PENGASSAN Caught Up In N559.3m Housing Project Fraud

Even when Nigeria Labour Congress, NLC, is battling to address close to N3 billion housing project scam involving it and Christon-Lally, another housing project fraud has hit the labour movement.

This time around, it is the Petroleum and Natural Gas Senior Staff Association of Nigeria, PENGASSAN, that is enmeshed in over Five and fifty-nine million, three and eight thousand, seven hundred and ninety (N559,308,790.00) housing project scam.

The said amount is alleged to be unaccounted for after an internal investigation of PENGASSAN Housing Project between 2009 and 2015.

The project on the platform of “PENGASSAN Abuja Housing Project”, situated in Lokogoma, has three sites.

According to investigations, while subscribers to site1 had taken possession of their houses, subscribers to sites 2 and 3, have not and to worsen the matter, the project has been stalled.

Findings revealed that following unsatisfactory developments, subscribers started asking questions without getting appropriate answers. This was said to have forced some subscribers to ask for refund and were refunded, while others kept faith with the project.

However, when the houses were not delivered as promised, months after due date, subscribers were said to have become restive prompting investigation.

An outcome of preliminary investigation revealed suspected huge fraud, forcing the matter to be reported to the anti- fraud unit in Panti, Yaba for further investigations.

Sources at Panti said two senior officials of PENGASSAN (names withheld) are currently being quizzed.

The sources at Panti equally confirmed that all immediate past executives of the union were invited by anti-fraud operatives to make statements.

While investigation is still going on by Panti operatives, PENGASSAN internal auditors’ report to the association’s National Executive Council, NEC, meeting on November 12, 2015, in Abuja, and attended by over 100 leaders across the country, claimed that not less than N559,308,790.00, could not be traced.

The report was said to have angered members of NEC, who threatened to take the matter to the Economic and Financial Crimes Commission, EFCC, if nothing positive was achieved when NEC reconvened early this year (2016).

Auditors findings: The internal auditors that investigated the alleged fraud, in their report to the Association’s NEC, recorded 14 findings or observations.

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According to the report: “During the course of carrying out this assignment, we observed the following that:
(1) Generally, records were not properly kept.

(2) Too many bank accounts were used for the project.

(3) Releases of funds particularly to the main contractor/ others were done without due consideration to the milestone attained.

(4) Loans were taken and utilized without consideration to the time value of money. For instance , a loan of N100million taken in September 2012, was not used till the end of February 2013. Also, at the end, only N40million was utilized and the balance was used for capital and interest repayment.

(5) Transfers were made from other PENGASSAN non-housing accounts to finance loan repayments.

Finance loan repayments

(6) PENGASSAN gave Aso Savings & Loans Plc a guarantee on behalf of the main contractor (name withheld) which led to PENGASSAN inheriting a loan of over N297million at 27 % interest rate . The current balance on this loan account is over N322million (after repayment of over N152million).

(7) Two units of 3 Bedroom Fully Detached, BDFD, at the cost of N19,946,000.00 per unit were sold to Chevron branch at N17,696,000 per unit, bringing a shortfall of N4,500,000.00.

(8) The sum of N200 million was moved out of the Aso Savings & Loans account on December 30, 2009 and a charge of N1.050.00 was made but the same amount was later returned on January 5, 2010 without any form of interest.

(9) Monthly bank reconciliations were not done on all bank accounts used for the project. (10) Regular prepayment audits/checks were also not done before payments.

(11) There was no registration of contractors with PENGASSAN prior to the award of contract for the project.

(12) The current balances of the accounts used for the project are as follow: (i) Aso Savings & Loans N22,041,214.00. (in) Stallion Homes N20,186,245.22. (iii) Zenith Bank 41,565.24. (iv) Keystone (Account 2) N384,761.39. (v) Keystone (Account 4) N7,620.42. This brings the total to N42,646,165.43.

(13) There is a shortfall of N559,318,790.00 between the amount recorded as individual contributions and amount lodged into the four banks used for the project.

(14) The sum of N845,799,800.00 being the different between expected total contributions and payments made by subscribers is still outstanding.”

Recommendations: According to report, the auditors recommended that: “

(1) The shortfall of N559,308,790.00 should be investigated further and recovery made as soon as possible.

(2) Subscribers who have not yet paid fully for their houses should be made to pay so that the outstanding balance of N845,799,800.00 can be recovered and used for the project.

(3) Names of those who collected refund for opting out of the project should be verified with various branches for proper identification and recovery should be made if it is discovered that some names who collected refund are not PENGASSAN members or did not subscribe to the project.

(4) Proper explanation should be obtained from those who handled the project on how sub-contractors were hired , the nature of contract agreement and type of work done by each sub-contractor. Effort should be made to actually ascertain whether all the companies earned the money that were paid to them. If any company is discovered to have received money for not doing any job, then such should be recovered immediately and the officers or officials involved should be investigated further.

(5) The credit balance of N42 million in the bank accounts should be used to offset part of the outstanding loan in Aso Savings & Loans of over N322 million.

(6) It is also advisable to obtain a soft loan from any bank to fully liquidate the balance of the loan in Aso Savings & Loans since the interest rate of 27% is considered to be too high.

(7) Fund transfer from the housing accounts to other accounts should be traced.

(8) Statement of bank account maintained with FHA Homes where N20 million was transferred into should be provided and transferred from other PENGASSAN non- housing accounts made for the purposes of housing project should also be investigated .

(9) Those who made over payment amounting to N4 million should be refunded .

Housing project fraud

(10) Any other action(s) needed to enhance the resolution and continuation of this project to completion should be pursued with every seriousness it deserved so as to avoid dragging the name of our noble Association in the mud.

(11) We advised that henceforth, prepayment audit should be carried out before large sum of money can be paid to third parties.”
Many unanswered questions: Investigations confirmed that it is not just the housing project fraud that has plagued PENGASSAN, there are a lot of unanswered questions on finance and general administration to the extent that it culminated into the association’s inability to pay staff salaries and meet other obligations after the delegates conference that brought the present leadership into office in June 2014.

Findings revealed that staff pensions took about a year to be cleared as money deducted from staff salaries were not remitted. It was discovered that there was eight months arrears to Pension Fund Administrators, PFAs, before it was cleared.

A former officer of PENGASSAN, told Vanguard that because of political reasons, a very viable PENGASSAN Cooperatives and Thrifts was wounded up years back without due process, saying “only contributions of members were paid to them, while the assets have remained unaccounted for till date.”

—vanguard