The Nigerian National Petroleum Company Limited (NNPCL) is facing intense scrutiny over its financial practices following the release of the Auditor-General’s 2022 audit report, which flagged a failure to account for £14.3 million spent on its London office during the 2021 financial year.

The Auditor-General’s report, which contains interim observations, detailed significant regulatory failures and a disregard for due process and accountability standards.

The audit observed that a total of £14,322,426.59 was expended by the London Office on personnel costs, fixed contracts, and other operational expenses...TAP TO CONTINUE FULL READING.

However, audit officials were reportedly: Not provided with the necessary documents or supporting schedules; Not allowed to confirm how the funds were utilized; Unable to ascertain whether the expenditures were made in line with due process and economy.

The transaction, the report noted, contravenes Paragraph 112 of the Financial Regulations (FR) (2009), which states: “The functions of the Accounting Officer shall include: …(i) ensuring internal guides, rules, regulations, procedures are adequately provided for the security and effective check on the assessment, collection and accounting for revenue.”

Furthermore, Paragraph 415 of the FR (2009) states: “The Federal Government requires all officers responsible for expenditure to exercise due economy. Money must not be spent merely because it has been voted.”

Similarly, Paragraph 603(1) of the FR (2009) states: “All vouchers shall contain full particulars of each service such as dates, numbers, quantities, distances and rates, to enable them to be checked without reference to any other documents and will invariably be supported by relevant documents such as local purchase orders, invoices, special letters of authority, time sheets, etc.”

The Auditor-General warned that the inherent risk in such undocumented transactions includes the diversion and misappropriation of public funds, attributing the anomalies to weaknesses in the NNPCL’s internal control system.

In its defense, NNPCL management claimed that the London office operates as a service unit with an approved annual budget of £14.3 million, which was executed in line with operational and financial requirements.

The management argued that: “While the audit findings raise concerns about unaccounted expenditures, it is important to note that details of specific transactions or line items under scrutiny were not provided. Without specific references or documentation requirements, it is challenging to provide tailored evidence or clarity of particular expenditure.”

The NNPCL asserted that detailed records for personnel costs, fixed contracts, and other operational expenditures exist and could be made available upon request.

The NNPCL said: “These records can be made available upon request for audit review to verify compliance with financial regulations and ensure alignment with due process and economy.

“The NNPC remains committed to maintaining and strengthening internal control systems across all units, including the London Office, to ensure transparency, compliance with financial regulations and the prevention of anomalies in expenditure management.”

However, the Auditor-General deemed the response unsatisfactory, stating that the findings remain valid until management implements the recommendations.

According to Premium Times, the report directed the Group Chief Executive Officer (GCEO) to: Recover and remit the full sum of £14.3 million to the national treasury; If the amount is not recovered, sanctions relating to irregular payments and failure to account for public funds, as specified in paragraphs 3106 and 3115 of the Financial Regulations (2009), should apply.

The NNPCL is simultaneously facing probes over other financial irregularities detailed in the same audit report, including: Over $51 million in questionable settlements; Approximately N684 million in questionable expenditures on abandoned projects and irregular procurements; A Senate probe over N210 trillion allegedly unaccounted for between 2017 and 2023.