Auditor-General admits mass fraud in revenue remittances to govt

GUARDIAN

24 JANUARY 2012

Auditor-General admits mass fraud in revenue remittances to govt

•Says oil firms undertake self-assessment of royalties

•Finds N11b gap in customs’ returns

LARGE-scale fraud in revenue calculation, collection and remittance to the Federal Government by some revenue-generating agencies and oil firms have been confirmed by the Auditor-General of the Federation (AGF) Samuel Ukura.             

In the 2009 report now before the National Assembly, Ukura said sharp practices characterised the calculation of the revenue accruing from the oil sector to the Federation Account.            

He said significant differences also existed in the figures of revenue remitted to the Federation Account by the Nigeria Customs Service (NCS).

The report is titled: “Yearly report of the Auditor General for the Federation on the Accounts of the Federation of Nigeria for the year ended December 31, 2009.”

Under a sub-head: “Wrong basis of calculating royalties and failure of Department of Petroleum Resources (DPR) to raise assessment,” Ukura said “during the audit examination of accounting and other records at the DPR for the Federation Account, the computation of royalties payable by oil companies was based on actual crude oil lifted by them and not calculated on actual production figures contrary to the provisions of the Memorandum of Understanding (MoU) with the relevant oil companies.”

The MoU provide that payment of royalties should be based on production volume multiplied by the prescribed royalty rates, he said.

According to him, the DPR had shirked its responsibility of raising the assessments on royalties and sending the demand notices to the oil firms for prompt settlement. “Rather, the oil companies are allowed to engage in the self-assessment of royalties payable by them. This action is obviously detrimental to the interest of the country.”

In the report, which The Guardian obtained in Abuja yesterday, the AGF said the attention of the Accountant-General of the Federation had been drawn to “this anomaly.”

The AGF said oil companies in Nigeria owed the government huge sums of money in local and foreign currencies. “Audit investigation revealed that the sum of N1.148 billion on penalty on gas flared and $795.309 million on royalties on crude oil were owed by various oil companies as at December 2009.”

The report also indicated that there were several instances of late remittance and non-payment of penalties by banks to the Federal Inland Revenue Service (FIRS).

Etc. Etc.