Stopping the thieving pension managers

Ezrel Tabiowo looks at the various incidences of massive pension fraud in the country against the backdrop of the recent intervention by the Senate via the new Pension Act

Disturbed by the overwhelming incidents of fraud and mismanagement of pension funds in the country, the Senate in March, 2012, embarked on an investigation into pension fund administration in Nigeria. This  followed a discovery tracing the sum of N26 billion domiciled in six commercial banks which was meant for the payment of police retirees.
Even shocking was another revelation that showed how the Pension Reform Task Force (PRTF) opened 70 bank accounts to allegedly siphon pension funds which were transferred to the various banks without the authorization of the Office of the Accountant General of the Federation.
Determined to put a stop to the activities of pension thieves, the Senate on June 21, 2012 adopted the report of its committees on Public Service and Establishment, and States and Local Government following an intense investigation conducted, and which exposed what it described as “the crimes of embezzlement, fraud, misappropriation, misapplication, illegal virements, contract splitting, award of contracts to non-existing companies, outright stealing of police pension funds, among others.”
The Senator Aloysius Etok-led committee which at the time carried out a probe into the administration of pension funds in Nigeria, unearthed that N273.9 billion was diverted by pension thieves in government.
The committee in its report stated that out of the total sum of N1.025 trillion received as pension funds by the various pension offices and boards in the country within the period, only N751.4 billion was expended, with N273.9 billion stolen.
According to the report, out of the N213.3 billion pension funds received by the Office of the Head of Civil Service of the Federation, only N154.6 billion was disbursed; while the Military Pension Board disbursed only N294bn out of the N317.6bn it received.
The report revealed also that the Customs, Immigration and Prisons Pension Office paid only N57.4bn out of the N85.2bn released to it; the Department of State Service Pension Office, N9.4bn out of N34.7bn; and the Police Pension Office, N88.2bn out of N131.4bn.
The report, while exposing further the level of monumental fraud in pension administration in the country disclosed that within the period under review, out of the N176.4billion received by other parastatals as pension funds, only N100.6billion was expended; while only N46.9bn was spent out of the N55.8bn released for the payment of retirees of universities across the nation.
Against the backdrop of this alleged fraud,  the committee recommended the disbandment of the Pension Reform Task Force headed by Mr. Abdulrasheed Maina.
Giving reasons for its decision, the Senate Committee explained that “its continued existence and usurpation of statutory functions and violation of extant laws is illegal.

“This position was also recommended by three former Heads of Service, Chief Steve Oronsanye, Prof. Adedapo Afolabi and Alhaji Isa Bello Sali, all of whom at different times appeared before the investigative panel during its sittings.”
The PRTF was indicted by the panel for illegal contract splitting and award to the tune of N1.8billion; spending N1.6billion as running cost of the police pension instead of N80 million appropriated; spending N830.8 million purportedly for the payment of June 2010 pension using cheques instead of e-payment system,   dubious enrolment of pensioners into the payroll, 49,395; and also for allegedly spending N234 million on the already 90 percent completed biometric capturing with no files, data and documents from the pension department. It was also accused of spending N17 million on the biometric verification of less than 30 pensioners in Diaspora without recourse to the Nigerian Embassy/High Commission responsible for such.
Subsequently, on April 7, 2014, the Senate passed the Pension Reform Act 2014, one that repealed the Pension Reform Act 2004 and signed into law by President Goodluck Jonathan. The new law among other punishments, prescribes a 10-year jail term for pension thieves.
In addition, the Act prescribes a fine of three times the amount misappropriated, for any convicted person, as well as the forfeiture to the federal government any property, asset or fund with accrued interest or the proceeds of any unlawful activity under the Act in his/her possession, custody or control.
The Act also criminalises any reimbursement or payment by a Pension Fund Administrator (PFA) or Pension Fund Custodian (PFC) to a staff, officer or director upon whom a fine has been imposed under the Act.
The penalty prescribed for this is a minimum of N5 million. In addition, the Act imposes a penalty of at least N10 million, upon conviction, where the PFC fails to hold the funds to the exclusive preserve of the PFA and PenCom or where it applies the funds to meet its own financial obligations.
The Act also imposed a fine of N10m on any pension fund administrator which failed to meet the obligations of the contributors while each of the directors of the firm would pay N5m each as fines, or face a term of 5 years imprisonment or both.
Also, under the Act, jurisdiction is vested in a Court of ‘competent jurisdiction’ which includes the Federal and State High Courts; the High Court of the FCT as well as the National Industrial Court. The court may lift the veil of incorporation where necessary and ensure speedy and just determination of any case before it.
It also stipulates that whoever attempts to misappropriate pension funds, on conviction, will be liable to the same punishment as prescribed for the full offence in the act.
The new Act reads: “Notwithstanding the provisions of any other law, the commission may, in addition to the penalties stipulated under this Act, impose additional sanctions on the board, any director, management, manger or officer of a pension fund administrator or pension fund custodian that violates any of the provisions of this Act”.
Chairman of the Senate Committee on Establishment and Public Service, Senator Aloysius Etok, while briefing newsmen after the passage of the Pension bill said the Head of Service and Heads of different departments have issued a directive asking all the accounting departments to ensure that pension deductions are treated with a high sense of accountability.
According to the lawmaker, PENCOM consistently has problems because people have failed to provide genuine and credible data on themselves including their PFAs.
He noted that there were some who have not even appointed PFAs and therefore once such funds were deducted, they are kept in accounts pending when they have the data to transfer them.
He said, “We have like buffer stock funds pending in different places. But with the enactment and passage of this Bill today and is assented to by the President, all the penalties and all the prescriptions contained in this Act would be followed strictly by the various agencies.
“We have penalties ranging from 10 years imprisonment. For even failing to give proper information, you have to pay N500,000 daily by any agency. And if you embezzle pensions funds now you will pay not less than three times the amount of funds you embezzled. That is how serious this Bill has treated pension funds.”