The Permanent Secretary justify all unauthorised payments and recover the misappropriated funds for remittance to the Treasury.

Evidence of compliance be submitted to the National Assembly’s Public Accounts Committees.

Failure to comply could attract sanctions under Paragraph 3106 of the Financial Regulations.

Officials involved in irregular contract awards face strict penalties under the relevant financial laws.

The report also underscored the need for sweeping reforms to enhance financial accountability and transparency, warning that failure to act could perpetuate the misuse of public funds.

Grim Financial Management and Call for Reforms

The audit paints a troubling picture of financial management at the Federal Ministry of Works (Housing Sector), citing pervasive non-compliance, a lack of accountability, and weak oversight. The revelations demand urgent action to restore public confidence and safeguard national resources.

Despite repeated queries, the Ministry failed to respond to the Auditor-General’s findings, further fuelling concerns over governance lapses.

The report has been forwarded to the National Assembly for further scrutiny and enforcement of recommendations.