On January 26, Tracka, BudgIT’s platform for monitoring service in Nigeria, alleged that the Minister of Works, David Umahi, disbursed a total of N9.3 billion from the Federal Ministry of Works to FIMS Microfinance Bank Ltd in an apparent violation of the 2007 Public Procurement Act.
According to Tracka, the payment was made between June and December 2023 for 62 projects, including the construction of road projects across the country, amongst others.
Providing complete details of the transactions in its publication, Tracka identified some of the payments to include N1.4 billion construction of the Yaba-Yangoje Road in the FCT, the payment of N1.2 billion for the rehabilitation of a 2km road from Oriawo-boroboro-oke-medina school of science Road in Atiba, Oyo state as well as the payment of N1.2 billion for the rehabilitation of Ejule-otukpo Road in Benue State, among others.
According to Tracka, the disbursement raises legality concerns as FIMS Microfinance Bank is not recognised as an institution providing construction services within the country.
The report stated, “According to its mission statement and information on its website, FIMS Microfinance Bank Ltd was incorporated on December 11, 2009, to conduct Microfinance businesses/services with a certificate of incorporation number RC 858800.
“As a financial institution, the award of road construction contracts amongst others to this company is a violation of the Public Procurement Act 2007, specifically s.16 (6) (a) (¡), (¡¡¡) and (¡v) as they state that: All bidders in addition to qualifications to carry out particular procurements; (¡¡) financial capability; (¡¡¡) equipment and other relevant infrastructure; (¡v) shall have adequate personnel to perform the obligations of the procurement contracts.”
UMAHI RESPONDS
The Minister of Works, David Umahi, has swiftly refuted the allegation that funds allocated for road construction were improperly deposited in a Microfinance Bank, contrary to existing regulations.
The minister clarified this during an inspection of the Enugu-Port Harcourt carriageway, under reconstruction by Arab Contractors Ltd in Rivers State on Saturday, 27, 2024.
“Let me also use the opportunity to debunk something ongoing in the social media. I don’t know what they call the group. Is it Tracta Budgit or something which claims they’re monitoring the federal government’s budget? Said that we paid 8.7 billion to the microfinance bank,” he stated.
Umahi said Tracka BudgIT was wrong. He explained that from June to August 20, 2023, he was in the Senate.
He pointed out that after being appointed as a minister later, he could not have authorised payments to the Microfinance Bank for the ministry during the designated period, as stated in Tracka’s report.
On payments to the Microfinance Bank, Umahi clarified, stating that once a contractor finishes their work, the money is theirs, and they can deposit it in any bank they prefer.
He dismissed Tracka BudgIT’s claim as misleading, asserting that the organisation lacks the authority to probe where a contractor places the funds from a finished road project.
“Whether it’s paid in a commercial bank or microfinance bank, what is paramount to establish is if the work funds were rightly paid for work done,” Umahi said.
OUR FINDINGS
Gatekeepers News investigated to unravel the truth or otherwise of the allegation by Tracka.
It was discovered that the Ministry of Works did make payments to FIMS Microfinance Bank, as reported by Tracka.
However, we discovered that FIMS Microfinance Bank is not the ultimate beneficiary of the said payments. The payments are for contractors with the Ministry of Works who have accounts with the Microfinance Bank.
Our findings revealed that Microfinance Banks operate via commercial banks, which act as correspondence banks for them in transactions involving their customers, who, in this case, are third parties.
When customers of Microfinance Banks expect payments from any of their clients, such payments are made through the accounts of the Microfinance Banks domiciled with a commercial bank, which, in that case, becomes the correspondence bank for further credit to the original customer/contractor.
VERDICT
The Ministry of Works indeed made payments to FIMS Microfinance Bank. The bank is not a contractor to the Ministry of Works and does not engage in road construction.
The payments are for contractors working for the Ministry of Works who are customers of FIMS Microfinance Bank, and they are the ultimate beneficiaries.
It is, therefore, not true that the Minister of Works, David Umahi, diverted payments to FIMS Microfinance Bank.
