Nigerian Finance, Budget and
National Planning Minister, Zainab Ahmed, got the country worried when she
announced at the National Economic Council (NEC) meeting of May 21, 2020, that
the country had an oil revenue shortfall of N425.52 billion at the end of the
first quarter of 2020. The statistics showed Nigeria got only N940.9billion as
against N1.366 trillion oil revenue that was expected into the treasury between
January and March this year. This was a gloomy picture of the adverse effect of
COVID-19 on the federation account revenues and foreign exchange earnings.
“The net oil and gas revenue
inflows to the federation account in Q1 2020 amounted to N940.9billion. This
represents a shortfall of 31.1 percent of the prorated amount,” according to
Ahmed. This period perhaps is the most challenging in the history of a country
that is surviving on a monolith economy.
The global economy including
Nigeria, since the beginning of the year, has faced its sharpest reversal since
the great depression and these have health and economic implications. According
to Ahmed, “To prevent a deep recession arising from the COVID-19 economic
crisis, the orthodox approach all over the world, including Nigeria, is the deployment
of a stimulus package” which has gulped billions and may at the end, gulp
several trillions of Naira.
It is however surprising and
saddening that, in the same month of May that Zainab Ahmed painted a gloomy
picture of government finances, the management of a federal agency, the
Financial Reporting Council of Nigeria (FRC), while at home, but amid the cold
hand of the pandemic, approved a back-dated new jumbo salary package for its
staff for which it started to pay on 1st June 2020, with four months’ arrears.
The approval and payment of the
new package came during the total lockdown measure that was ordered to lessen
the spread of the COVID-19 pandemic, and also at the time that the federal
government was cutting down on expenditure and went begging owing to shrinking
revenue.
The new salary package came on
the heels of earlier wastefulness of N70 million by the FRC that was set up to
ensure prudence and accountability in the private and public sectors. FRC paid
out over N70 million for an office accommodation that it did not occupy till
the expiration of the rent in 2019.
Whatever excuses the FRC could
have advanced seem not tenable to the National Salaries Incomes and Wages
Commission, which said the Council’s newly approved salary package is illegal,
according to Adighiogu Chiadi, the Commission’s Acting Director, Compensation
who noted that it contravenes Section 3(L) of the commission’s Act and also, a
contravention of circular SGF/OP/I/S.3/VII of 25th May 2017.
Section 3(L) of NSIWC gives the
commission the sole right to examine, streamline, and recommend salary scales
applicable for each post in the public service, a provision of the Act which
the FRC management has flouted.
These two developments have
clearly shown that the management and board of the Council as they are
currently constituted, are out of tune with the current global economic
realities as the FRC now mirrors everything that is negative in Nigeria’s
public sector, especially at the federal level.
The approval of the new salary
scale shows the government is funding those who may not add any value to
governance and also, incapable of imparting knowledge especially when one
considers that a larger percentage of these workers are adjudged as unfit to be
at the agency, according to 2014 report by Akintola Williams Deloitte, one of
the big audit firms in the country that assessed the staff immediately after
the transit from Nigerian Accounting Standard Board (NASB) to the FRC.
The new remuneration package has
hence raised the Council’s monthly payout, on salaries alone, to about N42
million at a time that the agency is not generating adequate revenue. The fear
that the Council could collapse in months to come if urgent measures are not
taken, was expressed at the Senate during the public hearing by the Solomon
Adeola-led Joint Committee on Finance and National Planning that ended a
fortnight ago.
The Senate is currently looking
at ways to free more funds for the government treasury and the findings from
the meeting with the FRC and other revenue-generating agencies have now
compelled the federal lawmakers to consider an amendment of the Fiscal
Responsibility Act that will stop agencies from spending the money they
generate as they are pleased, following discoveries of poor revenue profile,
huge wage bill, and poor remittances to the Consolidated Revenue Fund Account.
The FRC management refused to
comment on its wastefulness, the salary package, and other issues when it was
contacted through a June 22, 2020, letter from InsideBusiness which was
addressed to the Acting-Executive Secretary, Iheanyi Anyahara. Anyahara, in his
response through a WhatsApp message, said he would need to get the clearance of
the CEO, Daniel Asakpohai who unfortunately has not been in the office since
February this year.
“There is a substantive CEO, I am
just holding the forte for him for a short period,” noted Anyahara who promised
to revert to InsideBusiness but never did till the time of this publication.
The Minister of Industry, Trade,
and Investments, Niyi Adebayo, who requested for an official correspondence in
a response to a text message that asked for his comments on FRC, has also not
responded to the official inquiry sent by InsideBusiness on 2nd September.
“I have seen it. Please give me a
few days to revert to you”, the minister said in a September 2 text message to
InsideBusiness.
Checks at the agency showed that
the former Executive Secretary, Jim Obazee, upon the approval by the management
in 2016, paid N47,364,666 for two years rent in addition to another payment of
N23.6 million for diesel and facility management for a tenancy that was to run
from February 1, 2017, to January 31, 2019, for office accommodation at the
Japaul building which is close to its former office complex, the Lagos Chamber
of Commerce and Industry (LCCI).
Obazee, however, was removed from
office in questionable circumstances on January 9, 2017, and could not effect
the relocation of the agency to the new Japaul Building complex. The current
Executive secretary Daniel Asakpokhia, who was appointed on the same 9th
January 2017, was then expected to ensure the relocation to the new office
complex in February 2017 but which never happened.
InsideBusiness findings showed
that the beautification of the Japaul Building Complex was also tendered in The
Guardian newspaper edition of 4th December 2017.
Invitation To Tender By FRC in
The Guardian Edition of 4th December 2017.
The FRC, which has now relocated
to Alexander House, another facility that is adjacent to the LCCI and the
Japaul complexes paid another N66 million for rent in addition to money for the
redesigning of the two floors in the new office accommodation which has no
library facilities and which the staff complained of leakages whenever it
rains. Though the rents at the LCCI building expired on June 1, a fresh tenancy
could be running because the Council still has its library facilities at the
complex because the Alexander House has no space for its Library.
Findings on the new salaries by
InsideBusiness showed that the package was calculated, using the difference
between FRC Step 10 and step 13 with an addition of 75 percent of the previous
scale. The management also used the 2014 approval secured by the former
Executive Secretary, Jim Obazee, as the basis to set a new salary scale which
the NSIWC insisted must carry its approval for it to be legitimate.
“No, they cannot do that unless
they clear from us at the National Salaries Income and Wages Commission,” noted
Chiadi in a telephone conversation with InsideBusiness.
Also, in a letter written to
InsideBusiness by NSIWC on the 5th August, 2020, Chiadi noted that the 25th May
2017 circular requires the FRC, like other agencies, to clear any proposed
changes in staff salaries, allowances, and fringe benefits with the Commission
before they are implemented.
“Therefore, any contravention to
the Act or the Circular by any Chief Executive Officer of a government agency
constitutes an abuse of office,” he said in the letter referenced
SWC/S/04/S.490/77 to InsideBusiness.
Details of the new salary package
show that the drivers got a 100 percent increase, directors got a 50 percent
increase while principal managers and others got a 75 percent increase from an
agency which is allegedly surviving on the funds generated during the tenure of
the former Executive Secretary, Jim Obazee.
The new package was jointly
approved by the Union leader, Raji Sheriff, and the FRC board chairman, Dotun
Sulaiman in May 2020 with the knowledge of Iheanyi Anyahara, the acting-Executive
Secretary. It was then backdated to January 2020 while payments began on June 1
together with the arrears from January 2020.
Sulaiman and the Union leader,
Sheriff whom the report of Akintola Williams Deloitte placed on “Watchlist”
upon assessment, were said to have based their actions on Section 20 (5) of the
FRC Act 2011 which says that “The Board shall define the duties and fix the
salaries, allowances or other compensation of staff appointed under sub-section
(3) at a level that is comparable to the private sector or other regulatory
organizations. Sub-section 3 says, “The Board shall appoint for the Council
such other staff as it may deem necessary and expedient from time-to-time for
the proper and efficient performance of the functions of the Council”.
Sources at the supervising
ministry, the Ministry of Trade and Investments who floored the premise for the
new salary package, told InsideBusiness that the approval of the new salary
scale is beyond the powers of Dotun Sulaiman, who currently chairs both the FRC
board and that of Cadbury Nigeria Plc, as it runs contrary to the functions
that are stipulated for the board by the agency’s enabling Act of 2011. Section
10 of the FRC Act, which prescribes the functions of the board, excludes setting
and approval of salary from the roles expected of it. That responsibility rests
solely with the National Salaries Income and Wages Commission, the body that is
charged with setting the remuneration of workers in the federal public service.
It will be recalled that Obazee
in 2014 got an approval from the National Salaries Income and Wages Commission
to upscale the salary of the FRC staff when the body transited from the then
Nigerian Accounting Standard Board (NASB) and which was effected the same year.
The new scale which was higher than the civil service salary structure was
approved for Obazee owing to the conviction by the Salaries and Wages
Commission that the FRC is self-dependent and has the capacity to sustain its
expenditure from its earnings without recourse to the federal budgetary
allocation.
Throughout the tenure of Obazee,
findings by InsideBusiness showed the FRC was self-sustaining on the revenue it
drew from the market which it supervised. It was also discovered that the
self-dependency of the FRC saved the agency from being recommended for a merger
with the Corporate Affairs Commission (CAC) whose roles are seen as identical
by Stephen Oronsaye’s Committee on Rationalisation of Federal government
Agencies.
The FRC sustains its operations
including salary payment from earnings made from sanctions meted to companies
that committed market infractions and other sundry levies like annual dues from
companies and practitioners. An instance of such earnings was the N1 billion
penalties paid by StanbicIBTC bank in 2016 when the Council ordered the bank to
restate its two years’ accounts.
The new salary package for the
staff that was backdated to January 2020 and paid to the staff on June 1,
together with the May salaries and the arrears from January, was said to be a
total of N70 million.
Prior to the June 1 payment,
InsideBusiness findings showed the FRC had N300 million balance in its account.
This was said to be the balance from the N1 billion penalty paid by StanbicIBTC
bank when it was sanctioned by the Council in 2016.
The payment of N70 million for
the new salary package brought the balance in FRC account to N230 million by
the first week of June amid fears that the new jumbo pay which is allegedly not
sustainable may have further depleted the account by another N126 million
payout, the sum amount of June and July, and August salaries.
Findings showed that Sulaiman
approved the new package allegedly to appease and silence the workers who are
miffed and getting agitated about the decline at the Council and also, how the
probe of Cadbury Nigeria Plc which Sulaiman is also the chairman, was swept
under the carpet.
Sulaiman’s approval of the new
package also raised questions considering a 2014 report from Akintola Williams
Deloitte which says that only nine staff of those in the core area of
operations of the agency are “Suitable” to work at the FRC. The audit firm in
its appraisal of the staff adjudged Eight as “Suitable But Requires Development”
while 12 staff who scored below 60 percent were placed on a “Watchlist”. Seven
others, comprising one principal manager, three assistant directors, and three
deputy managers were judged “Not Suitable”.
Interestingly, Akintola Williams
Deloitte both in its “Manpower Assessment” and also the ‘Final Analysis’ of its
assessment, specifically stated that Anyahara Iheanyi Odinakachi, whom the
Ministry of Industry, Trade and Investment appointed as the Acting Executive
Secretary was not suitable to be at the FRC.
Anyahara, who according to
Akintola Williams Deloitte, has a B.Sc in Vocational Business Education, MBA
Accounting, ICAN Certificate, with an M.Sc program that was in view as at the
time of the assessment by the audit firm was adjudged “Unsuitable” for the
Strategy, Organisation, Research, and Policy Unit in the organogram that was
recommended for the agency.
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