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Govt Opens Battle to Retrieve N138b Trapped in 17 Banks
Over N138 billion National Insurance Health Scheme (NHIS) cash is trapped in 17 banks, financial companies and individual pockets from January 2011 to date, a Federal Government team has discovered.
Successive NHIS managements had investments in some banks but could not recoup them in the last seven years.
The NHIS Governing Council has raised posers for the incumbent Executive Secretary, Yusuf Usman, for not drawing its attention to the scandal.
The trapped funds were discovered by an accounting firm, Aruna Bawa and Company, which was engaged by the Attorney-General of the Federation and Minister of Justice, Mallam Abubakar Malami (SAN).
Malami mandated the accounting firm to look into the trapped investments, after a whistle-blower blew the lid off them.
The identities of the banks and the individuals were not available yesterday.
In a November 13, 2017 letter to former NHIS Acting Executive Secretary Attahiru Ibrahim, the AGF said “Messrs. Aruna Bawa & Co. (Chartered Accountants) had been engaged by the Federal government on August 15, last year.
“The mandate of the firm is to carry out a forensic audit and backlog recovery of all National Health Insurance Scheme’s (NHIS’) funds held by financial institutions, companies, individuals into the Federal Government’s Treasury in accordance with the extant laws of the Federal Republic of Nigeria and the terms and conditions of the Agency Agreement executed by the parties on the 19th day of September, 2017.”
“Please render the firm the requisite cooperation, support and information needed to carry out this task for and on behalf of the Federal Government of Nigeria. Please accept the assurances of my highest regards.”
In a May 21, 2018 report to the Chairperson of the NHIS Governing Council, Dr. Enyantu Ifenne, the accounting firm said over N138billion NHIS cash was trapped.
The report said: “We have determined the amount due from each of the financial institutions that NHIS placed Investments or operated a current account with, before the adventure of the TSA policy.”
“We have already worked out forensic update and have submitted the results of same to the Federal Ministry of Justice, Federal Ministry of Finance and the Central Bank of Nigeria (CBN). Please find attached as Annexure A, a summary of amounts due from each of the financial institutions, mentioned in the preceding paragraph.”
“A total amount of N138,088,353,172, made up of principal plus accrued interest charges, compounded up to April 29, 2018 are as at the date of this letter, due from the financial institutions that are holding onto the funds.”
“Please note, the amount due from each of them, duly analysed into various headings, based on the nature of the amount outstanding, such as: Accrued Interest Shortfall (Total amount – N24,630,784,864), Loss Arising from Failure to Use CBN Rate to Place Investments (Total Amount – N7,909,339,409), Capitalised Interest Shortfall (Total Amount – N4, 657,631,261), Un-recouped Investments (Principal -Interest – Total Amount – N46,832,773,759), Unexplained Interest Reversals (Total Amount – N1,810, 455,551), Transfers to NHIS TSA, not Reflected in NHIS’ TSA Statement Issued by the CBN (Total Amount – N52,247,368,327), has been served on each of the banks involved, by way of a notice of indebtedness and demand for payment.”
“NHIS has yet to provide us with copies of some of the Investment placement documents, a list of which we gave to the then Acting Executive Secretary, Mallam Attahiru Ibrahim. We would be most grateful if these documents are provided.”
But the accounting firm said it would require more cooperation from NHIS to recover all the trapped funds.
It said: “Our firm, Aruna Bawa & Co, has been in practice as chartered accountants for more than three decades and has successfully undertaken a wide variety of complex assignments, the knowledge and experience of which are being brought to bear on the conduct of this assignment.”
“We understand that NHIS is concerned about the ownership of the Funds to be recovered from the financial institutions concerned.”
“In this regard, we suggest NHIS work with us to first recover these funds, and thereafter approach the Federal Government to transfer the funds to its account in CBN.”
“For now, it is in the overriding public interest to recover these funds from the financial institutions concerned. We have already blown the whistle, entered into an agency contract with the Federal Ministry of Justice on behalf of the Federal Government of Nigeria, determined the amount due from each bank based on the audit and recovery work we did at NHIS and CBN, and served notices of indebtedness and payment demand notices on the banks concerned.”
“Accordingly, as the Honourable Attorney-General of the Federation and Minister of Justice … in his Letter of Introduction (See Annexure C) we hereby appeal to the NHIS’ Governing Council and Management to continue to give us the requisite cooperation, support and information we require for the orderly execution of this assignment.”
The Governing Council has asked Usman to respond to the discovery which was not brought to its knowledge.
It said its attention was also drawn to the engagement of Sofura Professional Services for forensic audit of its financial records.
It said Aruna Bawa and Company said there was no nexus between its Asset Recovery mandate given to it by the AGF and a separate engagement of Sofura Professional Services.
A memo to the Executive Secretary was signed by the Chairman of the Governing Council, Dr. Enyantu lfenne.
The memo was titled “Re: Forensic audit and backlog recovery of NHIS funds held by financial institutions, companies and individuals on behalf of the Federal Government of Nigeria.”
The Council said: “A firm of Chartered Accountants, Aruna Bawa & Co., presented a letter titled ‘Re: Forensic Audit and Backlog Recovery of NHlS’ Funds held by Financial Institutions, Companies and Individuals, on behalf of the Federal Government of Nigeria”. In addition, the firm submitted voluminous documents.”
“Significantly, the documents were delivered on 25th May, the same day that l had audience with CBN Governor to present Council’s request for recovery of NHIS funds trapped in commercial banks. The petition by Aruna Bawa & Co is herewith attached”
“You may recall that in response to presentation of the Forensic Audit Report by Sofura Professional Services, Council resolved to proactively move to recover NHIS funds. In fact, the financial data and the narrative of Council request to CBN Governor were based on the Forensic Audit Report.”
“The Petition by Aruna Bawa & Co, made the following allegations:
- the firm was engaged by the. Federal Government Asset Recovery and Management Unit in Federal Ministry of Justice under a whistle blowing intervention to recover NHIS funds trapped in commercial banks;
- that, you, as Executive Secretary, encouraged them to enlist in the whistle-blowing project before and during your suspension;
- that Acting Executive Secretary requested for and received approval from, the Minister of Health directing NHIS to support the exercise. Accordingly, key senior staff were assigned to work with the firm;
- that the assignment has advanced to the extent that listed banks were served indebtedness profiles and demand notices and presumably, CBN so informed;
- that no duly executed contract exists between NHIS and Sofura Professional Services for the Forensic Audit and Asset Recovery;
The Council is interested in these grave revelations for the following reasons;
“Suggestion that Aruna Bawa & Co and Sofura Professional Services are locked in an ownership contest for the financial data, and by inference, rights to financial rewards accruable from recovered funds.”
“Likelihood that these developments/ revelations may undermine public confidence in Council’s integrity, transparency and motives for funds recovery efforts.”
“Controversy arising from the conflict between the accounting firms may jeopardise recovery of NHIS funds.”
“Council was not informed about FGN approved initiative to recover NHIS funds trapped in commercial banks.”
To clear these concerns and guide Council on the way forward, you are requested to:
- respond to the salient issues contained in the attached.
- address the conflict of interest issues raised, specifically on page 5.
- explain fully, the procurement process, fees, terms and conditions of engagement of and all payments to, Sofura Professional Services for Forensic Audit; Retainer contracts. Please provide copies of procurement processes contract, and payment documents.
- clarify your intention for not disclosing to Council the FGN intervention to recover NHIS funds trapped in commercial banks.
Although the council gave a June 12, 2018 deadline to the NHIS Executive Secretary to submit the details on the investments, there has been no response from him.
A top source in NHIS said: “This exercise predated the new Executive Secretary of NHIS, Prof. Yusuf Usman. They are talking of funds invested between 2011 to date. The Executive Secretary will respond to issues raised by the council. The good thing is that no one is accusing the Executive Secretary of embezzling funds.”
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