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HomeBusinessSenate sets to probe N3 bln irregular contract payment at FMBN

Senate sets to probe N3 bln irregular contract payment at FMBN

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The Senate Committee on Public Accounts has queried the Federal Mortgage Bank of Nigeria (FMBN) over alleged irregular award of N3 billion contract in four phases.

The committee issued the query based on the 2018 Auditor General of the Federation’s (AuGF’s) report and has therefore resolved to summon the former Managing Director of the Bank, Gimba Yau Kumo, to appear before the panel this week to explain the rationale behind the irregular award of the contracts in question.

“Audit observed that a contract was awarded to a contractor in four phases at a total contract sum of N3,045,391,531.97.

“Audit, however, observed that the second, third and fourth phases of the contract were above the approval thresholds of the Bank.

“It was also observed from the examination of payment documents that the contractor was overpaid in the sum of N118,717,892.72 that resulted from irregular addition of 5 percent Withholding Tax in the Bill of Quantity on each of the four phases of the contract.

“Audit further observed, from physical inspection of the site, that a provision of N80,000,000.00 was made and paid for the implementation of ‘Unified Access and Attendance System’ but the device was not working according to specifications.

“A sum of N644,040,000.00 was also provided in the Bill of Quantities for offshore training and other deliverable in the 3rd and 4th phases of the contract, but there was no evidence of execution, in contravention of Financial Regulations 70,” the senate wrote in its query to the chief executive of the bank.

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In his response, the FMBN Managing Director, Dangiwa, said the contract was awarded in 2011 by the previous management to design, build and implement a mortgage banking business process solution workflow and infrastructure with the aim of creating an enterprise software that will integrate all the bank’s processes.

He explained that the management after an assessment of the contractor’s performance expressed dissatisfaction with the service rendered by the contractor.

”Management thereafter severally engaged the contractor over all the issues surrounding the project which include amongst others the issue of overpayment of the sum of N118 million due to wrong addition of WHT to the contract award sum in all the four phases as well as other payment to the contractor.

“A settlement agreement was thereafter entered into by FMBN and Messr Starter-Point LTD on the mode of repayment of all outstanding due to the bank.

”Payment of the contract sum for phases three and four were made to the contract by the previous management based on the milestone achievement as specified in the contract agreement.

“Each payment was duly certified by the in-house consultant appointed by the bank for the project Messes Comsoft Limited. The settlement agreement between the bank and the vendor has also taken into consideration the payment made for the off-shore training that was not done by the vendor.

“No final payments were made by the bank on the phase four project,” FMBN CEO wrote in his response to the senate committee.

However, not satisfied with the presentation, the Chairman of the Committee, Mathew Urhoghide, directed the former MD to appear before the panel this week to give further explanation.

He further demanded the details of the contractor who carried out the contract.

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