Ecological Funds: A story of missing money, vanishing projects
Maraban Rido is a quiet community on the outskirts of the city of Kaduna in the North-West of Nigeria, hosting the Kaduna Refining and Petrochemical Company, a subsidiary of the Nigerian National Petroleum Corporation. Access to drinkable water in Maraban Rido is a challenge, and the community cannot boast of a standard primary health care facility.
The only primary school in the town lacks basic facilities such as chairs, thus compelling the pupils to sit on the bare floor or to take classes under the shade of trees. This community, where such basic necessities are lacking, woke up one day in 2011 to find out that contractors were bringing in equipment to work on a N1.8 billion contract to remediate the sludge pit of the local refinery. Strangely, for a project that was meant to benefit the community, the mediation scheme did not come at the request of the company or anybody in the town. The input of the community was not even sought in order to understand how the sludge pit was affecting community members, or whether another project would have been of greater benefit to their wellbeing.
Mr. Charles Ameh, Team leader of Follow The Money Group, an NGO campaigning for accountability and transparency in the management of government funds noted that the project was assigned by Nigeria’s Ecological Fund to Kaduna State, not because the sludge pit was causing any problem, but seemingly to appease the Vice President Mohammed Namadi Sambo and the then Minister of Environment, Hadiza Mailafia, both of whom are from Kaduna State.
This story is not new. In 2011, most of the Ecological Fund contracts were assigned to Otuoke in Bayelsa State, homeland of President Goodluck Jonathan. Projects in Otuoke received an allocation of N5 billion from the fund. Moving on to the northeast of Nigeria, the Federal Housing Estate in Yola, the capital of Adamawa State, had suffered greatly over the years from the menace of flooding and erosion. Residents of the area had lost properties and belongings worth millions of Naira, before in 2013 the Ecological Fund decided to award a contract for erosion and flood control in the area.
To the chagrin of residents, rather than alleviating their suffering, the contractor handling the multi-million Naira project instead left behind tales of woe. A petition from residents of the Federal Housing Estate to the Minister of Environment noted that, “the noble intention of the ministry in undertaking to solve the problem of the ecological challenges of the Estate was scuttled by the contractor in view of his attitude and manner of handling the work due to poor execution of the contract. The work of the contractor was poor, shoddy and of substandard quality.” The residents alleged that the company did not carry out the contract in line with the contractual agreement. They said they had suffered serious hardship and damage to their properties due to the absolute refusal of the contractor to provide connecting slabs to link their houses, and the inability of the contractor to follow the timeline for the contract execution.
Regrettably, this investigation by Weekly Trust gleaned – from a source familiar with the workings of the Fund – that the contractor had already received over 80 per cent of the contract fee from the Ecological Fund Office (EFO). In another case, the Ecological Fund was recently directed by the Federal Executive Council to fund the procurement and nationwide distribution of over 750,000 clean cook stoves and 18,000 wonder bags, at a cost of over N9.2 billion. In December 2014, the Senate Committee on Environment and Ecology concluded that this was a ploy to fund the 2015 elections by the ruling party.
Back story of the Fund
These stories serve to show how the Ecological Fund is operated. The Ecological Fund is one of the biggest special funds in Nigeria, these being funds from government that seek to address shortcoming in a particular area – others include the Education Fund and the Petroleum Technology Development Fund. The Ecological Fund was established in 1981 as an intervention fund to receive one per cent of the Federation Account, increased to two per cent in 1992. It was placed on first line charge to provide resources for the amelioration of ecological problems such as soil erosion, flood, drought, desertification, oil spillage, pollution and general environmental pollution, among others.
However, over the years the operation of the Ecological Fund has raised many questions, as politicians and government officials at federal and state levels have been accused of diverting monies and enriching themselves from the Fund. Sometimes this has resulted in action. The 2006 case in Plateau State, where the former governor Mr. Joshua Dariye was impeached for misusing the state’s share of the ecological funds, is still fresh in the memory of many Nigerians.
Today, the Ecological Fund is regarded as a goldmine by many observers, and this is evident in the calibre of contractors and the kind of contracts awarded by the Ecological Fund Office. Charles Ameh, team leader of Follow The Money Group, says that the EFO awards multi-million Naira contracts to high-profile and selected contractors, who are either agents or fronts for highly placed government officials or politicians. Contracts awarded by the Office include those for land reclamation, river channelization, and flood and erosion control among others.
Attempts by the media to beam its searchlight on the Ecological Fund over the years have met a brick wall. In the last three years, Weekly Trust has made frantic efforts to let Nigerians know how the money that accrues to the funds was being spent, but rather than submit itself to accountability, deliberate efforts were made by the office to block access to information about fund’s activities.
The Ecological Fund Office has yet to reply to two letters sent by Weekly Trust requesting information on specific items. The letters were followed up with several fruitless visits and the Fund’s spokesman merely reiterated that the Permanent Secretary, Goni Sheik, has not acted on our request.
The EFO has previously claimed that it does not choose which projects to undertake, as this decision lies with the presidency. “Our interventions are decided and selected by the presidency and these are mainly situations that are beyond the capacities of state governments to handle,” said the Permanent Secretary during a 2014 meeting with elders from the Niger Delta, who complained to Sheik that the Delta region is not getting enough projects from the Ecological Fund.
Having approached the EFO and received no useful information regarding the amount of money that has accrued to the Fund, Weekly Trust then attempted to find out the answer to this question through other means. While the information available is far from comprehensive, statistics from the Revenue Mobilisation and Fiscal Allocation Commission, Central Bank of Nigeria annual reports and other government agencies show that the EFO received over N375.5 billion between 2007 and the end of the first half of 2014.
According to the laws establishing the Ecological Fund, the two per cent first line charge from the Federation Account that is devoted to the amelioration of ecological problems in Nigeria is shared among the tiers of government as follows: the Federal Government gets 48.5 per cent, state governments 24.5 per cent, and local governments share 20 per cent. The federal government manages its own share of the Fund through the Ecological Fund Office.
Money going missing
The Ecological Fund Office headquarters in Abuja is a hub for contractors, and it is littered with exotic cars returned from project sites. All contracts awarded by the EFO have the provision for the purchase of a new project vehicle. This is usually captured under ‘Bill One’, which also caters for site clearing, establishment of a site office and the moving of the supervisors to the site. The vehicles are purchased by the staff of the ministries that execute the projects, in collaboration with the officials of the EFO, which funds the projects.
However, even though the cars lined up outside the EFO headquarters are exotic, they are not new. Investigations by Weekly Trust reveal that the funds for project vehicles are frequently used for the purchase of second-hand vehicles – referred to as Tokunbo – instead of new vehicles. According to a source, this money is being pocketed and a lot of taxpayers’ money is being fraudulently diverted. The cars are shared to politicians or given to highly-placed government officials.
As some of the contractors are paid before starting the job, it is typical that they end up abandoning the job, and not executing the work as contractually agreed. Engr Chikeze Felix, a civil engineer and public works consultant, told Weekly Trust that the government had tried to reduce this spate of abandoned contracts, by changing public contracts in 2013 such that they now operate on a ‘pay-as-you-go’ basis. “Government have tried to close all the loose ends. Contractors are now required to submit an Advance Payment Guarantee, a bond from a bank showing that the contractor will not run away with government money before [having] been mobilised to site, and [that they will] start work before getting any form of payment. But this whole process is operated by Nigerians and we know that we are not yet there,” Felix stated.
In 2013, the EFO brought consultants onto all of their funded projects, nominally to bring transparency to the workings of the Fund. However, Weekly Trust sources state that the undercutting between ministry and EF officials often receives the endorsement of consultants.
A case in point is a recent disagreement brought to the attention of Weekly Trust by the contractor who undertook the rehabilitation of a waterworks in Kaduna. As a result of the recommendations of the consultant and the Ecological Fund Office, the contractor had N50 million deducted from his payment, without an official reason and the money was not returned to the Fund. When the first contractor complained, another contractor was brought in, and the project handed over to this new contractor. The first contractor only came to know of the re-commissioning when he read an article published by Weekly Trust. As the Ecological Fund keeps swelling and politicians and contractors are smiling to the bank, Nigeria has just taken out a $500 million loan from the World Bank to handle erosion challenges in the South-East.
Alex Abutu produced this report with support from Partners for Democratic Change and from the Institute for War & Peace Reporting. It is part of the Access Nigeria/Sierra Leone Programme funded by the United States Department’s Bureau of International Narcotics and Law Enforcement.