© 2018 - International Centre for Investigative Reporting
Pension Scam: How Senate Betrayed Nigerians
The Nigerian Senate indicts a task team that unearthed a multi-billion fraud in pension administration but protects the perpetrators.
Senate President David Mark may have inadvertently placed a curse on some of his colleagues in the upper legislative chamber.
Early in the year, at the commencement of the probe into pension funds administration by the Senate, Mark declared that “pension fund administrators pilfering funds meant to pay pensioners are accumulating “blood money.”
Represented by Victor Ndoma-Egba, the Senate leader, he lamented that many people had gotten rich on “blood money while pensioners were left suffering and dying.
Again, a few weeks ago, at the presentation of the report of the joint committee on public service and establishment and state and local government administration, which conducted the probe, Mark declared, “for any living human being to have stolen the money of those who have laboured for this country, I think it is only God who can decide their fate.”
“But, as human beings, we have just made our recommendations and hope that the Almighty God will see them to hell,” Mark concluded.
At that session where recommendations of the committee, headed by Aloysius Etok, were adopted by the Senate, Ndoma-Egba who gave the example of his own father who was denied lawful pension amounting to N2 million, also rained curses on pension funds thieves.
“That is blood money and blood money is cursed money, not only on them but on their children’s children; it is a curse on them no matter what they think,” he declared.
However, Mark and Ndoma-Egba might have been raining curses on some members of the Senate joint committee who have now been accused of collecting billions from pension fund ‘thieves’ to forestall their prosecution and stop further investigations into the mindless pillage of funds meant for the payment of pensioners.
Sani Shuaibu Teidi, former director of pension in the office of the Head of Service of the Federation, who is being prosecuted along with 31 others, alleged that Etok and other members of the committee collected a bribe of N3 billion from him.
In statements he made to the Economic and Financial Crimes Commission, EFCC, Teidi said that he paid the money to Etok in foreign currency and that the bribe was meant to prevent their prosecution. He told investigators that he equally bribed Farida Waziri, former chairman of the EFCC.
Curiously, nothing was said about that allegation at the session of the Senate that adopted the report of the discredited committee. After the allegations were publicly made, Ike Ekweremadu, deputy Senate President, at a session, set up a committee to look into them with a mandate to report its findings within two weeks. Nothing has been heard about that committee since then.
Also, Abdulrasheed Maina, chairman of the Pension Reform Task Team (PRTT) alleged that Etok demanded from him a bribe of $100,000 dollars for each of the 18 members of the committee. Although Maina has since been pressured to offer a public denial, he had revealed in confidence on the day the demand was made that certain key members of the panel asked for the bribe.
Maina said he declined giving the bribe on the advice of a security chief who alerted him that once he gave the bribe, he would be subsequently blackmailed into giving heavier bribes.
Etok has publicly denied both allegations. However, the conduct of the committee’s hearing into the fraud in pension administration and the report it presented to the Senate last week, among other things, are indications that the committee’s work may have been compromised and, indeed, orchestrated from the beginning for the purpose of discrediting the Maina-led task team and its work.
First, for years, while pensioners suffered and even died roaming the streets of Abuja while waiting for their pensions, the Senate did nothing. For years, old pensioners turned the corridors and underneath the staircases of the Complex housing the office of the Head of Service to their homes; yet, nothing was done by the Senate.
However, shortly after the EFCC started the prosecution of Teidi and others, as well as arrested several senior civil servants, including a serving permanent secretary for stealing billions of naira from the pension funds, the Senate suddenly got interested in the plight of pensioners.
For a discerning follower of the pension scam, a careful perusal of the report of the Etok-led panel immediately reveals that the primary goal of the committee’s work appears to have been to discredit the pension task team and disband it.
More than 90 percent of the 107-page report deals with only the pension offices handled by Maina — Police, Head of Service and the Customs, Immigration, Prisons Pension offices.
In its report, in the attempt to achieve its purpose, many of the observations of the committee are disjointed, contradictory and sometimes downright ridiculous.
The committee did make some pertinent findings in concerning goings on in the pension office of the head of service.
This includes the fact that “there is syndicated and institutionalised corruption, fraud and embezzlement in the administration of the payment of pensioners and administration of pension funds”.
The committee also determined that officials of the pension office “enrolled as pensioners several persons who had not served in the public service with forged and false documentations”
“The officials in the department use numerous fake and pseudo names in the pension payroll and banks to siphon monthly pension funds to their private use” the report declared.
The committee also noted that quarterly verification exercises on which it said the department spent N256 million every year “were only a facade to fulfill all righteousness and a decoy to expend the funds appropriated for that purpose.”
However, the report goes on to destroy the work of the task team which came to address and rectify all the anomalies. In the process, the committee cooks up several false allegations and claims against the team, which documents in the possession of icirnigeria.org contradict.
In spite of its earlier observation that yearly verification exercise were carried out to siphon money, the committee quarreled with the team’s conduct of a biometric capturing exercise which has forever removed the necessity for any further verification.
Through the biometric exercise, the team has come up with smart cards for every pensioner with which they can be verified without going to queue for hours unnecessarily.
The report alleged that the team conducted another biometric exercise in spite of the fact that the pension office had already conducted up to 90 percent of a similar exercise for the year at the cost of N234 million.
But the committee was aware that in truth the pension office under Teidi did not have any biometric data on pensioners and even if it had could not have used it because of the fraud it was perpetrating.
The committee equally falsely alleged that the team embarked on the biometrics without data or files from the pension office, only relying on documents submitted by pensioners. Due to this, the report further alleged that the names of aged pensioners whose documents had been lost or misplaced were removed from the pension payroll.
“The task team therefore declared aged pensioners (some of whom have received their pension for up to 20 years) as ghost pensioners thereby removing 71,133 names of pensioners from the payroll and reducing the list of pensioners from 141,790 to 70,657.”
However, documents in the possession of our reporters, which were also made available to the Senate joint committee, show that this is a deliberate falsification of facts. The over 71,000 names removed from the payroll are the same fake and ghost pensioners that the committee acknowledge exist in its findings.
The task team went to the 36 states of the federation but many of the fake pensioners stayed away because the team went with security officials. A few of the ghost pensioners were actually arrested.
It is also absolutely false that the team went on the exercise with no data because it had retrieved all the over 141,000 files of names of persons claimed to be pensioners. Working with these files, the team discovered a lot of cloned names, repetitions and doctored documents.
In many cases, names of dead people were brought into files of the living and paid pension while names from living files were also duplicated in the files of dead people so they could be paid death benefits. Officials of the pension office colluded with bank officials to collect the money thereafter.
To do this, they used under-age youths, teachers and jobless persons in several states.
Another false accusation is the claim that the task team illegally enrolled 49,395 new pensioners “without the mandatory pre – payment audit by the office of the Auditor – General of the Federation and other mandatory clearance and also refused to submit same for audit, thereby bringing the total list of pensioners to 120,733.”
The committee went on to observe that “if the list of 71,133 pensioners is verified and added to the 120,733 now verified by the task team, the number of pensioners would increase to over 190,000”
The truth, however, is that the biometric exercise conducted by the task team unearthed nearly 45,000 persons who were entitled but had been denied their pensions. Some of these people had never been paid for over 30 to 40 years since they retired. Over the last several months, the figure of such new pensioners has gone up to nearly 50,000.
One of the newly-paid pensioners, Ibrahim Damchida, a retired super permanent secretary, who spoke to icirnigeria.org in March confirmed that he had never received pension until the task team captured and put him on the payroll last year.
However, contrary to the impression given in the report, the task team has actually reduced the number of pensioners by cutting off fake and ghost pensioners and reducing the monthly pension burden on the government. Whereas the office was paying out N5 billion as pensions and gratuity to 141, 702 pensioners, the cost has been reduced to N1.7 for about 120,000 pensioners, including the nearly 50,000 that were recently added to the payroll.
It is also untrue, even ridiculous, the suggestion that the task team jerked up the monthly pension bill without pre-payment audit by the Attorney General’s office when the Attorney General is the one that approves the monthly payroll and pays the pensioners.
In one of its findings, the committee also alleged that “the task team engaged in contract splitting and awarding same to the tune of N1, 816,956,401.95.” It stated further that the companies that got the contracts were not registered and did not pay tax and that the funds were not appropriated for the contracts.
The committee deliberately closed its eyes to documents, which showed that the task team had nothing whatsoever to do with the contract awards. The award of fake contracts was one of the ways by which officials of the pension office siphoned money from pension funds. And although they claimed to be awarding contracts for items needed by the task team, they never involved any member of the team.
Documentary evidence shows that Charles Wali, deputy director, Pension Account wrote the memo for the award of the contracts, the Permanent Secretary, Establishment and Records office and the Head of Service approved and signed the mandate for the payments.
It is therefore misleading to say that the task team awarded any contracts. But the Senate committee shied away from indicting the real culprits who are the ones proven by documents before them as beneficiaries on fake contracts.
The report also accuses the task team of paying N830, 835,745.23 for the payment of pensioners in June 2010 using cheque instead of the e payment system in contravention of financial regulations.
However, the senators had facts before them that being the first month of the team’s operation, it adopted a parade system after capturing the biometrics of all the pensioners who showed up for payment.
The representatives of the bank used for payment issued every verified pensioner with an e – cheque with which he was paid. It was through this method that ghost and fake pensioners were weeded out.
The findings and observations of the committee in the report concerning the activities of the police pension office are even more curious and the recommendations even more questionable.
The committee observed that officials of the police pension office “use numerous fake names in the pension payroll and banks through which they siphon monthly pension funds” but in the same breadth accused that the task team taking over the financial operation of the office as well as changed the signatories to the accounts.
It alleged further that… “Opened bank accounts with signatories of such accounts being members of the task team without authorisation from the office of the Auditor-General of the Federation.”
The report also stated that the task team transferred over N40 billion being pension funds to new bank accounts opened by the team without authorisation from the accounting officer.
All that these documents show, however, are untrue. The Minister of Finance, Ngozi Okonjo-Iweala, actually instructed the changing of the signatories to the Police Pension Account to stop the looting of funds. So the team had authorisation to take over the account.
But contrary to the impression given, only three members of the task team Maina, Baba Gana Kaigama and A.A. Magaji, were made signatories to the account. The police pension office still had Edwin Nwokoye, Yakubu Kolawole Adeyemi, Toyin Ishola and Mike Okoro as signatories to the accounts.
Also, contrary to the report’s claim, the Accountant General did authorise the team to open two bank accounts to transfer funds from accounts through which officials of the police pension office were siphoning hundreds of millions of naira every week.
In the authorisation letter signed by the Accountant General of the Federation, the task team got approval to open two accounts in Fidelity Bank and the UBA.
One of the most curious findings of the committees that the alarm raised by the task team over a N2 billion fraud involving the Nigerian Union of Pensioners, NUP, was false.
The committee said that “the amount so paid was legitimate outstanding union check – off dues from 2005 to 2011.”
However, investigations by the EFCC showed that Teidi colluded with Ali Abatcha, the president of NUP and Actor Zal, the secretary, to siphon up to N2.7 billion in the guise of paying check – off dues.
Teidi, Abatcha and Zal are currently facing a four count charge at the Federal High Court, Abuja. The report of the EFCC investigation as well as court papers were presented to the committee but it still declared that the NUP was clean.
THE Senate report made other alarming allegations of financial mismanagement against members of the task team without basis.
For example, the team is accused of engaging in “numerous contract splitting in order to beat the approval limit and avoid contract tender process. One company was allegedly awarded a contract worth N145 million split into units and that the funds spent were not appropriated for that purpose.
But the truth is that the team never awarded any contract because it does not have the powers to do so. The question of spending limit therefore does not arise.
Members of the team are also accused of collecting money to undertake overseas biometric exercise. Listed names include those of John Yusuf, Abdullahi Umar, Oludare Adedokun and Madubuike Christian. But none of them is a member of the task team. John Yusuf, for example, is an official of the police pension office while Adedokun is the security detail to the Head of Service.
However, the most outrageous claim in the report is that the task team’s assertion that it had helped the nation save any money is false. The report stated that what the team claimed it had saved were unspent funds. But even the Minister of Finance has publicly announced that the task team saved the government about N78 billion, funds which were incorporated into this year’s budget.
The Senate closed its eyes to include the over N3.3 billion that was being collected monthly at the head of service for over 71,000 fake pensioners and being stolen by civil servants. The case against Teidi and others arise from this monumental scam. But for the task team exposing them for prosecution, they would have stolen more than N70 billion in the last two years.
In the police pension office, the team has also saved the N1 billion that was being siphoned monthly in the guise of paying the pension and gratuity of retired police officers.
Also, through the work of the team, over N30 billion in cash and assets have so far been seized from pension thieves in the office of the head of service and the police pension office. But due to their prosecution, the seized funds cannot yet be returned into government coffers.
Besides this however, the team has also been able to discover the many illegally opened accounts into which pension funds were deposited before they were stolen.
In the office of the Head of Service, over N35 billion was discovered in some 66 illegal bank accounts. If the accounts had not been discovered, the funds would equally have been looted. There is also a six million pound account kept in accounts in London known to only a few top civil servants in different offices who were also allegedly drawing the interest on the account.
In all, the task team since June 2010 when it was constituted has saved the country about N170 billion that would have been pilfered. The committee, it appears, for some reason, has castigated the team from doing that.
Curiously, also, although it agreed that officials had been mismanaging these accounts, the Senate committee recommended that the accounts be returned to the pension offices from which they were rescued in the first place, giving the impression that the agenda is to allow the looting spree to continue.
In its recommendation, also rather curiously, the only mention of persons who have been found to have stolen billions from pension funds were given a cursory mention when the committee said that “those persons investigated and arrested by EFCC and other security agencies who are at present undergoing prosecution in various courts should be speedily tried.”
Even here, the committee was demanding protection for the pension thieves by calling for a speedy trial.
However, it recommended that Maina, Kaigama and all members of the task team “should be arrested and prosecuted by the Police Force,” spelling out their crimes as “fraud, embezzlement, misappropriation, misapplication, illegal virement, contract splitting, award of contract to non existing companies, award of contract without appropriation and outright stealing of pension funds.”
It recommended that the stolen funds be recovered from them.
The committee also recommended that officials of security and anti graft agencies such as the State Security Service, SSS, Customs, Prisons, Immigration, EFCC and ICPC seconded to the task team should be arrested and prosecuted.
What the committee members do not know is that all the agencies have a full report of the task team’s activities and the entire compromised proceedings of the Senate committee-led by Etok.
But the committee also made some very dangerous recommendations, which are not only unpatriotic but also would further worsen the sorry state of pension administration in Nigeria.
From these recommendations, it is clear that the senators ‘only agenda is to stop the Maina-led team from further stopping the looting of pension funds and returning to the status quo whereby billions were stolen monthly.
One of such recommendations is that the accounts of the police pension office, which was frozen, should be unfrozen for the office to be able to do its job. The committee claimed that the alarm raised by Maina over the accounts had been found to be false.
However, these are the accounts used by those being prosecuted to pilfer pension funds. That was what led to the setting up of the task force in the first instance. Without completing the restructuring of the office, what the Senate has done is ask that the accounts be returned to the same officials who were draining them.
The committee also recommended that the 49,395 new pensioners captured and paid pensions since June 2010 by the task team should be removed from the payroll “pending a proper and credible verification exercise.
Again, the committee is not only asking for a return to the era when N250 million was used yearly for bogus verification exercises , but also that genuine pensioners who were denied pension for years but whose biometrics have now been captured and included in the payroll be once again denied their entitlement.
There are two key recommendations made by the committee that indicate the entire purpose of its hearing on pension problems in the country.
First is the recommendation by the committee that the Police should take over investigations into issues relating to pension fraud in the country. And the other one is the recommendation that the task team be disbanded.
These two recommendations are entirely geared towards stopping the intrusion of the task team into the age long system of stealing pension funds by civil servants, a situation from which members of the committee are accused of benefitting from.
They are recommendations that appear to legitimise accusations that the whole purpose of the Senate hearing is to protect Teidi and all others who are being tried and their collaborators who are still in service.
Sources close to the proceedings also told our reporter that the joint committee chairman also remonstrated Oladapo Afolabi, the former head of service under whom the lead of massive fraud in pension funds was blown open, for suspending Teidi while he was being investigated.
It appeared that, throughout the hearing, the Committee Chairman was protecting Teidi, an accused person but was conversely hostile to Maina and other members of the task team, once declaring the team’s chairman wanted for failing to appear before the panel.
But unknown to him and other members of his committee, they too have come under investigation. Competent security source hinted icirnigeria.org that, at least, two security agencies have commenced a quiet investigation into the activities of the committee while it lasted as well as the allegations of bribery against its members.
It was gathered that members of the task team who belong to security services made detailed reports of compromise on the part of the members and that they have been on the radar of security agencies for a while.
In collaboration with The Guardian on Sunday