By JOHNSON CHIBUIKE

In the past few weeks, the politics of Abia State has been heated by a claim by the state governor, Dr. Alex Otti that he conducted a “Forensic Audit” on the financial activities of the administration of his predecessor, Dr. Okezie Ikpeazu. Ikpeazu and his camp has fought hard to rubbish the claim but an insight into the said report reveals that Otti might just be on a mere mission to tarnish Ikpeazu’s image. The ‘audit firm’ said it relied on document supplied by Abia State government and may not have seen other documents to the contrary

Governor Alex Otti of Abia State on April 19, 2024 opened a controversy over the management of the state finances by the previous administrations in the state. In faraway United States of America, where he delivered a lecture at the Johns Hopkins School of Advanced International Studies, the governor, who spoke on the topic  “State of Governance and Economic Transition: Meeting the challenges”, dropped  what was a bombshell, when he said that that an audit report he commissioned in 2023 discovered large scale financial malfeasance in the running of the affairs of the state by the previous administration in his state. Up till that time, Otti had not told anybody in Nigeria about the ‘audit report’ and its result. But in the United States, Otti began a controversy, which is still raging till date. According to Otti, the immediate past Governor of the state, Dr. Okezie Ikpeazu, allocated a N10 billion to a non-existent airport project in the state.

Otti said that the information was  obtained  from a report of a ‘forensic audit’ carried out by a firm contracted by his administration.

Otti had said with enthusiasm:  “Talking about corruption, I had set up a forensic audit as soon as I took over office in Abia, last year (2023). So that, there won’t be any argument. I called in one of the top three audit firms in the world, and not too long ago, they turned in their report, and some of the things in their report are frightening.”

“So, some N9.3 billion was paid to seven contractors for contracts that were not executed at all up till today. Another N15.9 billion was paid to 63 contractors with no supporting documents anywhere in the state. Another N12 billion was paid to two contractors for contracts that do not exist. Out of this figure N10 billion was on September 25, 2020, paid to some contractor for the construction of the Abia State Airport.

“We have spent time trying to locate the airport and up till now, have not been able to locate it. So, as we continue to look for our airport, we have also involved the security agencies to help us search,” the governor stated.

Otti did not immediately disclose the administration that paid the said sum or the one that was being investigated. But evidence emerged thereafter that Otti’s  ‘audit’ was on the administration of Ikpeazu, which started on May 29, 2015 and ended on May 28, 2023.

What Otti did not disclose to his audience, having previously claimed that he met an empty treasury when he took office on May 29, 2023 was that the Ikpeazu government left for him a net cash balance of  N3,495,207,127.14 in various banks, where the Abia State government  operated about 78 accounts in 14 banks in the country. Indeed, it turned out that Otti had on July 13, 2023, less than two months after assumption of office, engaged the services of KPMG, a globally reputable firm, to carry out a financial process review of the Ikpeazu administration from May 29, 2015 to May 28, 2023, when the former Governor left office.

Otti did not also disclose the terms of the review, which was contained in the report of KPMG, which was submitted to the Abia State government by electronic means to Dr. (Mrs.) Njum Onyemenam, Accountant General, Abia State Government and   Hon. Michael Akpara, the Commissioner for Finance.

In the 360-page report, which was titled: “Provision of Process Review Services; Project Azumini, Final Report of Factual Findings”, submitted to the Abia State government in March 2024, KPMG was clear on  Page 15 of the document that, “(A). This assignment was not performed by us in the capacity of a statutory auditor. Hence, this is not any form of financial statements audit of ABSG or any entity listed in the report. We are therefore not required to render an opinion on the financial statements of ABSG or any entity listed in the report.(B) Rather, we have performed the procedures we considered appropriate in the  circumstances and in line with relevant KPMG methodology. (C). We were also not required to review the adequacy or otherwise of the output of the prior or current external auditors and/or consultants of ABSG, and did not perform any of the  following: (I) Conduct a trial and / or inquiry in the course of the assignment.

(II) Act as a tribunal, commission of inquiry or in judicial or quasi-judicial role.

(III) Perform, any adjudicatory function whatsoever in the course of the assignment.

(IV). Conduct any exercise with a view to determining whether any person was guilty or innocent of any offence.”

KPMG further clarified on Page 16 of the same report that it was limited to only the documents provided to it by the government and as such, could not be said to have exhaustively dealt with the review, since it did not see certain documents from the government. It said under “Limitations and subsequent events”, that, (A). We have included and records information relevant to the scope of work and objectives in line with the executed engagement letter of 13 July 2023, and as provided by the relevant MDAs of ABSG and the banks. Notwithstanding the foregoing, it is possible that documents and/or information exist, which were not made available to us.

(B) The provision of additional documents and / or information after submission of this final report will however attract a separate fee and timeline discussion between KPMG and ABSG.

(C). For ease of understanding of this report, specific limitations (if any) are stated in the relevant sections of this report.”

Instructively, the report warned the Otti-led government that the report was not a public document and that the agency shall not be answerable to the document being made public or queries from agencies of government, should the Abia State government decide to make it public or submit same to security agencies.

On Page 2 of the report, it said: “This final report is intended for the use of the Abia State Government (“ABSG”) and should  not be used for any other purposes. This report may contain legally privileged and confidential information. No part of the content  may be quoted, referred to or disclosed, in whole or in part, without KPMG’s prior written  consent.

“Nothing in any part of this report shall preclude or subject to any limitation whatsoever the release of the report / communication by ABSG to any law enforcement or court of law to  whose control ABSG is subject, or becomes subject, provided that KPMG shall accept no  responsibility or liability to such agency of government in connection with their use of the  report.

“ABSG acknowledges that KPMG to the fullest extent possible shall not assume any liability whatsoever to any third-party recipient of this report or any other person or authority  whomsoever under any circumstances whatsoever, irrespective of whether KPMG has  consented to the disclosure of this report to such a third party.

“ABSG shall indemnify and hold KPMG harmless against any claim, litigation fee, cost,  expenses, or liability relating to the submission of this report to third parties by ABSG. KPMG may provide ABSG with oral, inception reports, status updates, draft reports, or  draft presentations. Nonetheless, our final report shall take precedence in all circumstances, and therefore, no reliance should be placed by ABSG on any oral, inception report, status updates, draft reports, or draft presentations.”

Ikpeazu: I didn’t divert N10bn for Abia airport, Otti’s govt reckless with funds

But when Otti broke the ice by announcing the result of review in the United States and subsequently released the report, it drew serious rebuttal from the Ikpeazu camp.  Ikpeazu warned Otti, to focus on governance and stop deceiving the people with lies and fiction.

Ikpeazu said that Otti was diverting attention from the  quarterly financial reports of Abia State, which showed that his government has been reckless with funds.

Ikpeazu said: “Accounting for the N10 billion, no dime was diverted. Otti is diverting attention from his own Quarterly financial report which captured him spending N3billion on research and other non-existent projects. Why is it that he is using the same Ferrotex contractor, who he accused of receiving N10billion from us for major contracts today? What stopped him or his auditors from asking Ferrotex for explanations? We have decided to respond to him with evidence of jobs done. The time of truth has come.”

A former Commissioner for Information under Ikpeazu, Chief John Okiyi Kalu,  said that the alleged N10billion originally budgeted for the airport project was rechanneled into road projects, following the approval of the Executive council, after traditional rulers in the state told Ikpeazu to forget an airport project but focus on fixing major roads in the state. The traditional rulers had told Ikpeazu that the airports in Owerri and Uyo made an Abia airport project unviable.

Okiyi-Kalu, who later served as a Commissioner for Trade and Investment, said that it was shocking that Otti and his media handlers rushed to a blogger to help them publish an indicting report against his former principal instead of the publishing the ‘forensic audit’ report through official state channels.

Okiyi-Kalu explained that the airport project issue first came to the Abia State Executive Council at a meeting on  September 24, 2020.

He said that based on the presentation made to the Exco, they approved the project and also approved the borrowing of N10billion “from UBA Plc as an initial investment by the state with repayment charged to our FAAC account with the bank.

PDP: KPMG conducted process review, not forensic audit on Abia funds

In an allusion to what KPMG later confirmed that they did not see all the documents in their review, Okiyi-Kalu challenged the current Secretary to State Government, Prof Kenneth Kalu, to review and confirm his claim from Exco records in his custody.

He further said that on November 17, 2020, Governor Ikpeazu took to his official X (formerly Twitter) handle to inform Abia Citizens that the airport project had been suspended.

Okiyi-Kalu said that Ikpeazu informed the then Commissioner for Works, Elder Bob Ogu, of his intention to suspend the Airport project in anticipation of  Exco approval, hence the State Ministry of Works selected road projects in Abia 2020 budget for funding with the N10 billion and allocated resources to the contractors.

Okiyi-Kalu gave a detailed account of the roads and contractors that received the N10 billion initially marked out for construction of an airport and listed about 18 projects that were done, in place of the airport.

According to his list: “China Zonghghao for Osisioma flyover Aba & ABSUTH Road Aba got N800,000,000. Trackcare Construction Company for Aba-Owerri road Aba (Brass to Osisioma junction segment, Ururuka road Aba,  Afor Ibeji/ Ubakala Umuahia, Stella Marris Catholic Church, etc got N1,035,000,000.

“Ferrotex Construction Company for Aba-Owerri road (Railway junction-Brass junction segment) Aba, Obohia Road Aba, Opobo Junction-Ukpakiri Ogbor-Hill Aba, Uratta Ugwuati, Itungwa, Rehabilitation of failed Ururuka got N1,500,000,000.

“⁠Shannah Jardon Construction Company for  Okigwe Road Aba, Milverton Road Aba, Cemetery-Eziukwu Road Aba got N450,000,000. Ecklean: Osusu road Aba-N 200 000,000, Cosmos Construction Company for Immaculate Avenue Umungasi Aba got N150,000,000 while Setraco/Hartland for Port Harcourt road got N1,000,000,000.”

He added that, “⁠Rockwaters for Ohanku Road Aba, Okpu Umuobo Aba got N650,000,000, MOW for Ebenma Street Aba and Ovom street Aba got N1, 130,000,000. Zubbalco for MBUBO Umuakwu got N200,000,000.”

Other details showed that Tunnel End Construction Company got N780,000,000 for the construction of Umuene-Obikabia, Umuojima-umuokiri- Ekeakpara, umuakatawom-Eziama-Ohanze while Paceo Carretera company got -N312,000,000 for the construction of Agalaba Ring road in Obingwa.

Others, according to him were ⁠Delhope Construction Company got N557,000,000 for the construction of Umuobiakwa-Owo road Obingwa, Federal Medical Centre internal road, Aba Road Umuahia (GG-shoprite).

He also argued that Ministry of Works’ Construction department got N325,000,000 for the construction of  Umuobiakwa internal roads, Umuobiakwa (Gov) roads, Mbawsi internal roads and desilting of Aba big gutter while ⁠⁠BOK construction got -N100,000,000 for the construction of Agbama Ring road Umuahia.

“Crystalkleen Construction for York/Jubilee/Nicholas street Aba got N30,000,000, Pumeco Construction for Aba road (Uchenna/ShopRite) Umuahia, Zero portholes in Umuahia roads got N353, 000,000, while Yodel construction for Afrata road, Umuahia got N100,000,000.

“⁠E&P for Trinity College Road Umuahia got N60,000,000 and Obitex Development Company Ltd for construction of Ohuhu road from Isiokata, diversion from the gully erosion at isiokata to Umuawa Ohuhu to Nkwoegwu got N125,000,000.”

More details provided show that Smutedge Company got N200,000,000 for the rehabilitation of failed portions of Umuikaa-umuenne, Pacon Company got N12,000,000.00 for completion of drains at

Ozuomba/Ohazu road.

“MOW company for Zero pot holes(Aba) got N100,000,000, Charbel Company for Government house got N400,000,00 and the State Ministry of Public Utilities got N100,000,000 for Streetlights.”

He, however, explained that the list  containing the tranche payments was not exhaustive as those were the only ones in his personal Exco note that he kept during meetings.

He said that it is also true that other tranche payments were made from other sources, stressing that the Ministry of Works led by Elder Bob Ogu and the Ministry of Finance led by Dr Aham Uko back then, should be able to supply a more comprehensive list to what he was saying.

Okiyi-Kalu added that Ferotex Construction Company, as one of the reputable indigenous construction companies with anti-graft agencies’ clearance was selected by the Ikpeazu administration as lead company in the “contractor financier” arrangements with UBA.

He said that the above-mentioned arrangement, the “contractor financier” arrangement was not alien within the public sector, alleging that a similar arrangement was entered into by the Otti’s government with Craneburg Construction Company for N50bn facility earmarked for “various roads”.

He explained that such lead companies are more or less consultants that would receive the bulk amount and pay other road contractors as banks would not likely agree to enter into multiple agreements with all the contractors.

He said that Otti’s claim that he got the top three audit firms in the world to do the forensic audit was untrue, as his top three audit firms have failed to follow the money as expected of any audit firm, even the least ones, adding that a serious forensic audit investigation would simply seek to establish if the allocated funds got to the companies and also if the contractors did the work.

According to Kalu, “Those who claim that there was need for “virement” may be speaking out of ignorance in this case. The road projects were already in our approved 2020 budget, hence no need for further house approval.

“All state revenues are expected to be used to fund state budget and from the time we had approval to spend on the roads instead of Airport there is, no further need for legislative approval.”

“For the further education of those who verbalize terms they do not understand, “virement” is the process of transferring items from one financial account to another. In this case, the airport project and the road projects must both be in the 2020 budget before you can execute virement….says Otti lied deliberately to mislead Abians.

Okiyi-Kalu was to further explain that the  net credit balance of N3.48 billion left  for  Otti by Ikpeazu  was different from other near-cash assets, such as a 3.5% share in Aba Independent Power Project (IPP) Geometric now valued at  over N40 billion, among others. RAAMP funds of $50 million and AfDB fund of $115m as well as net FAAC credit of N6 billion and stamp duties accrual of more than N40 billion.

Okiyi-Kalu said that given that one should at least expect a former Managing Director of a Bank to know the difference between a Process Review report and a Forensic Audit Report, he can only say that Otti lied deliberately to mislead the public. “Furthermore, Governor Otti sought to mislead the public when he alluded to the N10 billion being taken from the state’s consolidated revenue account whereas it was a contractor finance loan from UBA plc”, he said.

He expressed sadness that many of Otti’s cheering crowd do not know the difference between a forensic audit and a process review, a situation he advised all those confused to do proper research to know the difference.

“How much did Governor Alex Otti pay KPMG? Abians deserve to know because we are already paying a state-owned audit unit that would have done a far better job.

“So far, Otti’s government has spent N9 billion on a subhead called “research & development”. What is he researching and developing in Abia State? Check quarterly financial reports published by his administration, if in doubt.

“Based on antecedent, never trust anything said by Governor Otti. He lies and misrepresents facts too frequently to be taken seriously.

“Did you notice that after I responded to his allegation of missing N10b with details of road contractors paid from the money, he said, “The money was moved into 32 different accounts” instead of the money being paid into road contractors’ accounts?”

He said that he remains grateful to whoever forced Otti to leak the KPMG report, stressing that at face value, the report exonerates  Ikpeazu of any wrongdoing and highlights the leadership shortcomings of Otti.

“A Governor does not award contracts in Abia State and a Governor does not sign Cheques. It is the Finance & General Purpose Committee (F & GPC) that reviews tenders, recommend companies for the award of contracts and passes the same to State Exco for approval.

“Similarly, only the top officials of the Ministry of Finance sign State Government Cheques and at the level of ministries it is the Permanent Secretary and Director of Finance.

“As a Commissioner in Abia State for six years I never signed any government or ministry cheque because it is not within my remit. Where then is the evidence of Dr Ikpeazu stealing N10bn meant for Abia Airport.”

In the report, KPMG said its investigation  for the period under review covered  Zenith Bank and Union Bank is from 1 January 2020 to 28 May 2023 as the two (2) banks were KPMG audit clients up to 31 December 2019.

The firm said that although “our report may contain references to relevant laws and regulations, we do not provide legal opinion on compliance with such laws and regulations. (b). Our discussion of the relevant laws and regulations is intended solely to facilitate the determination of applicable facts, which may be relevant to the interpretation and/or application of such laws and regulations.

1. Should such interpretation require legal advice, we recommend that ABSG obtain an independent legal advice.

These among other process yielded some findings, which included the fund for the now controversial airport project and some issues of conflict of interests, where some Civil Servants and some government officials had interests in some companies that were awarded contracts by the government. Significantly, some of the contracts were awarded without the approval of the governor.

The report added: “We did not perform any scientific test on any of the records and / or information provided to  us by ABSG and/or the circularised banks during this assignment, to ascertain their  authenticity, as this type of assignment does not require scientific test on the records.

Therefore, our review, analysis and examination of the records and information provided  were limited to the content of such records or information.”

It said under Ikpeazu, the government awarded 560 contracts to 23, 121 contractors with 520 contracts, having a cumulative contract value of ₦294,824,123,365.79.

“Notwithstanding that ABSG did not provide sufficient information to enable KPMG to: Determine the contract values of the remaining 40 of the 560 contracts. Independently verify the accuracy and completeness of the ₦294,824,123,365.79  contract value of the 520 contracts.

“We analysed available records, noting the following: ABSG paid ₦131,877,519,592.0622 to the 231 contractors, via three (3) means i.e., CFFs (₦71,315,434,474.50), directly from ABSG bank accounts (₦59,467,035,117.5623), and procuring MDAs (i.e. Ministry of Works –

₦927,200,000.00 and ASOPADEC – ₦167,850,000.00). We reviewed sample payments of ₦107,234,358,515.21 of the ₦131,877,519,592.06, noting the following exceptions amounting to ₦56,662,966,007.76: ₦15,936,522,309.43 – 6324 contractors with no supporting documents maintained  by the Cash Office, Office of the AG.; ₦12,800,851,500.00 – Four (4) contractors for contracts that do not appear to exist, per available records and discussions with relevant officials. These include: ₦10,000,000,000 to Ferotex on 25 September 2020 for the “construction of Abia State airport”; ₦2,000,000,000.00 on 6 June 2022 and 1 September 2022 to Logistics De Luke, for the “delivery of 22 different brand-new vehicles”, among others.

It said there were cases of non compliance to due process relating to the selection of contractors and  award of contracts. These included: “Six (6) MDAs did not provide “Certificate of No Objection” from the Bureau of  Public Procurement for 8232 contracts worth ₦156,759,362,425.87, contrary to  Section 21 (h) and Section 18 (4) of State Public Procurement Law.  Six (6) MDA did not provide record of bid evaluation for 7,234 of the 85  sampled contracts with a cumulative value of ₦98,570,680,828.07. The firm said it did not see any record that the governor approved 3535 contracts amounting to  ₦83,382,082,143.10, in line with ABSG’s practice.”

Some of the contractors listed by the report have gone public to confirm receiving payments for work done as stated by the Ikpeazu team. They listed the work they did for the state government and offered pictorial evidence. They also highlighted the fact that the process reviewers listed sums pertaining to contract awards as if they are funded projects emphasizing that contract award is different from funding for contract. One of the contractors, Track-Care Global Construction Limited in a recent media statement said: “After the publication of the KPMG reports, we have deemed it imperative to further enlighten the citizens of Abia State about the various processes of contract jobs.

“There is a difference between contracts awarded and the amount paid. Payments are released in multiple tranches therefore, some of the contracts mentioned are yet to be mobilized or funded e.g. Ururuka phase 2 etc. All the contracts that were mobilized have been completed”

“KPMG in their reports, have stated that the figures are yet to be verified.

It is important to set the record straight in order to avoid further defamatory information against a reputable organization.”

The Star