An exclusive report of how over N60 billion was stolen from the pension funds of the head of service of the federation. It is the third in our series on pension funds mismanagement.
As they strolled into the room, bustling with cheerful chit chat, they appeared to be part of the normal crowd you would find in a court. Some wore stiff smiles on their faces, obviously trying to make light of their situation.
But as the court went into session and as they were called to the dock, their smiling faces turned into pensive, forlorn, long looks as the seriousness of the matter at hand hit home.
Sani Teidi Shuaibu, former director, Pension unit, head of service of the federation, HOSF, Phina Ukamaka Chidi, his former deputy, and 30 others are battling a 134-count charge of conspiracy, fraud and corruption before Justice Adamu Bello of the Federal High Court, Abuja.
The Economic and Financial Crimes Commission, EFCC, filed the charges against Shuaibu and others after investigating a monumental fraud unearthed at the pension office of the HOSF running into several billions.
The scandal was uncovered by the Pension Reform Task Team, PRTT, set up by Steve Oronsaye, former head of service to reform and restructure the pension office.
The discoveries of the task team and the EFCC are, indeed, mind boggling. Shuaibu and Chidi devised and administered a system through which they mindlessly and systematic looted pension funds. For two years, the two chief custodians of the pension fund colluded with unscrupulous bankers and others to loot over N60 billion from money meant for retired civil servants.
The EFCC has already recovered about N35 billion from several illegal accounts opened and operated by Shuaibu, Chidi and others and their companies.
The sum of N12 billion was found in two accounts maintained by Shuaibu in two different banks while assets worth several billions of naira, including a hotel in Abuja and petrol stations in Lokoja, capital of Kogi State were also confiscated. Investigators also found over $2 million and another N560 million in Chidi’s company accounts.
The fraud, which ranks as the biggest in the federal civil service till date, was discovered following a verification exercise carried out by the PRTT in June 20, 2010.
Oronsaye had set up the team to deal with the intractable problems bedevilling pension administration at the pension unit of his office.
Headed by Abdulrasheed Maina, director of the Customs, Immigration, Prisons Pension Office, CIPPO, the team which draws personnel from some security agencies including the EFCC, State Security Service, SSS and the Independent Corrupt Practises and other related offences Commission, ICPC, made astonishing discoveries.
As it went across the 36 states and the Federal Capital Territory, FCT, for verification of the over 141,000 pensioners on the payroll, it discovered that 71,133 were ghost workers.
The pension office under Shuaibu had been collecting N5 billion for the payment of pensioners every month.
The breakdown of this was N3.3 billion for the payment of pension to over 141,000 retirees, N800 million as arrears and N900 million as death benefits and gratuities.
However, the task team discovered that only N825 million was required for the payment of just over 70,000 genuine pensioners while little was needed to be paid as arrears and gratuity. The meaning of this is that officials of the pension unit had been collecting N5 billion monthly but paying only N825 million to pensioners and pocketing nearly N4.2 billion.
Investigations show that the pension fund thieves devised several disingenuous means to pilfer the money meant for pensioners.
First, they opened more than 60 accounts which were not known nor approved by any authority, including the office of the accountant general of the federation. It was through these illegal accounts that monies were moved and subsequently laundered. In fact, long after they had left the HOSF’s office Shuaibu and Chidi remained signatories to these accounts until the bubble burst.
One of the ways used in stealing pension funds was through the payment of ghost pensioners. This was done with the connivance of some fraudulent bank officials and others recruited for the purpose.
In the first stage of the scheme, officials of the pension unit in the office of the HOSF shuffled files of living and dead people to cook up names to add to the payroll. Names of many pensioners who had died long ago were exhumed from “dead” files and put into ‘living” files which were then put in the payroll.
On the other hand, to swell the list of persons collecting death benefits, names from “living” files were transferred to “dead” files.
Investigations show that accounts were in some cases created with fictitious addresses, pictures and other data as account officers in the banks compromised procedures to help corrupt civil servant launder money.
At the end of the month they collected the money in the accounts and paid to officials of the pension unit after taking a five per cent cut.
The two “specialists” in charge of creating a list of ghost pensioners were Aliyu Bello, personal assistant to Shuaibu and Abdul Mohammed, assistant cash pay officer in the HOSF’ pension unit.
Bello recruited many people including his friends to pose as pensioners. These people opened accounts and subsequently drew pension from the office of the HOSF which they paid back to Bello for a fee.
For example, Bello recruited Haruna Maigida whom he instructed to open three accounts in different name. Maigida was at different times paid N17, 452,910.87, N7, 783,891.68 and 17,293,888.44 respectively as pension and gratuity from HOSF pension fund.
In all, he fraudulently received N42, 530,690.99. Maigida confessed to EFCC investigators that he paid it all back to Bello for a five percent commission.
Bello equally recruited Abdullahi Omeiza who used 13 separate accounts to fraudulently receive pension and gratuity totalling N191, 794,312.51 from HOSF pension funds. Upon arrest, Omeiza also confessed that he paid all the money back to Bello for a five percent fee. Investigators found this to be true as monies were transferred from Omeiza’s account into Bello’s personal account.
Others were paid through the account of Fafama Estate Developers, a company owned by Bello. The Fafama Estate account was found to have had a turnover of close to N300 million with a balance of N60 million at the time Bello was arrested.
In the case of Mohammed, when he was arrested and his Abuja house searched, four separate lists of names of fictitious pensioners were discovered. He cooked up thousands of fake names which were put on the payroll and paid pension and gratuity. He then collected the money back using the accounts of companies he set up for that purpose.
These companies include Salimpa Ventures, Omaumali Ventures and Sa’azab Global Ltd. Salimpa Ventures alone had accounts with a turnover of N422 million generated from returns from fake pensioners.
Apart from using ghost workers the pension fund thieves also devised a most crooked and wicked way to steal money. Every month they invited pensioners out for verification.
For years, Abuja faced the embarrassment of pensioners, old men and women who served the country years ago, some close to 90 years old, coming to queue for verification exercises. Many of them who had problems with their pension took up residence at the office of the HOSF at the federal secretariat, Abuja. Many reportedly died.
What Nigerians did not know is that this system of monthly verification was sustained so that officials of the pension unit could collect money to conduct the exercise. Government was paying over N400 million monthly for the verification exercise.
That is an exercise that has been proved to be needless as the task team has shown with a new pension administration system it has introduced which has done away with monthly verification exercises.
Also, it was discovered that pension officials in the office of the HOSF colluded with officials in the pension offices in some states to collect N500 million monthly for the payment of pensioners in the states who served in the federal civil service and are allowed by law to be paid from federal pension funds.
To do this, the state pension offices generated thousands of documents for fake names for which they claimed pensions. Thus they collected N500 million every month whereas only N100 million was needed to pay these category of pensioners.
The state pension officials allegedly collected the money and sent back N400 million to officials in Abuja for a fee.
Generating fake state federal pensioners appeared to have been Mohammed’s specialty. He coordinated the generating of fake pensioners’ list for which money was released to pay state federal pensioners.
Investigators discovered several forged documents in Mohammed’s house including those used in opening bank accounts for ghost pensioners.
He was found to have recruited some officials of the Kogi State Pension Board who helped him generate lists of fake pensioners and faked documents with which huge amounts of money were fraudulently siphoned from pension funds.
In their statement to investigators, the trio of Ohiemi Elejo, Isah Hussaini Sule and John Adejoh, all officials of the Kogi State Pensions Board, who were found to have been involved in drawing up fake lists confessed that it was done on the instruction of Shuaibu.
Mohammed was said to be the one who collected back the monies paid to the fake pensioners and remitted same to Bello through his (Bello’s) company, Fafama Estate Developers, for onward transmission to Shuaibu.
Statement of accounts of Mohammed’s companies, including Salimpa Ventures, Omaumali Ventures and Sa’azab Global Nig. Ltd, show that he paid the sums of N10,000,000. N43, 300,000 and N5, 100,000 into Fafama accounts.
However, the biggest frauds were perpetrated by the fraudulent civil servants through the award of bogus and fictitious contracts that existed only in their own books.
Enquiries at the HOSF’s office showed that none of the contracts worth billions for which Shuaibu, Chidi and others signed mandates was ever executed. There was never any tender, bid or approval. They just paid out money for bogus contracts.
It was gathered that the head of audit in the HOSF’s office had raised audit queries, complaining that payments from the pension unit were not vetted by his office.
However, rather than taking action Shuaibu was posted out of the office of the HOSF.
Shuaibu and Chidi, the chief custodians of the funds, were the biggest players in the contracts scam through which billions of naira was siphoned from pension funds.
Both engaged in a mindless and crazy looting frenzy, the magnitude and brazenness of which beat the imagination of even investigators. Each devised his own looting strategy.
For the fair complexioned Chidi, she adopted a double edge strategy. While she registered some companies on her own she also recruited other people who also brought their companies to partake in the contract bonanza.
Because she knew that her agenda was dubious, Chidi falsified documents at the Corporate Affairs Commission, CAC, to register four companies used in the contract scam.
The companies are Ijez Global Resources, Figure International Agency, Obiz Ventures and Cenco Enterprise. She registered Ijez Global in the name of Ify Chidi. She also opened two accounts for Ijez Global using a forged driver’s license.
For the three other companies, she registered them in the name of Cecilia Maduagwuna Phina. Chidi also fraudulently opened three accounts for the companies and a personal one for Cecilia using another forged driver’s license.
To her companies Chidi awarded fictitious contracts and at different times fraudulently paid them N32,607,432.00, N88,336,604.00, N80,233,631.00 and N81,904,382.00.
The sums of N77, 785,344.42, N25, 504,796.73 and N27, 546,748.05 respectively were discovered in fixed deposits in the accounts of Figure International, Obiz Ventures and Cenco Enterprises. Another N80, 551,216.60 was lodged in a fixed deposit in Cecilia’s account.
However, Chidi was not satisfied with this haul for she also went ahead and recruited others to partake in the contract looting spree.
One of the persons she recruited was Boniface Jibro, branch manager of UBA, Maitama. At different times, Jibro received amounts totalling N146, 771,252.00 from the pension funds. The banker confessed that he remitted all the monies he got to Chidi through her company, Pam Investment Property, and that he collected five percent amounting to N7, 338,562.60 for his efforts.
However, Jibro also recruited some customers of his bank whose company accounts were also used to receive money from pension funds of the office of the HOSF ostensibly for fake contracts.
Two companies, Effect Services Ltd and J.K. Palawinco Nigeria, belonging to Jibro, collected N116, 525,000.00 and N105, 100,000.00 respectively for bogus contracts.
It was discovered that Pam Investments had a current and a domiciliary account. The current account was found to have had a turnover of N560 million (N500 million of which was in fixed deposit) while the domiciliary had $2.15 million ($2 million of which was in fixed deposit). Both accounts have so far been seized by the authorities.
Upon interrogation by EFCC investigators, Jibro disclosed that the Pam Investment accounts were opened by Chidi in the name Cecilia Maduagwuna using an elderly woman’s photograph.
Chidi confessed that she opened the Pam Investment using her mother’s photograph and that she had at different times collected monies from Jibro and others.
However, in all these, Shuaibu remains the kingpin of the pension fraud. As director of the HOSF pension unit he coordinated the whole heist, recklessly dishing out mandates running into billions of naira for the payment of fake contracts and ghost pensioners.
He was not only a signatory to the pension funds accounts, he also signed and confirmed all mandates to banks before money could be released.
Like Chidi, his deputy, he also fraudulently registered several companies or recruited people who registered companies which fraudulently collected money for the pension funds of the office of the HOSF.
The companies traced to him include Riba – Ile Petroleum Ltd, Suntrust Property Company, A.Y. Ted Oil Ltd, Egbuna Attah Investments and Badawulu Investments.
Funds from pension funds were traced to Shuaibu’s petrol stations in Lokoja and Anyingba, both in Kogi State from where he hails.
He was also discovered to have purchased Frefina Hotel, Abuja for N359.25 million using pension funds. He also had an estate under construction in Nyanya, in the outskirts of Abuja.
Shuaibu set up several companies for the specific purpose of receiving money laundered from pension funds. Riba-Ile which had a turnover of over N1.5 billion in the bank was registered in the name Egbuna Attah while the photograph in the account opening document was that of Danjuma Yusuf, not Shuaibu.
When he was arrested and questioned, Yusuf confessed that he did not own the company or control its account but that he only gave his passport photograph to Shuaibu for the purpose of opening the account.
The company’s account manager also confessed that Shuaibu controlled the account and signed the mandates for all its withdrawals. The account officer also confessed that Shuaibu equally owned and operated the account of another company, Suntrust Property Co. Ltd registered in the name of Mohammed Mohamud, Declan Okpala and Isah Abuh.
Confessional statements made by Bello and Mohammed indicate that they remitted proceeds from payment for contracts, ghost pensioners and collective allowances to Shuaibu through his companies. This was found to be true.
For example, over N100 million was paid into Shuaibu’s Riba – Ile Petroleum account from Bello’s Fafama Estate Developer’s account.
It was also discovered that Mohammed had paid millions of naira from the accounts of his company, Omaumali Ventures, into Riba – Ile Petroleum account as well as the account of another company, Smart Investment, also owned by Shuaibu.
Unlike Chidi, however, Shuaibu was smarter for he devised a circuitous route of laundering money into his account rather than awarding contracts directly to companies he owned. He recruited other people and their companies to do the dirty job.
One of the people he used was Stanley Iwu Obioma, a businessman who registered and used six companies to receive nearly N2 billion for payment for fictitious contracts from the pension funds.
Obioma used the accounts of his company, Mobis Point Investment in three banks to collect N55, 710,950.00, N35, 573,379.00 and N8, 700,000.00 from pension funds for fake contracts and supplies.
Obioma’s other companies, Essential Gadgets, Obista Enterprises, Computer Plaza and Shallow Well Ltd also received N59,391,468.00 , N83,578,842.50, N140,390,785.07 and N37,509,000.00 respectively for fictitious contracts and supplies.
As an icing on the cake, Obioma also got N9, 965,762.48 from HOSF pension funds as pension arrears and gratuity though he never was a civil servant all his life.
He even invited seven of his friends to partake in the bazaar. He simply submitted the names and account numbers of his friends who were then paid pension and gratuity.
Not done, Obioma went ahead to use 10 other companies belonging to friends and associates to collect a total of N583,519,847.19 for fake contracts from pension funds.
The companies he used include Jefund Nig. Ltd, S.S. Badejo Ltd, Lopee Ventures, Cigans Tech. Ltd, Golden Egg Nig. Ltd, Rumirgo Integrated Services, Omozua Ventures, Blue Bench Resources and Sly Technics Enterprises.
When he was arrested and questioned, Obioma confessed to having used his own and friends’ accounts to fraudulently obtain money from the HOSF pension unit funds, adding that he handed over the money to Shuaibu and Chidi.
Like Obioma, another person jointly recruited and used by Shuaibu and Chidi is Eric Omoefe Udesegbe, former manager with Oceanic Bank. He helped them launder nearly N2 billion through payments for fake contracts and ghost pensioners.
Udesegbe registered several companies in fictitious names with the help of a lawyer. He then proceeded to open accounts in the name of the fake companies. The normal Know Your Customer procedure was never followed.
The companies are Gozinda Enterprises, Bashinta Nig. Ltd, Haleath Enterprises, Uthathak Nig. Ltd and Krasiva Nig. Ltd. While Gozinda received N413, 400,000.00, Bashinta Nig. Ltd got N393, 000,000.00, both for bogus contracts.
Other illegal payments to Udesegbe’s fake companies were N384,162,000.00 to Haleath Enterprises; N364,900,000.00 to Uthathak Nig. Ltd and N393,130,000.00 to Krasiva Nig. Ltd.
Udesegbe confessed that he registered the companies using fake names and documents and that he did everything on Shuaibu’s instruction that he look for accounts to help him launder money.
To further help launder the money, Udesegbe also helped scout for bureau de change companies into whose accounts he remitted money from his fake companies’ account. The bureau de change gave him dollar equivalents which he gave directly to Shuaibu.
Another method devised by Shuaibu and his gang of looters was the payment of collective allowances to staff of the HOSF pension department.
Several senior and junior officers were paid collective allowance amounting to hundreds of millions. But the money was later returned to Shuaibu and others.
The payment of collective allowance to civil servants is illegal as it is in clear violation of a federal treasury circular on e- payment issued by the accountant general of the federation which mandates every civil servant to have a bank account into which payments due should be paid.
It also violates Section 601 of the 2009 financial regulations. But corrupt civil servants use it to siphon money.
Bello alone collected more than N65 million as collective allowance from pension funds of the office of the HOSF.
Not only that, he also used many workers to collect millions in collective allowance and collected the monies back after giving some commission. Bello said he collected the money and gave it all to Shuaibu.
Garba Abdullahi Tahir, cash officer in the pension unit collected a total of N13, 250,500.00 as collective allowance.
He told investigators that he used part of the money to purchase a Toyota Land cruiser and a Mercedes Benz car for Shuaibu, a claim that was corroborated by the director’s driver, Lawal Abdullahi.
Another official, Emmanuel Aderemi Olanipekun, the head of final accounts and one of the signatories to pension accounts in the HOSF’s office, collected more than N130 million in collective allowances.
Olanipekun was also used as conduit for others who fraudulently received collective allowances which they remitted to him at 10 percent commission.
When Olanipekun’s house in Abuja was searched, mandates worth over N2.5 billion were found there. He confessed that he alone had collected over N1 billion from pension funds through fake companies and proxies and claimed that he paid most of it back to Chidi for a 10 percent fee.
The fraudulent public officers were also found to have gotten willing accomplices among officials of some association in the pension sector, including the National Association of Pensioners, NUP.
In fact two officials of the NUP, Ali Abacha, President and Actor Zal, secretary, are currently facing a four – count charge at the Federal High Court, Abuja for allegedly conspiring with Shuaibu to steal about N3 billion from pension funds.
By law, associations in the pension sector are entitled to a percentage of the pension funds for the running of their operations. But it is alleged that officials of the pensions unit of the office of the HOSF conspired with officials of the associations to inflate the amounts due to them.
Virtually all the other accused persons have confessed to the crime for which they have been charged. But Shuaibu, in spite of all the evidence linking him, his associates, companies and bank accounts to the fraud, has denied any involvement.
Although he signed and confirmed all the payment mandates through which the fraud was perpetrated, he distanced himself from all that happened.
In spite of the monumental fraud they perpetrated, Shuaibu and others are free men and enjoying some of their unrecovered loot having been granted bail by the Abuja court trying them.
They appeared last in court four weeks ago but the trial could not go on as the prosecution had to be given time to sort out the issue of subpoenaing banks for the trial.
Although none of the banks or their officials has been charged to court, feelers from the EFCC indicate that a case has been built on some of them and they might soon be charged for aiding and abetting the stealing of public funds.
Abubakar Mohammed, corporate affairs director of the Central Bank of Nigeria, CBN, declined speaking on the role of banks in the pension scam. Speaking on the phone yesterday, he said that the apex bank does not comment on any case involving banks if it is still being investigated or already in court.
He could also not say if the EFCC had reported the matter to the CBN.
“The CBN will not comment on any matter under investigation or already in court. I cannot say if the matter has been reported to us but we cannot act on hear say and pass judgment on any bank,” he stated.
Not only are the accused persons free, some of them have actually been rewarded in their careers through promotions since their trial commenced.
For example, Chidi who was first moved from the HOSF’s office to the ministry of transport was promoted a director on level 17 in January 2011 and moved to the petroleum ministry as a director.