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An audit report just released on the finances of the Governor Olusegun Mimiko administration indicts virtually all ministries, parastatals and agencies as well as the state House of Assembly of financial recklessness

It is celebration time for Olusegun Mimiko who mounted the saddle as governor of
Ondo State on February 23, 2009. In various government ministries and departments, officials are putting finishing touches to the celebration plan for the third anniversary of the Iroko, as Mimiko is known among his admirers, in power.
Ahead of the celebration, on February 1, 2012, the governor unfolded his N150 billion budget which he tagged: “A Caring Heart Budget 111” to the people. It was N7 billion higher than the 2011 package of N143 billion. The 2012 budget is made up of N85.5 billion and N64.5 billion for capital and recurrent expenditures, respectively. The former includes N8.2 billion statutory grant to the Ondo State Oil Producing Areas Development Commission, OSOPADEC.

To service this package, Mimiko expects N75 billion from the Federation Account and N12 billion projected internally generated revenue. There is a N38 billion drawdown from the Bond market even though a case is pending in court over the governor’s plan to borrow money. A breakdown of the package showed that the biggest allocation of N16.025 billion is for road construction and maintenance; education, N12.198 billion and health services, N8.2 billion. Agriculture got N3.7 billion; trade and industry, N3.3 billion; social and community development, N6.6 billion; water supply, N3.6 billion; housing and environment N6.7 billion; administration of justice N1.38 billion and enhancement of electricity supply, N800 million. The sum of N2.2 billion was allocated to the legislature, “for a more robust level of engagement, especially in performing oversight functions and monitoring of projects” as well as “to provide the needed impetus for the delivery of the dividends of democracy to the people of the state.”

Mimiko said that under the capital estimates for 2012, emphasis was placed on completion of all ongoing developmental projects while only very important new initiatives were taken on board. The budget is geared towards consolidation of the achievements of his administration recorded in the past three years based on its 12-point developmental programme. “On a general note, it is heartening to state that we have redefined governance, achieved a respectable level of infrastructural renewal, invested heavily in the productive capabilities of our people and raised the bar in all sectors of governance. We set out to be a cynosure of all eyes and, with all modesty, Ondo State has now become a reference point in a number of initiatives,” he boasted.

But as Mimiko begins the celebration of his third anniversary as governor, not a few watchers of the administration are convinced that he has not governed the state transparently. Otito Atikase, a former member of the Ondo State House of Assembly between 2007 and 2011, alleged that the 2012 budget for OSOPADEC is riddled with false figures which in most cases short-changed the people of the oil producing areas. He claimed that from the estimates, N18 billion will come from mineral derivation and N8 billion from excess crude. “Assuming this is true, the total comes to N26 billion. Forty percent (the constitutionally approved allocation) of this is N10.4 billion as against N8.2 billion projection for OSOPADEC. This is short-changing the oil producing areas,” he told Newswatch.

According to Atikase, Mimiko’s practice of short-changing his people dated back to 2009 when he inherited N18 billion budget for OSOPADEC from the Olusegun Agagu administration but spent only N2 billion. The next year, the governor budgeted N10 billion for the agency but the lawmaker objected to this as it fell short of the people’s expectation. The Ilaje-born politician contended that the unspent N16 billion should be rolled over into the 2010 package to make it N26 billion. He won the battle but it cost him his return ticket to the House the following year.

Also, the former lawmaker is worried that the governor claimed that he rolled over N14 billion into the 2012 budget. In his review of the 2011 budget, Mimiko had said that as at December 2011, a total of N118.997 billion had been generated from all sources as against the expected N143.5 billion, implying a shortfall of N24.997 billion. “How come the huge N14 billion he now rolled over,” the former legislator asked rhetorically?

The ex-legislator noted that the government’s finances had developed to a worrisome level. Two weeks to the end of the 2011 financial year, the governor got the House of Assembly to hurriedly pass a N7.885 billion re-ordered budget. In it, Mimiko asked the Assembly to approve additional N5.156 billion for construction and rehabilitation of highways aside the N9.388 billion approved earlier by the legislators. He requested for N255 million for General Administration; Governor’s Office, new Governor’s Office, N350 million; maintenance of office premises, state secretariat, N200 million, the moribund Dome, N500 million and N25 million to mark a 28.5 kilometre road (see table).

Also, on December 29, 2011, N364.86 million was ordered to be released for the State’s Residency Card project’s phases iii and iv. The residency card for all citizens in the state had gulped N1.2 billion before the latest request. So far, there is nothing to show for the huge expenditure.

 Indeed, when Mimiko presented the 2011 re-ordered budget, the second since he became governor, Olaiya Oni, former chairman of the Labour Party, LP, in Ondo Sate, had filed a suit in which he accused the governor of misappropriation of the state’s funds. He contended that a re-ordered budget was unknown to the Nigerian Constitution. He said the government was out to cover its looting spree. “I saw that the government was calling for the approval of a budget two weeks to the end of the year. What the governor was demanding for will take effect from 2012 January,” Oni had said, adding, “Mimiko is a bull in a China shop. Many governors in the federation are already preparing to submit their 2012 appropriation budget to their various Houses of Assembly, but here in Ondo State, the governor was demanding for additional money which we all know had already been spent by the government and only looking for a way to cover up.”

But the ‘Report of the Auditor-General on the Accounts of the Government of Ondo State for the year ended December 31, 2010’ which has been submitted to the House of Assembly paints a grimmer picture of the financial recklessness of the Mimiko administration throughout its second year in power. The report was signed by S.O. Adegoke, the auditor-general of the state and dated May 20, 2011.

The auditor-general stripped Mimiko of any niceties and described his government in 2010 as one riddled with financial recklessness. The finance experts who pored through the books said that all facets of the administration – from the office of the governor to all the ministries and even the smallest of agencies or department - engaged in fiscal irresponsibility. And they ignored several queries.

More worrisome was the revelation that most MDA awarded contracts but could not and (or) refused to produce documents to investigators on demand. The sums were mind-boggling. At OSOPADEC, Akure, believed to be the biggest fraud channel, the auditor-general found that the agency awarded contract for the construction of Okitipupa - Ayeka Araromi – Irele road with bridge over River Oluwa for N6.94 billion. The agency could not produce the contract documents when demanded on October 25, 2010. Similarly, contracts for phase one and two capital projects of OSOPADEC were awarded to 25 contractors at a cost of N6.8 billion. The auditors were stunned as the agency refused to respond to request for the contract documents through an audit letter dated January 13, 2011.

The ministry of special duties was also notorious. The audit report said the ministry could not produce contract documents for the N1.385 billion rehabilitation of Owo-Ose Water scheme; N988.68 million rehabilitation of Awara water supply scheme and N60 million contract for construction of an embankment dam for the Ondo State Golf Course at Idanre, among others. The State Water Corporation could not produce documents for contracts totalling N688.35 million. “Several requests made by audit to the corporation to supply the contract documents for vetting were totally ignored. Audit could not, therefore, confirm whether the contracts had been executed or executed according to specifications,” the report said.

Adegoke noted further that there was gross budget indiscipline among virtually all MDAs. “This resulted in overspending of votes without approval from appropriate authority, contrary to the law. The departmental vote expenditure abstract, DVEA, maintained for the purpose of controlling expenditure did not yield the desired result as expenditure incurred by some ministries/departments did not agree with the Accountant-General’s control figures,” the auditor said.

Every MDA spent recklessly without fear or control from the number one citizen of the state. By the end of the year, excess expenditure on recurrent and capital accounts were N2.839 billion and N2.049 billion respectively(see table). The Ministry of finance could not produce authority for excess recurrent expenditure totalling N2.5 billion over the approved budget for the year while the Ministry of Health overspent recurrent and capital accounts by N143.9 million and N581.16 million, respectively.

The ministry of physical planning and urban development exceeded its capital account by N534.5 million; ministry of community development and co-operative services, N443.2 million; Ondo State University of Science and Technology, N255.06 million and State Judiciary, High Court, N167.55 million. The Ministry of Youth Development and Sport could not produce contract documents of N256 million for work done in four stadia because no job was done there.

For the Ministry of Agriculture, the documents were in two batches: over expenditure and projects not accounted for. The auditor could not pass expenditures totalling N160 million either because they could not be accounted for or there were no receipts for the spending or could not be supported by proper records of accounts. A contract of N594 million was awarded to an Abuja-based company to supply tractors and spare parts. When the auditors asked for the papers in a letter marked GMD/MAG/CP/1/10 of July 12, 2010, the ministry could not produce the contract papers.

Oni confirmed that the contractor did a shoddy job in this particular case. He should know. His company in agro-allied business got a contract to supply 20 tractors while the Abuja-based firm was asked to supply 80. “I told them that what they were doing was bad. At the end of the day, they asked me to supply three with N45 million. I supplied four with the money. The quality of the tractors I supplied was 300 percent better than the ones the other company supplied for N12 million each. I supplied mine at N10.2 million each. When the tractors from that supplier were distributed to various agricultural sectors, they could not function for two weeks. The farmers rejected them. All the tractors are lying in the ministry of agriculture and yet they paid the contractor,” he told Newswatch.

The Ministry of Information and Ministry of Commerce and Industry were not left out of the profligacy. The latter overshot its budget by N700.9 million and the former by N218.1 million.

Newswatch learnt that three ministries were instrumental to the government’s financial recklessness. The first was the Ministry of Special Duties, a one-man ministry, which was responsible for preparing the documentations for most of these projects for the State Tenders Board. The commissioner for special duties was the chairman of this board. The issue is clear: the man sent the proposals to himself and approved them. From that point, the Ministry of Finance, which was nothing more than the pay master general, brought out the money at the beginning of the contract award, not at the phases of the contract execution. “They will put some percentage on the particular project which had been approved by the Tenders Board and distribute the remaining money to the various ministries and departments pretending that they spent the money. That is why the auditor general could not lay his hands on contract documents for the award of contracts in the majority of the capital projects which were purportedly executed in Ondo State that year,” a source said. 

The Ministry of Economic Planning and Budget reportedly distributed the funds. The source said if the administration wanted to buy information communication technology, ICT, materials worth N2 billion, it would bring out the money and spend about N100 million on ICT and then share the remaining N1.9 billion on other projects. Thus, these other projects would not have a foundation, that is, the contracts that had been awarded and by whom it was authorised. The ministries would simply find in their books that they had spent so much money which in many cases was not known to them.

In spite of the government’s profligacy as revealed in the 2010 budget, those who spoke to this magazine were baffled that Mimiko asked the Assembly for a re-ordered budget that year in which his office alone spent N450 million on computer feeders such as ink, cords and paper and N420 million on hotel accommodation. The sum of N60 million was spent to prepare the budget while 40 copies of the budget were printed at a cost of N35 million. 

Newswatch investigations revealed that the State House of Assembly that could have checked the excesses collaborated with the executive arm of government in alleged exchange for huge bribes. For example, when Atikase opposed Mimiko in 2010 over OSOPADEC budget, other members of the House reportedly advised the governor to invite him for inducement. The governor allegedly did so but the lawmaker turned down his overtures. “No legislator dares the governor now. Instead, it is regular handshakes with the Iroko,” a source said.

Consequently, the current Assembly is enmeshed in a series of fund embezzlement totalling N210.2 million. In a petition dated December 2, 2011, a group styled Concerned Citizens for Good Governance detailed how the leadership of the House allegedly siphoned the state’s funds through unexecuted contracts between August and November, last year. In some cases, the governor approved the release of money.

For example, on August 19, four fund release warrants were issued by the Ministry of Finance and Planning to the Assembly. About N33 million was for reconstruction of dilapidated porch; N36 million for the purchase of back-up Perkins generator; N46 million for supply and installation of wireless intercom 200 capacity extension and N2.2 million for sensitisation on HIV/AIDS. The petitioners alleged that all the funds were embezzled. The same month, N24 million was released for fumigation of the Assembly complex. It was gathered that although N2 million could have done the job, the lawmakers did not fumigate the complex but shared the money.

Again, on September 29, N30 million was released in two tranches of N15 million. The House reportedly claimed it needed each tranche for public hearing and intensive legislative research, respectively. “Neither was done but the funds were shared by the House leaders,” a source told this magazine.

On October 20, the Assembly requested for N30 million “for the production of compendium of laws and compendium of resolutions passed by the assembly.” Three days later, Mimiko personally signed the release of N20 million (see document) for the assignment. However, the Concerned Citizens noted that till date, no compendium has been  published, rather  the money was allegedly shared.

Again to bring out funds for embezzlement, the House asked for N19 million for a retreat at Mic-Com Golf, Ada, Osun State. The money was released. “No member from Ondo State House of Assembly attended any retreat at this period,” the petitioners wrote.

Since he became governor in February 2009, many people have criticised Mimiko for poor management of the state’s finances. Many have complained that whereas the State House of Assembly should have looked into the allegations, it kept on approving “re-ordered budgets” and Mimiko’s borrowing of N10 billion last year and his plan to raise N27 billion from the bond market. Currently, the opposition  Action Congress of Nigeria, ACN, has a suit pending at an Abuja High Court trying to stop the governor from going ahead on this.

 Also, a group, Concerned Ondo State Professionals, led by Rotimi Ogunleye and Gbenga Adekola, has expressed misgivings about the bond. The organisation said while it cannot question the authority of the governor, borrowing should be discouraged most especially, when the amount so borrowed would not be put into any fund yielding investment. “As one of the few states that receive handsome allocations from the federation account, an efficient management and effective utilisation of our resources would have made the much desired difference in our economy. We thought about the cost of financing the bond bearing in mind the internal loan of N10 billion and came to the conclusion that even at 10 percent per annum, the state will have to cough out N227 million Naira monthly as interest cost of the bond. This is unhealthy for the economy of the state,” the group warned.

Efforts to speak with Samuel Adesina, speaker, Ondo State House of Assembly, on the various allegations of embezzlement of funds by the House leadership proved abortive. When Newswatch visited his office on Thursday, February 2, 2012, he said through Sina, his chief detail, that he was busy and that the reporter could continue to work the phones, may be he would be lucky to get him to talk on the issues.

Similarly, Kayode Akinmade, commissioner for information, was too busy to grant an interview. In a text message, he said he was at the executive council meeting on Wednesday, February 1. He promised to meet with the reporter later. The following day, he again said he was at a meeting. Consequently, a questionnaire was sent to him. He did not reply by press time last week.