The Joint House of Representatives Committee on Finance, Banking and Currency has said that Nigeria lost about $30billion from 2005 to 2019 annually from revenue leakages.
The leakages were basically from activities of agencies and companies in banking, oil exploration, engineering, procurement, construction, installation, marine transportation, manufacturing and telecommunications.
According to the committee, the country has lost significant foreign exchange and revenue shortfall from the infractions.
Consequently, it grilled the management of two banks over several of the alleged infractions, accusing them of compromises.
The Chairman of House Committee on Finance and Co-Chairman of the Joint Committee, Hon James Faleke, in his remarks at the commencement of the investigative hearing on the allegations, said the House at its sitting on March 5, 2020, resolved to conduct an investigative hearing on revenue leakages in excess of $30billion.
He said, “The necessity and commencement of this investigation was as a result of growing problems in the financial management of all the God-given resources in our country, Nigeria, from our vast natural resources to the value added by these resources in the form of foreign exchange earnings and revenue generation, etc, into these investment environment and opportunities.
“Thus, this committee deemed it imperative to investigate revenue leakages and loopholes in the system, that have contributed to a loss of over $30billion in annual federation tax revenue between 2005 and 2019.
“The investigation, therefore, was premised on the documents received from target agencies and companies in banking, oil exploration, engineering, procurement, construction, installation, marine transportations, manufacturing and telecommunications upon which the committee -noted significant foreign exchange and revenue shortfall infractions against the Federal Republic of Nigeria by these stakeholders.
“This places an imperative need to put an end to, or at best, minimise all attributable infractions that have been instruments in the hands of some stakeholders in bringing economic woes to this country and her people.
“During our documentation compilation and a further look at the economic woes caused the country by some companies, the committee has noted the following major infractions which have multiplier effects on other infractions.
“Lifting of some crude oil and gas by oil exploration companies, that were not wholly and legally allocated to the Consignors in JV, PSC and PSA exploration activities including those whose crude oil Certificates of Quantity were not signed by the Department of Petroleum Resources (DPR) and terminal operators.
“Concealment and non-disclosure of some crude oil liftings that ought to have been subjected to Petroleum Profit Taxation at PPT rates ranging between 50 per cent of profit for PSC and PSA companies, and 85 per cent of profit for JV companies.
“Inflow of foreign investments in the form of equity, foreign cash loans, equipment loans whose utilizations are majorly subject to tax, end up in transactions, foreign transfers that were at variance with the purpose of such inflows.
“Overnight and fictitious disappearance of Naira proceeds of foreign inflows from the bank accounts of Nigerian beneficiaries, and subsequent allocations of foreign exchange by CBN for capital repatriations, principal loan repayments and Interest payments.
“Multiple foreign exchange allocations to holders of foreign inflow Certificates of Capital Importation (CCI) over and above the amount brought into the country, leading to capital flight of the country’s much needed and scarce foreign exchange.
“Loan backed Certificates of Capital Importations without evidence of transfer to the foreign lenders in the form of principal repayment and interest payments.
“Some expected imports that were funded by foreign equipment loans and other direct allocations of foreign exchange for foreign exchange valid transactions were neither translated to imports nor their import duties paid to the Nigerian Customs Service.
“Capital Flight using the Form ‘M’ valid for Forex and Forex obtained by the beneficiary companies without utilization of the forex to reflate the economy and taxes paid.
“The committee shall extensively review all of the above infractions, among others, to ensure that all federally collectible revenues are not only identified and recovered, but also to sanction companies involved in the other non-civil infractions in order to serve as a deterrent to potential classmates of the affected companies.”
Interfacing with the representative of one of the two banks, Ngozi Omoke on the allegations, the committee accused the bank of not making remittances to the federation accounts from certain transactions.
It also picked holes in the presentation made by the representative of the second bank, Hassan Imam, saying there were many irregularities.
“Some of the infractions listed against the banks included outstanding withholding tax collectible on Form A: $2, 544, 973, 484; outstanding VAT collectible on Form A $1, 081, 383, 885; outstanding withholding tax collectible on known Form A bank transfers by customers $927, 556, 300; outstanding VAT collectible on known Form A bank transfers by customers from your bank is $463, 778, 150; breakdown of foreign exchange leakage infractions on Form A transactions filed with CBN as taxation services but not traced to the Federal Inland Revenue Service collection platforms $171, 256, 297 and foreign exchange inflow from capital importation yet to be accounted for in the foreign exchange sales voucher is a $17, 655, 410, 376.
“Others are Form A transfers for loan repayment and interest with no evidence of capital importation and payment of withholding tax on interest $210, 013, 266; Capital importation on loans with no evidence of principal repayment and interest payment $1, 072, 868, 110; Capital importation on equity with no evidence of dividend payment and capital repatriation is $1, 134, 835, 320; Dividend transfers in excess of capital importation on equity without payment of withholding tax is $3, 027, 298, 192; Form A transfers for dividend repatriations with no evidence of capital importation, either foreign equity and payment of withholding tax is $305, 725, 840.
“Also listed are foreign transfers for principal loan repayment and interest payment in excess of capital importation loan without payment of withholding tax on interest in $110, 635, 050; and foreign exchange on Form A transferred payment filed with the committee but not traced to CBN returns without payment of taxes is $510, 816, 573.”
Faleke further stated that the committee discovered that one of the banks had Form A transfer by customer through their bank accounts that were not filed with the CBN and committee, with no evidence of withholding tax amounting to $3,107, 398, 073.
The committee also disagreed with the bank’s position on advertisement, saying it was a taxable item.
Faleke, therefore, directed the bank to make available all the receipts of various transactions, and directed the clerk of the committee to write to the Federal Inland Revenue Services (FIRS), to appear before it to confirm the remittances.
Responding to the allegations, Mrs. Ngozi Omoke said the bank conducted its activities within the Foreign Exchange Monitoring and Miscellaneous Provision Act.
She said, “I will just say in a summary before I go to specifics. Our presentation is that we are guided by the Foreign Exchange Monitoring and Miscellaneous Provision Act and from time to time, the Central Bank of Nigeria as well as issues guidelines to regulate transactions on foreign exchange.
‘’It is in the light of this that we have reviewed all the allegations and the transactions mentioned in the report sent to us and we want to affirm again that we were not in any way in contravention of any of the guidelines in the Act or in the foreign exchange manual.”
“If you permit me, sir, I will just take the items one by one as read before. The first is outstanding withholding tax collectible on form A transaction. The total in this regard is $2,544, 973,484.04. We noticed that the committee or whoever computed this applied the total amount that was remitted and applied certain rate which is either 10 percent or 5 percent to arrive at the potential withholding tax or VAT.
‘’A lot of transactions that were documented or mentioned do not attract withholding tax or VAT. So, if I give some examples which you said here are not subject to VAT or withholding tax: Advertisement, airline remittances, principal loan repayments.
‘’What attracts withholding tax is interest on loan repayment not the principal itself; education, credit card, home remittances, BTA and so on. It should be noted that payments made on the basis of Form A by banks to customers are not payments for services rendered to the bank itself. I am glad that the chairman also mentioned it when he was speaking.
“So, withholding tax for the purposes of this amount that has been alleged here applies only to dividend remittances and interest on loan repayment or sometimes when there are consultancy on related transactions.
‘’Those are the only ones that attract withholding tax as guided by Foreign Exchange Miscellaneous Act and FX manual. So, in total, if I can speak to this amount, only $1.29billion and N357million were eligible for withholding tax and in those cases, they were duly deducted and remitted to appropriate authorities.”
Similarly, Imam, who is the Executive Director, North of the second bank, told the committee when confronted with the allegations that the bank only made transactions and would not be in a position to know what their customers did with their funds.
PDP Inaugurates 15 Convention Sub-Committees –
Wike Chairs Special Duties Committee
6,000 Delegates Expected To Attend
The Peoples’ Democratic Party (PDP) National Convention Committee, yesterday, in Abuja inaugurated 15 sub-committees for its national convention scheduled for October 30.
The sub-committees as read by the Bayelsa State Governor, Senator Duoye Diri, include the National Convention Organizing Committee, chaired by Adamawa State Governor, Hon Ahmadu Fintiri.
Others are Constitutional Amendment Committee, chaired by Akwa lbom Governor, Udom Emmanuel; Zoning Committee chaired by Enugu State Governor, Ifeanyi Ugwuanyi; Screening Committee, chaired by former Minister of Justice, Mohammed Adoke.
Sub-committees and their chairmen also inaugurated were Screening Appeal Committee chaired by Senator Ike Ekweremadu; Special Duties Committee chaired by Rivers State Governor, Chief Nyesom Wike; Accreditation Committee chaired by Delta State Governor, Dr Ifeanyi Okowa; and Security Committee chaired by former Inspector General of Police, Solomon Arase.
The Electoral (Statutory) Committee, with Adamawa Governor, Hon Ahmadu Fintiri as the chairman; Publicity Committee chaired by Edo State Governor, Godwin Obaseki; and Venue Committee, chaired by Bauchi State Governor, Senator Bala Mohammed are also among them.
Others include: Welfare and Entertainment Committee with Mariya Waziri as chairperson; Transportation Committee, with Ibrahim Dankwambo as chairman; and Contact and Mobilization Committee with Taraba Governor, Darius Ishaku as chairman.
The rest are, Protocol Committee with Sen. Biodun Olujimi as chairperson; Medical Committee — Nuhu Zagbayi; and Secretariat Committee — Umaru Ibrahim Tsauri.
Inaugurating the sub-committees, Fintiri expressed belief that the October convention would be successful and lead PDP to victory in 2023.
Fintiri said that the leaders and members of the sub-committees were carefully selected to organize a credible convention for the party.
The Adamawa governor urged them to make the necessary sacrifices to deliver the best convention to the party.
Fintiri, fielding questions from newsmen after the inauguration, said that by PDP’s new constitution, over 6,000 delegates were expected at the convention.
“We are fully prepared for that. We are expecting everybody in every ward that is a delegate to attend the convention.”
He said that the sub-committees had been given directions and they were expected to go back, adequately prepare and submit their report to the main committee for approval.
On which part of the party’s Constitution would be amended, Fintiri said he could not pre-empt the Constitution Sub-Committee, but allow them do their job.
On how far the zoning committee had gone after the one-week appeal he gave them, last week, Fintiri said the committee was in a meeting in Enugu carrying out its responsibilities.
“You can see the party is working, and it is a turning point for all of us,” Fintiri said.
According to him, the leadership tussle in the party has largely been addressed even as he came short of saying the PDP has moved on from the crisis.
He said, “We are moving on. I am the chairman of the convention committee and you can see that we are doing our work. Everybody is happy and participating. I don’t see any crisis in this party.”
The party’s national elective convention is slated for October 30 and 31 this year in Abuja.
RSG Recommits To Building Agric Sector
The Rivers State Government has said that it was committed to building the agricultural sector and utilise the huge potentials the state has for the benefit of Rivers people.
The state Governor, Chief Nyesom Wike, stated this while speaking at a seminar of the Norwegian Seafood Council at Hotel Presidential in Port Harcourt, yesterday.
Represented by his Deputy, Dr. Ipalibo Harry Banigo, Wike said, “In the face of dwindling oil prices, and the need to diversify the economy, we see a lot of potentials in the seafood industry especially post Covid-19. This is an important industry for creating employment opportunities, generate revenue and boost economic activities in our area”.
Wike, who said that Rivers State was one of the coastal states in the Niger Delta endowed with valuable seafood resources, revealed that Norway and Nigeria have had a long history of relationship and trade.
According to the governor, “Rivers State, known as the oil and gas hub of Nigeria, is open to do business in all sectors including maritime and welcome more partnerships and investments from stakeholders who wish to do business in the state”.
Wike further said, “In the effort to grow our economy, the Government of Rivers State supports making laws that work for us all, by putting laws in place to improve society’s efficiency. Hence, the assent and signing of the VAT law”.
The Rivers State chief executive, who commended the Norwegian Seafood Council for conducting the seminar in the state, stressed that stock fish was enjoyed across Rivers State by all groups, including low and high earners, while both men and women are involved in the sales in our markets.
“I believe this seminar will examine the many advantages and gains of seafood as well as anticipated support from the Norwegian Embassy in the areas of encouraging deep sea fishing, trawlers, good storage for sea products, training to grow and nurture fish production standard, fish ponds and open fish farms, use of technology and encouragement, support to artisan farmers.
“We believe that the gains for removing stock fish and stock fish heads from the list of items not valid for the FX windows far outweigh the losses if any.
“For all the reasons stated above and many more, we anticipate Federal Government and the CBN’s removal of stock fish and stock fish heads from the list of items not valid for the Central Bank of Nigeria FX window”, Wike further stressed.
In his remarks, the Ambassador Royal Norwegian Embassy, Knut Lein, who described the history of stock fish in Nigeria and Norway as fascinating, said it creates a bond between both countries, and expressed the desire to foster increased cooperation, build on bilateral relations and inform the government of Norway about the opportunities in the country.
He said, “together we could create lots of jobs”, insisting that “doing what we can to promote stock fish trade was a win-win for all of us”.
Highlights of the occasion were the presentation of papers by the Director Africa, Norwegian Seafood Council, Mr. Trond Kostveit, and other stakeholders.
The Norwegian Ambassador, Mr. Knut Lein, had earlier paid a courtesy call on Governor Nyesom Wike, at the Government House in Port Harcourt, where the state chief executive expressed the state government’s desire to continue to partner with the Norwegian Embassy to facilitate economy growth and development of both countries, and the state in particular.
Encourage States To Harness Own Resources For Dev, Wike Tasks FG
The Rivers State Governor, Chief Nyesom Wike, has said Nigeria must encourage federating states to harness their resources and generate revenues, including Value Added Tax (VAT) to advance their development.
He also stressed that it was baffling to note that Rivers State was not included among states to benefit from any of the projects to be executed with the fresh loan that the Federal Government was seeking to obtain from the World Bank.
Wike made the observation when the Managing Director and Editor-in-Chief of the SUN (Newspaper) Publishing Limited, Mr Onuoha Ukeh, led a delegation to present letter of nomination to him as the SUN Man of the Year 2020 Award at Government House, Port Harcourt, last Monday.
The Rivers State governor observed that there were mounted attempts to frustrate federating states like Rivers, to actualise the constitutional provisions that empower them to harness their resources and revenues, particularly VAT.
The governor decried the situation where the legality of states collecting VAT was not considered on the merit of the law by some public commentators, including state executives, rather, they were politicising it and looking at it from prism of ethnicity and religion.
According to Wike, what the FIRS was doing was illegal, and could be likened to robbing some states to pay others.
“You don’t even need to be a lawyer to know that VAT is not in Items 58 and 59 of the Second Schedule of the 1999 Constitution as amended. Everybody knows that. It is not even in the Concurrent List. Therefore, it falls under the Residual List. It is not arguable. That yesterday, nothing happened, does not mean that today, nothing will happen or tomorrow, something will not happen.
“Nigeria should encourage states to be strong enough to have resources to develop themselves. We are in a federal system where we are practicing unitary system. Everybody at the end of the month will run to Abuja to share money. Nobody comes back to the state to think, how do I develop my state.”
He explained that the contest against the collection of Valued Added Tax (VAT) was started by Lagos State, which had sued the Federal Government at the Supreme Court.
According to him, Rivers State only avoided their pitfall by suing the Federal Inland Revenue Service (FIRS), which is an agency of the Federal Government that was illegally collecting the tax in the state.
“The issue of VAT did not start from Rivers State. It started in Lagos State when Lagos State challenged it in Supreme Court. Unfortunately, the Supreme Court said you (Lagos) shouldn’t have sued the Federal Government. All you would have done was to sue the agency.”
The governor observed that rather than commend Rivers State Government for seeking to entrench fiscal federalism and constitutionalism, a particular state governor had threatened that the judgement of the court that declared that states, and not FIRS, are entitled to collect VAT within their jurisdiction, will not stand.
He urged those demanding for a brothers’ keeper consideration to first, appreciate the position of the law and situate it rightly.
“Some people say, ‘be your brother’s keeper’. I have no problem in being my brother’s keeper, but why not come out and say, let us tell ourselves the simple truth: as it is provided in the law, who is the person responsible to collect the VAT?
“When you agree to that, that it is the state, then, we can sit down to look at the different problems of states. And not to say ‘be your brother’s keeper’ while you’re doing an illegal thing, in disobeying what the law says you should not do.”
Wike stated that it was sheer act of discrimination for the Federal Government not to include Rivers State as one of the states that will benefit from projects for which it was seeking fresh foreign loans to execute.
“Look at the money that Federal Government has gone to borrow from the World Bank. Of all the projects, in all the states, Federal Government did not include Rivers State.
“Look at the list of projects that states will benefit from this money they’re borrowing from the World Bank that they have sent to National Assembly for approval, the only state that is not benefitting is Rivers State”.
He further noted, “It is the prerogative of Mr President; if he says he does not like Rivers State, if the ruling party says they don’t like Rivers State, I won’t kill myself. But leave the one that the law says I should be the one to collect so that I will be able to develop my own state.”
Speaking further, Wike explained that beyond the provision of infrastructure, his administration was seeking a law that would provide comfortable accommodation for judicial officers on retirement.
The reason, he said, was to ensure that, while in service, the judicial officers can concentrate on their jobs without cutting corners, and avoid corrupt practices.
In his remarks, the Managing Director and Editor-in-Chief of the SUN (Newspaper) Publishing Limited, Mr Onuoha Ukeh, said the SUN Man of the Year 2020 Award was the flagship of award the company.
According to him, Wike was unanimously selected for his remarkable contributions to the socio-economic development of Nigeria and promotion of fiscal federalism with his position on VAT, which would help in the restructuring of Nigeria.
“Today, His Excellency has guided Nigeria to true federalism with the issue of VAT. Knowing what fiscal federalism should be, His Excellency went to court to challenge the collection of VAT, and the court stated that actually the states should collect VAT. And that is laying the foundation for true federalism and fiscal federalism”, he said.
Ukeh commended Wike for his sterling performance in office and infrastructural revolution taking place in Rivers State.
- Rivers4 days ago
Group Wants Ekpeye People To Pursue Common Goal
- Politics4 days ago
Reps Query Presidential Committee Over Assets Seized From Past Leaders
- Politics4 days ago
Chieftain Urges Kanu, Ighoho To Join APC
- Politics4 days ago
Sanwo-Olu Signs Anti-Open Grazing Bill Into Law
- News4 days ago
- Opinion4 days ago
OurStateOurResponsibility: An Insight
- Editorial4 days ago
For A Greater Rivers Utd FC
- News4 days ago
NYSC Advises Corps Members Against Risky Engagements