MDA: maximum penalties as a remedy against revenue leakage


With more than 3 trillion naira reportedly reported missing by more than 60 MDA during the ongoing hearing on the MTEF in the National Assembly, its sanctions in time have been imposed on CEOs who underpay revenues in the national assembly. CRF, reports ABDULWAHAB ISA

The government is not on the same wavelength with more than 900 ministries, departments and agencies (MDAs) drawing funds from the treasury. His body language and vocal expression imply a violation of financial regulations and existing rules by MDAs regarding budget, expenditure and revenue management. Lamenting over the continued appearance of MDAs in the National Assembly, the results of EFCC and ICPC investigations into fraud among MDAs underscore the amount of federal government revenue siphoned off between MDAs. The diversion of government revenues by MDA staff to personal handbags weighs heavily on government budget execution.

FG shortchanging on earnings

The majority of income-generating agencies pocket large chunks of what they generate and pay paltry sums into the treasury accounts. This law deprives the federal government of the revenue it needs so badly to implement the projects in the budget. The House of Representatives’ finance committee highlighted the massive under-reduction of revenue by MDAs due to the underpayment of their revenue and extra-budgetary spending. The chairman of the committee, James Faleke, had, in a remark recently made at the end of the interactive session on the MTEF / FSP 2022-2024 with various income-generating agencies, lamented the large revenue leaks in MDAs. Faleke said that during the interaction, the committee observed that the agencies used their establishment laws to spend their Internally Generated Revenue (IGR), thereby depriving the government of necessary revenue.

“The committee has determined that some of these laws are self-serving and contrary to the national interest. The need to change these laws quickly, therefore, cannot be overemphasized. “The committee is also concerned about the agencies’ blatant disregard for existing laws, in particular the Constitution of the Federal Republic of Nigeria 1999 (as amended). “The action, so to speak, is straining the resources, which would normally be available for the government to pursue its development goals. “Government agencies engage in extra-budgetary spending contrary to the Constitution of the Federal Republic of Nigeria 1999 (as amended) and the Fiscal Responsibility Act.

“Some agencies that have not yet appeared before the committee will be re-invited to appear when the House of Representatives resumes, failing which our recommendations could include removing their capital and overheads from the 2022 budget,” said the legislator. The President said the interactive session, aimed at stopping financial leakage and instilling fiscal discipline, was revealing and rewarding. Ditto for the Senate.

The upper house alerted Nigerians that the MDA did not remit more than 3 trillion naira to the Federal Government’s Public Treasury (FIU) between 2014 and 2020. The Chairman of the Senate Finance Committee, Senator Solomon Adeola (APC – Lagos), made this request recently. via a statement. The lawmaker made the astonishing revelation following the Senate investigation into the non-payment of the 1% stamp duty by the MDAS, which saw the Minister of Finance, Zainab Ahmed, and the director general of the Office of the budget, Ben Akabueze, introduce himself to the committee. . According to the Senate Committee, investigations revealed that MDAs were operating under illegalities in remitting funds to the treasury, citing that the revenue supposed to be remitted may have been wasted. “The committee decided to investigate the remittances from government agencies.

The government cannot continue to borrow every year while the revenues of the agencies that the government finances with the loans are spent contrary to the laws of the land. “According to the submissions already made and the calculations of the Fiscal Responsibility Commission, around 60 state-owned enterprises (EGOs) may have around 3 trillion naira of government revenue still unpaid in their coffers, or already spent on frivolous spending. contrary to the Constitution and to FRA 2007. “We cannot continue to run government business as we did at a time when there are huge demands for government to fund necessary infrastructure and other social programs. -economic, “said Senator Adeola.

Continuing, he recalled Ahmed’s position, stating, “The Minister of Finance told the Senate committee that the federal government is considering an approach to calculate and deduct operating expenses from sources before handing them over to MDAs.

MDAs on FG’s radar

The government has acknowledged the scam. Ahmed had said the federal government had attacked the guilty agencies. During her contribution to the Senate, she confirmed that recently, a good number of agencies had been asked to reimburse the revenues collected on behalf of the federal government as required by law. For his part, the DG, Budget Office, Akabueze, clarified that the issue of operating surplus does not apply to government agencies that are fully funded by the government, stressing that all revenues generated by these agencies must be paid in full to the CRF as it is illegal to spend with this money without appropriation by the National Assembly.

Maximum penalties as a way out

In the absence of maximum penalties as a deterrent to subdue the CEOs of revenue agencies, the remittance of revenue by MDAs must remain an ongoing practice. The Fiscal Responsibility Commission (FRC) is established by the 2007 law to regulate the activities of MDAs in the tax space. Unfortunately, the Commission does not have the power to impose sanctions on stray MDAs who violate the remittance of revenues to the Treasury.

“Carry out tax and financial studies, analyzes and diagnoses and disseminate the results to the general public. Require periodic reporting on revenue performance showing estimates, actual collection and disbursements to the federal government treasury by corporations and agencies, accompanied by accurate documentary evidence of collections and disbursements. In addition, it “will ensure that all profits or dividend payments owed to the federal government by any privatized entity in which the federal government is a shareholder are duly paid to the Consolidated Revenue Fund; attend and follow the monthly follow-up meeting of all revenue collectors in collaboration with the office of the Accountant General of the Federation.

“The amendment will allow the commission to oversee the operation of the crude surplus account and the various funds established under the Nigerian Sovereign Investment Authority (Establishment, etc.) Act 2011. Among other provisions, the amendment bill provides that the commission is independent in the exercise of its functions.

The provisions of the Law on the Protection of Public Employees apply to its members and staff in the exercise of their functions. The appointment of the secretary of the Commission, as head of its administration, is subject to confirmation by the Senate. The dismissal of a member of the Commission by the President is supported by a simple majority vote of the members of the Senate, among others. When remitting operating surplus, the bill stipulates that FRA companies and organizations must remit 80 percent of their operating surplus to the federal government’s treasury. This surplus is calculated in accordance with the model issued by the Commission. The following offenses and the accompanying penalties have been provided for in the amending bill.

The obstruction or intentional obstruction (direct or indirect) of the Commission or its agent in the exercise of its functions results in a penalty of at least three months of imprisonment or a fine of at least 500,000.00 N or both fines in case of conviction.

Providing false information (including in documents) in response to a request or in the performance of a function imposed by law carries a prison term of at least six months or a fine of at least 1 000 000.00 N or both fines in case of conviction. Misleading and partial (instead of complete) disclosure of information regarding functions imposed by law results in imprisonment of at least three months or a fine of at least N 500,000.00 or both in case of conviction.

“Refusal or failure to provide information in the performance of a function imposed by law is punishable by a penalty of at least one year of imprisonment or a fine of at least 1 million. naira or both in case of conviction. The amendment bill provides that a federal High Court, whether in criminal or civil action, is empowered to recover all benefits of the associated corrupt enrichment; and in case of conviction, the offender will also confiscate any ill-gotten funds from the Treasury.

Last row

To reduce the incidences of revenue embezzlement and underpayment by MDAs to the CRF, a sanction for stray CEOs as a deterrent should be created, although the ongoing amendment of the CRF law by the members of the National Assembly remains a good step.


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