NNPCL Under Scrutiny Over £14.3 Million Undocumented Spending in London Office

Audit Report Flags Undocumented £14.3 Million Expenditure

The Nigerian National Petroleum Company Limited (NNPCL) is currently facing intense scrutiny following revelations in the Auditor-General's 2022 report, which highlighted a significant financial discrepancy. The report indicates that £14.3 million was expended by NNPCL's London office during the 2021 financial year without adequate documentation or adherence to financial regulations.

Audit officials reportedly encountered difficulties in verifying how these funds were utilized, as they were allegedly denied access to crucial documents required to ascertain if expenditures followed due process and complied with principles of economy.

Breaches of Financial Regulations Cited

The Auditor-General's report detailed several breaches of Nigeria's Financial Regulations (FR) 2009. These include violations of:

• Paragraph 112: Mandating accounting officers to ensure proper internal controls for revenue and expenditure.
• Paragraph 415: Requiring strict economy in public spending, emphasizing that 'money must not be spent merely because it has been voted.'
• Paragraph 603(1): Stipulating that all payment vouchers must carry full details and be supported by relevant documents such as invoices and purchase orders.

The report warned that such opaque spending practices create risks of diversion and misappropriation of public funds, attributing the issues to weaknesses in NNPCL's internal control system.

NNPCL's Response Deemed Unsatisfactory

In its defense, NNPCL management asserted that the London office operates as a service unit with an approved annual budget, and the £14.3 million expenditure was executed in line with operational and financial requirements. The company claimed that detailed records of personnel costs, fixed contracts, and operational expenses exist and can be made available upon request. NNPCL also argued that the audit query did not specify the particular transactions being questioned, making it challenging to provide tailored evidence.

However, the Auditor-General found NNPCL's explanations 'untenable' and 'unsatisfactory,' maintaining that the audit findings remain valid until the company implements the recommended actions.

Call for Recovery and Broader Financial Concerns

The Auditor-General's report has directed the Group Chief Executive Officer of NNPCL to recover and remit the entire £14.3 million to the national treasury. Failure to do so could result in sanctions for irregular payments and failure to account for public funds, as stipulated in Paragraphs 3106 and 3115 of the Financial Regulations.

This particular issue is part of a broader audit that uncovered over N61 billion (approximately $51.6 million, £14.3 million, and €5.17 million) in questionable payments and irregularities across NNPCL and its subsidiaries during the 2021 financial year. These irregularities include unsupported payments, missing documents, unauthorized virements, procurement breaches, abandoned projects, tax violations, and unaccounted foreign transactions. The Senate is also reportedly scrutinizing NNPCL over N210 trillion allegedly unaccounted for between 2017 and 2023.