Another significant fault the report found was that a number of cash advances were used to pay staff allowances. Cash advances for staff training were also reportedly transferred into the bank accounts of NPHCDA accountants, amounts as high as N91 million (US$600k) going to individual staff members. “The audit noted instances of discrepancies between the cash advance transferred to the accountants’ bank accounts and the amounts withdrawn by the accountants for planned programme activity,” Gavi says.
The Global Alliance for Vaccines and Immunization (GAVI), a public-private global health organization that assists with vaccine procurement, yesterday released the findings from an audit of $29 million USD in funding given to Nigeria between 2011-2013.
The Programme Fiduciary Oversight team of Gavi, which is based in Geneva, found that the Nigerian Federal Ministry of Heath and the National Primary Health Care Development Agency (NPHCDA) were guilty of arrant malpractice and fraud.
The findings, released in Geneva, claim that the funds—intended for procurement of vaccines and health systems strengthening for children in Nigeria—were badly misused.
“The report describes systemic weaknesses regarding the operation of controls and procedures in national systems used to manage Gavi cash-based support,” Gavi stated.
Specifically, the report found that only an approximate “40 per cent of the total expenditure of N4.5bn (US$29m) in the period 2011-2013 was spent on procurement with the main categories being: printing N919m (US $5.8m); incinerators N184m (US $1.2m); drugs N243m (US $1.6m); rehabilitation and equipping of medical facilities N437m (US $2.8m); other procurement N90m (US $397k), motor vehicles N17.8 (US 113k).”
SaharaReporters extensively reviewed the final report, noting that after the release of a preliminary report of the audit, cash-based support was suspended in April 2014. “Remediation of the identified weaknesses will need to be undertaken before disbursements can start again,” the final report recommended.
Disbursed funds that had not been used were also frozen.
Following this, Gavi assigned UNICEF Nigeria to supervise pediatric health systems strengthening activities. “Gavi has asked UNICEF Nigeria to oversee the implementation of a limited number of activities that are deemed critical to routine immunisation and health system strengthening,” it said.
As part of its report, Gavi has officially called for the Economic and Financial Crimes Commission (EFCC) to investigate the finding and assure reimbursement of a portion of the funds.
“Gavi and its partners have a zero tolerance on the misuse of funds. When misuse is identified Gavi requires reimbursement,” Gavi said. “Inappropriate use of funds not only undermines confidence in development support but it means that the desired beneficiaries, who often already live in challenging circumstances, do not see much.”
“As a result of specific findings the Government of Nigeria has agreed to repay funds deemed to have been misused, which are quantified as US$ 2.2 million.”
The audit presents major questions for both the Nigerian Ministry of Health as well as NPHCDA. Weak leadership, disorganization, and conspiracy to commit fraud were all factors that the health organization feels contributed to the mismanagement of funding. “The audit identified fundamental weaknesses in controls around procurement including a lack of segregation of duties, ineffective oversight, and indications of collusion that created an environment that Gavi believes resulted in irregular activities.”
Among the irregular activities mentioned in the report were weaknesses in the management of disbursements to states.
In the year 2012, the total amount disbursed to the states was US $2m, despite an approved budget of US$3.2m. At the close of 2013, the total amount of advances disbursed was US $1.4m, despite an approved budget of US $6.4m.
“At the states, zones and LGA level, the audit noted delayed liquidation of advances and in many instances, no liquidation at all. For several states, advances remain outstanding for months or years. As at 31 December 2013, N157m (US$1m) was outstanding with N125m (US $935k) outstanding for more than 12 months. At the zone level, as at 31 December 2013, N37m (US $239k) was outstanding for more than six months.
Failure to properly track and ensure taxes were properly and justly paid was also a substantial issue.
The report said, “Total tax remitted to the Federal Internal Revenues Services (FIRS) for the period 2011–2013 according to the bank mandates was N62m (US$390,000) for Value Added Tax (VAT) and N89m (US$560,000) for Withholding Tax (WHT). The audit was unable to verify that payments were correctly made to the relevant tax authorities: specific accounts are not maintained in the accounting system for VAT and WHT to record and monitor the taxes paid.”
Another significant fault the report found was that a number of cash advances were used to pay staff allowances. Cash advances for staff training were also reportedly transferred into the bank accounts of NPHCDA accountants, amounts as high as N91 million (US$600k) going to individual staff members.
“The audit noted instances of discrepancies between the cash advance transferred to the accountants’ bank accounts and the amounts withdrawn by the accountants for planned programme activity,” Gavi says.
As a result of the findings, the oversight team made an extensive amount of recommendations to the organization.
The most significant of these was a full audit of all high-risk expenditures in prior years. “Because of the identified weaknesses in controls and indications of misuse, Gavi will undertake a full-scale audit to cover both select, high-risk expenditures in prior years, and other expenditure from the period 2011-2013 not examined in the course of this audit,” the report stated. Gavi also made clear their intent to seek repayment for missing monies through the EFCC.
While the Nigerian medical entities implicated in the report did not speak to the press on the matter, an October 17 letter titled Letter of Understanding on the Principles regarding the Gavi Cash Program Audit 2011-2013” and signed by immediate past Minister of Health, Prof. Onyebuchi Chukwu acknowledged weaknesses in the management of Gavi funds.
The letter, which was written in response to preliminary reports, assured Gavi that the Nigerian government would refund misappropriated money and would welcome further audits of Gavi funding.
The letter also promised steps would be put in place to deter corruption and increase accountability. “In response to the CPA, the Ministry of Health and NPHCDA have introduced a number of measures to immediately enhance the transparency and accountability of systems. These include the upgrading of the Internal Audit Unit to a department empowered to undertake physical verification; the introduction of routine checks to validate that purchased assets have been delivered and installed appropriately across the country; and the computation of a fixed asset register."
The letter furthers, “The Ministry of Health and Gavi appreciate the role of partners, particularly UNICEF and WHO, in channelling Gavi funds during the transitional period while the executing entities are strengthening their capabilities. For the longer term, the appointment of a fiduciary agent was agreed to oversee the financial management of Gavi’s grants at both federal and state levels.
The appointment of a fiduciary agent to oversee the financial management of Gavi’s grants to Nigeria, at both federal and state levels, has also been agreed between Gavi and the Government of Nigeria. The fiduciary agent will also be tasked to help remediate the weaknesses identified at Nigeria’s National Primary Health Care Development Agency.
“This appointment will also support the enhancement of executing entities’ capacities to strengthen systems of transparency and accountability,” the statement concluded.
View the documents below.
