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Economy: Okonjo-Iweala Toying With Figures, Oshiomhole Says

July 1, 2015

“We were not even informed of the fact that this money was paid, and each time we ask[ed] the then Hon. Minister of Finance and Coordinating Minister of the Economy what was happening with the proceeds from the NLNG, no explanation was ever offered--whether in black and white, or in oral [statements]. There are several other federal agencies that made huge sums of money which were illegally and unilaterally spent by the Federal Government, without being allowed to flow into the federation account.


Governor Adams Oshiomhole of Edo State has accused the former Minister of Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo-Iweala, of toying with figures and being economical with the truth on the state of the economy inherited by President Muhammadu Buhari.

Oshiomhole, who said the Federal Government is broke and would have been in worse shape than States if it had not resorted to borrowing to pay wages, added that the economy under Okonjo-Iweala as Finance Minister and Coordinating Minister of the economy was so mismanaged that waivers were granted to various organizations running into several hundreds of millions of naira.

Speaking during an interview on a television network, on Wednesday, the Governor said: “with all due respect to the former Minister Okonjo-Iweala, she knows how to play around with statistics. I have made the point; she keeps opening part of the pages and not the entire book. The logic of transparency is that every minister must publish in full what is accruing to the federation account month to month and what is distributed to them. What she has been publishing is that this is what went to the Federal Government, this is what went to the state government and this is what goes to the local government.

“What she never published simultaneously is what accrued during the period out of which this was distributed. So we can now know what was collected to what was distributed so we can know what is left in the excess crude account. You can see her changing the goal post. On the authority to spend, Okonjo-Iweala was a member of the National Economic Council. I was a member [of the NEC] and I am on record of asking her not to give us verbal reports on matters of federation account, give us written reports and that the power to spend is not vested in Commissioners.

“Look at the constitution and tell me which section gives the Commissioner of Finance the power, all of them, they are unknown to ballot, they are not elected but the membership of NEC is clear, Governors chaired by the Vice President representing the President, the CBN and other relevant ministries. How will she avoid this level of accountability?

“The decision to take money from the excess crude account, that power is vested in the National Economic Council. The NEC is an institution created in the constitution. What she is referring to is her own administrative arrangement. The $2 billion is her last sum because in her last report, she said we had $4.1 billion, she said so orally but it was captured in the minutes only for her to come around again at the last minute to say “X” figure is left. We asked her, what did you pay for?”

On States which owe salary arrears to their workers, Oshiomhole said: “Every employer of labor has an obligation, a contractual obligation to pay those who work. The Bible says a laborer is entitled to his wages. Once you have labored, it has to be paid for and you don’t pay wages because you are rich and you are able to afford it, you pay wages because the people have worked for it. It is not a gift from a kind-hearted employer, it is an obligation, it is a consequence for work.

“I think what has happened is that at the peak of the oil boom, prices were high, people made projections about their expected expenditure and budget on the basis of those numbers. Down the line, there was a sharp drop and this sharp drop that people talk about is not just about a drop in terms of price of crude oil because prices have dropped below this level before.

“What is new is the level of so-called crude oil theft. A situation in which certain persons, powerful in the system, pretend not to know what was going on and simply excuse the huge lapses in terms of crude oil theft. So you have a double squeeze of drop in price and escalation in the volume of alleged theft of crude. The combined effect of these is that the total inflow into the federation account dropped sharply.

“This is also compounded by the fact that the Ministry of Finance and the Ministry of Petroleum Resources, the two of them working together, simply refused to transfer to the federation account a lot of the money that ought to have accrued. For example, over the past 4 to 5 years, the NLNG had every year made huge payment between $1.5 to $2 billion which ought to go to the federation account. This money was never transferred to the federation account, it was unilaterally expended by the Federal Government.

“We were not even informed of the fact that this money was paid, and each time we ask[ed] the then Hon. Minister of Finance and Coordinating Minister of the Economy what was happening with the proceeds from the NLNG, no explanation was ever offered--whether in black and white, or in oral [statements]. There are several other federal agencies that made huge sums of money which were illegally and unilaterally spent by the Federal Government, without being allowed to flow into the federation account.

“So when you draw up a budget on the basis of anticipated revenue and there is such a sharp drop in revenue arising from diversion and there is also [a] drop in price, obviously something will have to give.

“The federal finances are even worst hit. Over the past 9 months under the past government, [the] Federal Government could not pay salaries from her legitimate income. What she has been doing which States could not do;  was to borrow, using the CBN through various instruments termed security, etc  and basically drawing down the pension funds because they are the ones who have liquidity to patronize the bond market.

“So if we were to be able to stop the Federal Government from borrowing to pay salaries, the Federal Government would have defaulted in payment of salaries much earlier than [the] States and the number of months the Federal Government would have been owing would be worse than the worst state in the federation.

“Just look at the budget of the Federal Government over the past four years and you will see the level of deficit finances that was built into the budget. So in trying to understand the financial crisis, you shouldn’t limit yourself to those who can pay. Even those who purport to pay, look at their source of funding [for] the payment. If you do, you will find out that the Federal Government frees itself to borrow quite recklessly, reckless in the sense that no serious manager goes month after month to borrow for the payment of salaries.

“I speak on my honor that the Federal Government is just as broke and that they are borrowing using CBN instruments in trillions of naira to pay salaries.

“Now part of the problem is talking about taxes and this can be proved in black and white. The Federal Government illegally granted waivers to various organizations running into hundreds of billions of naira that ought to flow to the federation account.

“Now those are taxes. When the Minister grants waivers for you to bring cement into the country; grants waiver for you to bring vegetable oil into the country; grants waiver for you to bring vehicles into the country and when you look at the total sum, sometimes, even VAT are illegally waived. So how do you get taxes?

“There are two kinds of taxes: Direct and Indirect tax. Personal Income Tax which is deducted from your pay before your net gets to you and indirect tax which is VAT, Royalties, import tax where you spend quality of time looking at your tariff policies designed to protect your local industries and discourage importations. All of these are sources of funding of government.

“We must understand that in other climes, government does not live on rents from oil money. Governments worldwide are run on taxes. Now this last government is the worst in terms of granting unexplained sources of money in the name of waivers. Can you believe that even oil companies were granted so-called pioneer status? They will set up a small vehicle in the oil sector, give them certain transactions, give them so-called pioneer status so that they are excused from paying taxes.”

Speaking on the strike embarked on by members of the Judiciary Staff Union of Nigeria (JUSUN) in the state, the Governor said: “This is what I call power struggle. I had a meeting with JUSUN executives along with the members of the NBA and they said that we are up-to-date with the payment of salaries and allowances and that they are on strike because the national body asked them to go on strike that the Judiciary should enjoy what they call “First-Line Charge”.

“If you ask the Chief Judge of Edo State, he will tell you that Edo State has never defaulted and we will not default and today as we speak, if they work, they will get their pay.

“What I have refused to do is to pay them for the number of months that they have been on strike. For what? You stay at home, talking politics, you didn’t work and you want me to pay you. Because they are judicial workers, they are bound by law. They must be seen to respect the various trade dispute laws which say if you don’t work, you don’t get paid. They say they have a court judgment which says money should be transferred to the head of court. Is it the business of trade unions to fight for their employers?

“What they are doing is self help, that the judgment is directing state governments to release money and that the state government has refused to obey the order. I asked them, when a court issues an order and the order is not obeyed, does the trade union law say the union shall become an agency for enforcement of court orders?

“We are in a democracy. I am a union man and I know the limits. Any other person can submit out of panic, I will do things out of conviction. I don’t reward blackmailers particularly when you choose to be a general purpose vehicle. So they should not expect to sit at home and expect to get paid. The law is very clear, it says when you are on strike, particularly a frivolous strike like this, you don’t get paid. You are not on strike because your allowances have been withheld, you are not on strike because your promotions are delayed, you are on strike because you are dealing with issues on how the three arms of government are supposed to relate.

“The law is clear, if you walk out of your work on your own, we cannot compel you to work. If you are at home, we cannot use taxpayers’ money paid by people who are laboring to work, market women, furniture owners and others in the public service who are doing hard work and I will go and use it to pay judicial workers who stay at home. The law is “no work, no pay”. We cannot compel you to work, you also cannot compel me to pay you for not working. If you decide to stay at home for six months, you also will not be paid for 6 months but if they return to work today, they will be paid tomorrow.”