Alleged N150 Billion Fraud Scandal Rocks NIRSAL Microfinance Bank Posted by News Mirror, August 20, 2021

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. . . Audit reports indict MD, senior management staff

. . . AGF’s Office frustrates investigations by anti-graft agencies.

There is disquiet at the Nigeria Incentive-Based Risk Sharing System for Agricultural Lending (NIRSAL), where audit reports by different agencies have indicted the Management of alleged involvement in multi-billion naira fraud. One of the audits was carried out by Keystone Bank while another was by the Central Bank of Nigeria (CBN), which supervises NIRSAL.

The audits however covered only a fraction of the alleged fraud which reports put in the region of a humongous sum of N150 billion.

The large-scale looting of the eight-year-old interventionist fund for farmers is said to date back to the past five years, covering the tenure of the incumbent Managing Director, Aliyu Abbati AbdulHameed, who remains in office although his five-year tenure officially ended since December 2020.

For instance, an audit inquiry by Keystone Bank in 2019 over the diversion of the sum of N5.488 billion budgeted for NIRSAL’s 20,000-hectare wheat project in Kano and Jigawa allegedly indicted the agency’s MD, AbdulHameed; his Senior Technical Assistant, Oluwatosin Ariyo, who executed the dry season project; and the agency’s National Coordinating Consultant on Project Monitoring and Remediation Offices (PMRO), Dr. Olusegun Steven Ogidan.

The Keystone Bank audit inquiry found that only about N112,000,000 was actually disbursed to the farm sites in Kano and Jigawa states for the project, leaving a whopping N5.488 billion or 98 per cent of the total project sum diverted to personal use.

A reliable source privy to the report of the Keystone Bank audit inquiry said: “Three companies were responsible for the receipt of the loan, namely: Forest Hill, Mainframe and Woodfarm. However, huge fraud characterized the utilization of the loan as the MD and his cronies perfected a fraudulent act of round tripping the loans meant for farmers for the MD’s personal use. The project is not hinged on NIRSAL’s Anchor Borrowers programme, but on a corporate participation programme. Officers at NIRSAL who planned the programme understood that NIRSAL’s operating guidelines has a single obligor limit which does not allow for a single company to be supported to execute a N5.6 billion project.

“To get around this impediment, the planners engaged these three companies, which then split the total sum of the project into three with respective amounts not exceeding the single obligor limit of NIRSAL. This is the first grave infringement on this package.

“The Managing Director of NIRSAL, Aliyu Abbati Abdul Hameed, has substantial business interests in at least two of the companies. The arrangement was for the three companies to work out for respective agricultural instrument facilities with a commercial bank, which they did, to execute the 20,000-hectare wheat programme. NIRSAL’s role, as defined in the books, is dual: to guarantee up to, but not more than 70% of each of the instrument facilities, and then to also use its Interest-Drawback principle to offset a certain percentage of the interest paid by the borrower to the lending bank so long as the borrower is quarterly up to date with its loan obligations.”

The source added: “Keystone Bank offered the instrument facilities to the participating companies squarely as an agricultural facility for a wheat production programme. The participating companies ‘approached’ NIRSAL for its dual role of guaranteeing such loans, as well as for the application of its Interest Drawback principle. NIRSAL got involved, and then Keystone began its disbursements to the participating companies (loanees). The administrative setting is done with, and the field work for a wheat production set to commence.

“A short length into the field work, Keystone Bank observed actions which may be defined as potential infringements of the agreements entered into between it and the three companies, variously. Keystone Bank, in July 2019, then launched an audit enquiry into its dealings with the three companies. Keystone Bank was concerned that the terms of its dealings with Forest Hill Agricultural Development Limited, for instance, had been breached, and so the Bank had stopped further transfers of funds between Forest Hill and its other partners.

“In the present instance, Forest Hill had requested Keystone Bank to transfer, from Forest Hill’s account, the sum of five hundred and forty-three million naira (N543,000,000.00) to Mainframe, to cover for expenses incurred by Mainframe on behalf of Forest Hill on the wheat project under consideration. ‘…Exceptions noted in our enquiry’ is what Keystone Bank stated as reason for declining further transfer transactions between Forest Hill and Mainframe.

That is not all. According to the source, “Keystone Bank noted these exceptions as: (1) That Forest Hill had “mentioned” that it had cultivated and harvested 1,060 hectares of wheat in the initial planting season which ended April 2019, which was in line with the approved transaction cycle. However, the sales proceeds for this harvested wheat did not reflect in Forest Hill’s bank account with Keystone Bank, thus violating the irrevocable letter of domiciliation executed by Forest Hill to the effect that all proceeds of the wheat in this programme shall be deposited in the account of Forest Hill domiciled with Keystone Bank. This means that Forest Hill either did not sell the harvested wheat or that it sold the wheat but diverted the proceeds away from Keystone Bank. But Keystone Bank’s enquiry did not find the wheat! This only suggests that the proceeds have been diverted. This is a gross violation of the terms of agreement between the Bank and Forest Hill.

“Equally, Keystone Bank noted that, Forest Hill ‘mentioned’, during the enquiry, that it planted rice during the period of this contract. This has modified the project scope as there was no rice in the original contract agreement between the Bank and Forest Hill. Keystone Bank was not informed of this modification. Thus, this spells out another gross violation on the part of Forest Hill. Experts say investigators may not buy this explanation, as it will be viewed as diversionary.

“Keystone Bank, in the enquiry, reviewed the Forest Hill’s bank account in question, and then ‘observed numerous transactions between Forest Hill, Mainframe and Woodfarm’, noting that these transactions ‘were not as per the approved utilization schedule’, since the companies are separate entities with different directors, which cannot be viewed as a group.

“Keystone Bank found that the Forest Hill made out, from its loan account, to pay ACT Agribusiness Limited the sum of three hundred million naira (N300,000,000.00) for Land Preparation and Irrigation (Mechanisation) for a land area of 6,500 hectares. Keystone Bank, in its audit enquiry, found that the agreement between Forest Hill and ACT Agribusiness Limited was for 1,060 hectares. Hence, Keystone Bank required Forest Hill to either provide contract documents obligating ACT Agribusiness to complete the outstanding 5,440 hectares, or that the balance of payment for the outstanding hectares be refunded into the loan account. Investigators know very well that this is one of the commonest methods of stealing public money in Nigeria – documenting ‘payments’ for jobs that are never done, which is a major financial crime.

“Also, in relation to the mechanisation defence put forth by Forest Hill, Keystone has argued that this actual cost of mechanisation is incurred on behalf of Mainframe. Hence, passing this cost to Forest Hill, as it is in this case, while Forest Hill itself has its own cost of Mechanisation to the tune of N300,000,000.00, would bring the total cost of mechanisation to six hundred million naira (N600,000,000.00). This figure exceeds the five hundred and forty million naira (N540,000,000.00) budgeted for mechanisation in the Utilisation Schedule submitted to the Bank.

“In the case of the purchase of seeds, Forest Hill claims paying N117.45 million. This figure reflects the seeds to cover 6,500 hectares while the mechanisation process was only done on 1,060 hectares. Hence where is the balance payment for the outstanding 5, 440 hectares, since that has not been paid back into the Bank account?

“Mainstreet Capital paid NIRSAL fees and Insurance Premium of N120 million on behalf of Woodfarm Project. Forest Hill, from its loan account, made a refund of this amount to Woodfarm. But both NIRSAL and the insurance company refunded this total amount after cancelling such payments, but such a refund is yet to be reflected in Forest Hill’s account. Suffice to note here that Mr. Oluwatosin Ariyo’s brother is a portfolio manager at Mainstreet Capital.

“There is no doubt that the monies budgeted for the wheat project were laundered.”

Outside the briefs of audit reports, there are several other alleged instances of looting in NIRSAL. For example, AbdulHameed reportedly once awarded to his son, Imran Aliyu AbdulHameed, N2 billion contract for the purchase of MacBook Air laptops, iPhones, drones, and ICT software for the staff of the agency.

Besides, the NIRSAL helmsman is also alleged to be in the habit of grossly violating due process in the disbursement of the agency’s funds. It was learnt that there is a backlog of operating and capital expenditures already approved by him but which are above his approval limits and for which no board approval was obtained. Most of such contracts said to be worth tens of billions of naira were never executed, it was learnt.

The NIRSAL MD, it was learnt, caused the agency to invest directly in a number of projects called Farmsmart, which gulped the sum of N402,521,056 million but were allegedly deliberately designed to fail.

These projects, which were scheduled for execution in 10 states, it was learnt, have now been reclassified by the agency as “technical assistance” (also known as proof of concept projects) to allow the funds to be written off. Two of companies involved in the failed project are SCAGRIC Ltd and Tradeco Ltd, which got investment worth N348.2 million and N54.3 million, respectively, from NIRSAL.

That is not all, as AbdulHameed is said to have single-handedly approved the sum of N618 million as cost of design, implementation and management of a call centre and service delivery (N292,247,230.70) and design, implementation and support of enterprise network infrastructure (N326,175,894.37) without board approval. The NIRSAL MD’s approval limit for this category of transaction (capital expenditure) is N20 million. The call centre and enterprise network infrastructure do not exist anywhere in the country as at today.

Speaking on AbdulHameed’s approval of contracts beyond his limits without carrying along NIRSAL’s Board, an insider said: “Contracts worth tens of billions have been awarded by the MD without the jobs or contracts ever done. One of such is an ERP contract of about N1.3 billion. Other expenses (since 2017) include; N122 million training expenses awarded to Wildleaf Ltd., In January 2017, N263 million was awarded to Bamili for Study Tour. In December 2017, N227 million training expenses was awarded to Bokadi, while N154 million was awarded to EPMS for General Management. N107 million was also awarded to Freshvine as Training expense, while Data Acquisition and Software contracts were awarded to Inteliwork (N66.2m), Circus Advance (N58m) and Bokadi Links (N55 million).

“In the bid to be compliant with approval limits as from 2019 following years of breaches of approval processes, the Procurement Department guided by the MD resorted to contract splitting; most of these contracts were also never executed. Examples: AVC Capacity Development contract totaling N953m was split into 64 contracts of less than N15m each. In August 2019, AVC Gap Assessment contract which worth N119m was also split into 8 contracts of less than N15m per contract, while in September 2019, Specialized Risk Management Services had its N136 million contract split into 3 contracts.”

Despite not being a security agency, the NIRSAL boss has allegedly been ordering the payment of hundreds of millions of naira for such phantom items under different headings, among them “Advance for security challenge in the North-East on the farms fields”, “Security challenge in the North-Central on the farms fields”, “Advance for external security issue armoured car” and “Advance for security challenge in the South-East on the farms fields”.

These illegal funds, it was learnt, are directly wired into the private bank accounts of a top NIRSAL official. The said top official allegedly received in his personal accounts the sum of N784,549,773.45 between August 2017 and October 11, 2019 as security imprests and other expenses.

The NIRSAL MD, it was learnt, allegedly procured illegally two armoured vehicles (Toyota Landcruiser JTMHX09J5F4083758 and Lexus LX 570 JTJHY00W2J4260990) at the cost of N180 million without approval from the Office of the National Security Adviser. These are in addition to the nine official vehicles allocated to him in various locations across the country.

The NIRSAL funds are laundered and repatriated abroad through an Utako, Abuja-based microfinance bank said to be virtually under the control of the NIRSAL MD, to escape detection.

Regarding suspicious offshore contracts, Beresh Consulting registered in South Africa, it was learnt, was once awarded over N2 billion contract by NIRSAL to organise a training programme for 100 of its staff in Johannesburg.

It was further learnt that NIRSAL expends the sum of N40 million to organise training session every quarter for key persons from every PMRO, but much of the fund is allegedly diverted.

“For instance, a Head of PMRO is entitled to the sum of N57,600 per night (N172,800 for 3 nights) as duty tour allowance, but ends up being paid N20,000 (N60,000 for 3 nights) – the sum diverted in this case is calculated as N8,288,000 (i.e. N112,000 X 74 attendees) per event. The bulk of the money (N21 million) is usually spent on training manuals that are never printed (5,200 copies at the rate of N4,200 each),” a source at NIRSAL said.

A Board Audit Report commissioned by the CBN Governor under the chairmanship of the apex bank’s Deputy Governor, Edward Adamu, confirmed many of the fraud allegations against the NIRSAL MD.

News Express is in possession of petitions alleging large-scale corruption against the NIRSAL MD and his cronies. Strangely, however, petitions by concerned persons written to the Economic and Financial Crimes Commission (EFCC) and Independent Corrupt Practices and Other Related Offences Commission (ICPC) have had little or no effect.

Sources attributed this to the rapport between AbdulHameed and the office of the Minister of Justice and Attorney General of the Federation (AGF).

For example, AbdulHameed, in a letter written to Justice Minister and AGF Abubakar Malami, SAN, entitled, “Request for Intervention on Unwarranted and Multiple Investigations of NIRSAL PLC By Law Enforcement Agencies,” with reference NIR/MD/GEN/TAPD/24/20/03, and dated 29th January, 2020, requested the AGF’s intervention in the ongoing investigation of NIRSAL by security agencies.

Following the NIRSAL MD’s appeal to Malami, the Office of the Attorney General, through the Department of Public Prosecution of the Federation, wrote to the Nigeria Police in a letter with reference: DPPA/NIRSAL/110/20, and dated 4th of February, 2020, forbidding it from carrying out any investigation of the alleged fraud at NIRSAL.

When News Express contacted NIRSAL on Monday, August 19, 2021, the agency, rather than respond to the allegations, threatened the paper with a lawsuit if it dared to go ahead with the story.


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