Nigeria

The Auditor-General for the Federation has uncovered 28 major financial infractions involving the Nigerian National Petroleum Company Limited (NNPCL), with suspicious transactions totaling about N61.1bn when converted to naira.

The red flags, contained in the Auditor-General’s 2022 Annual Report on Non-Compliance (Volume II), cover activities carried out in the 2021 financial year by NNPCL and its subsidiaries. The document, obtained by our correspondent on Sunday, details questionable payments, undocumented expenditures, and serial breaches of financial regulations amounting to N30.1bn, $51.6m, £14.3m and €5.17m.

According to the report, NNPCL was indicted for weak internal controls, unauthorized virements, tax infractions, irregular procurement processes, abandoned projects and unsubstantiated settlements.

“These findings highlight systemic weaknesses that continue to expose public funds to avoidable risk. Where documents were not provided, payments were unjustified. Where approvals were absent, expenditure breached the law. Recovery and sanctions must follow,” the Auditor-General’s office stated.

The latest revelations add to earlier investigative reports by reporters this year, which exposed long-running financial discrepancies at the national oil company. The Auditor-General’s annual reports for 2017 to 2021 had previously indicted NNPC for the diversion of N2.68tn and $19.77m over a four-year period.

Those earlier audits flagged N1.33tn in 2017; N681.02bn in 2019; N151.12bn and $19.77m in 2020; and N514bn in 2021, indicating a persistent pattern of unremitted funds, unsupported transfers and irregular withdrawals that have heightened concerns over governance and accountability in the petroleum sector.

One of the most striking issues in the new report is Issue 2, which covers the expenditure of £14,322,426.59 at NNPC’s London Office without documentation. The auditors said the company failed to provide utilisation details or supporting schedules for the amount.

Citing the 2009 Financial Regulations, the Auditor-General stressed that accounting officers are required to maintain adequate internal controls and proper records for all public expenditures. Paragraph 112 mandates clear rules and procedures to safeguard revenue, while Paragraph 603(1) requires every payment voucher to contain full particulars—such as dates, quantities and rates—and be supported by invoices, purchase orders, letters of authority and other documents sufficient for independent verification.

However, the audit found that these statutory provisions were flouted in the operations of NNPCL’s London Office during the 2021 financial year.

The report stated that the foreign office spent a total of £14,322,426.59 on personnel costs, fixed contracts and other operational needs. A breakdown showed personnel costs of £5,943,124.74; fixed contract and essential expenses of £1,436,177.11; and other operational costs of £6,943,124.74.

Despite the scale of the expenditure, the auditors said they were not provided with supporting documents or granted access to verify how the funds were utilised, making it impossible to determine whether the spending followed due process or complied with the Financial Regulations.

The Auditor-General warned that the absence of documentation points to “weaknesses in the internal control system” at NNPCL, leaving the organisation vulnerable to diversion and misappropriation of public funds.

In its response, NNPC management said the London Office functions as a service unit with an approved annual budget and that the £14.32m allocation for 2021 was implemented in line with operational and financial requirements. It maintained that the office keeps detailed records of all transactions, including personnel and contract-related expenses, and expressed readiness to provide documents upon request.

Management further argued that the audit query did not specify which transactions or line items were in contention, making it difficult to give targeted explanations. It added that the company remains committed to strengthening internal controls and ensuring compliance across its units.

The Auditor-General’s office, however, dismissed the explanation as unsatisfactory. It insisted that the query would remain in force until NNPCL offers full accountability for the funds and implements the recommended corrective measures.

Consequently, the audit report recommended that the Group Chief Executive Officer of NNPC Ltd be summoned by the Public Accounts Committees of the National Assembly to explain the utilisation of the £14,322,426.59 spent by the London Office in 2021.

It also ordered that the entire amount be recovered and remitted to the Treasury. Failing that, the Auditor-General advised that sanctions for irregular payments and failure to account for public funds, as provided under Paragraphs 3106 and 3115 of the Financial Regulations, be applied to the responsible officers.

“Audit observed that the sum of £14,322,426.59 (Fourteen million, three hundred and twenty-two thousand, four hundred and twenty-six pounds and fifty-nine pence) was expended for the London Office during the 2021 financial year.

“Audit was not availed the necessary documents and the opportunity to confirm the utilisation of the funds that were managed by the London Office and to ascertain that the expenditure was made following due process and economy as required by the extant regulations. The above anomalies could be attributed to weaknesses in the internal control system at the NNPC, now NNPC Ltd,” the report stated.

In a related case, the auditors flagged a payment of €5,165,426.26 to a contractor (Issue 12), noting that there was no evidence of engagement or contract documentation to justify the disbursement.

Several dollar-denominated transactions were also queried. These include $22,842,938.28 in unsubstantiated Direct Sales Direct Payment (DSDP) settlements (Issue 4); $12,444,313.22 for delayed generator procurement at the Mosimi depot (Issue 24); and $1,801,500 paid under an irregular contract extension for a bunkering vessel (Issue 7).

Other queries listed $2,006,293.20 in provisional payments made without invoices (Issue 10) and $1,035,132.81 paid to a company without power of attorney (Issue 13). Altogether, the report flagged $51,674,020.15 as irregular.

On the naira side, the Auditor-General accused NNPCL of authorising payments without approvals or documentation, implementing budgets beyond approved limits and failing to remit statutory surpluses to the Treasury, in violation of extant financial laws and regulations.