Concerns about possible corruption and poor management have been raised by the World Bank’s discovery of $32 million in unexplained cash in a Nigerian water sector project.
The World Bank’s Integrity Vice Presidency (referred to as “INT” in the report) reported the disparities following a forensic investigation, according to the recently published FY2024 Sanctions System Annual Report.
An intervention was necessary to protect the integrity of the project since the monies, which were meant to strengthen water infrastructure, were not properly accounted for.
The World Bank worked with the project team, which included Nigeria’s Task Team Leader, Operations Manager, and Financial Management Specialist, in a clear attempt to reduce risks. The bank suggested actions to get the money back and stop more losses.
As a result, $22 million has been requested to be reimbursed by the Central Bank of Nigeria, with $6 million still in the project account to cover expected operating costs.
In an effort to prevent such irregularities, the bank has also restricted the project’s financial operations to direct payments.
According to a copy of the report, “INT flagged to operations the risk that was linked to $32 million in unaccounted funds and followed up on risks identified regarding a project in Nigeria’s water sector.”
To determine how to lower the risk of embezzlement, INT met with the task team leader, operations manager, program leader, and financial management specialist. The project team then requested that the Central Bank (of Nigeria) return the entire sum ($22 million) and restricted the remaining project to direct payments.
“The local account still had roughly $6 million in undisbursed balance, which is a little more than the projected PIU costs for the rest of the project.”
Subsequent enquiries revealed that a Nigerian engineering firm and its managing director had been placed on a 1.5-year debarment with conditional release by the World Bank due to fraudulent activities in the Nigeria Erosion and Watershed Management Project.
This judgement comes after the World Bank’s Integrity Vice Presidency conducted an inquiry and found instances of misrepresentation during the project’s bidding and implementation stages. The Nigeria Erosion and Watershed Management Project (the “Project”) in the Federal Republic of Nigeria is the context of this case, according to a World Bank document. The initiative aimed to lessen the susceptibility of specific Nigerian sub-watersheds to soil erosion.
In order to fund the project, Nigeria and IDA signed a financial agreement on April 16, 2013, for a total of 321.4 million Special Drawing Rights (or “SDR”), or roughly $500 million at the time of signing.
In order to assist the project, the World Bank and Nigeria simultaneously signed two grant agreements for $3.96 million and $4.63 million, respectively, under the Global Environment Facility and the GEF Special Climate Change Fund.
The World Bank gave Nigeria additional funding on February 12, 2019, totalling SDR 208.7 million, or $300 million, in addition to a $100 million Scale-up Facility Additional Credit.
The project closed on June 30, 2022, after going into effect on September 16, 2013. The goal of the International Development Association-funded and Global Environment Facility-supported NEWMAP project was to lessen soil erosion in specific sub-watersheds in Nigeria.
The company in question was hired to complete the $900 million project, which was spread across several states, including Abia.
In 2015, the joint venture engineering business was given a $1.22 million contract to perform erosion control design and supervision services. According to the investigation, the company misrepresented the position of one of its joint venture partners and the availability of key personnel during the selection process.
Additionally, the company violated the terms of the contract by replacing important employees during project implementation without informing the project management unit. Two important employees mentioned in the firm’s proposal were not available for the project, according to the probe. To support the bid, their credentials and resumes were nevertheless included in the proposal.
During the hearing, the managing director of the company acknowledged that the staff’s availability was never verified prior to submission. The World Bank’s Consultant Guidelines state that this act was a dishonest misrepresentation.
Additionally, the company misrepresented that a joint venture partner was actively involved in the project. Although the partner was mentioned in the proposal, it did not participate in the work or get payment for it.
The World Bank rejected the company’s argument that the partner was chosen because of its political ties. For a minimum of one and a half years, the company and its managing director are prohibited from taking part in any World Bank-funded initiatives.
Under a cross-debarment agreement, other multilateral development institutions may implement this sanction, which is applicable throughout the World Bank Group.
“The Respondent Firm and any Affiliate that is directly or indirectly controlled by the Respondent Firm shall not be eligible to
(i) be awarded or otherwise benefit from a Bank-financed contract, financially or otherwise;
(ii) be a nominated sub-contractor, consultant, manufacturer or supplier, or service provider of an otherwise eligible firm being awarded a Bank-financed contract; and
(iii) receive the proceeds of any loan made by the Bank or otherwise participate further in the preparation or implementation of any Bank-Financed Projects.”
It further stated that “the Respondent Managing Director, along with any Affiliate entity that he directly or indirectly controls, shall be ineligible to
(i) be awarded or otherwise benefit from a bank-financed contract, financially or in any other manner;
(ii) be a nominated sub-contractor, consultant, manufacturer or supplier, or service provider of an otherwise eligible firm being awarded a bank-financed contract; and
(iii) receive the proceeds of any loan made by the Bank or otherwise participate further in the preparation or implementation of any Bank-Financed Projects.”
The firm must put compliance measures in place, such as creating an integrity compliance program, in order to be reinstated following the debarment term.
A company called Diyokes Consultants Limited, located in Enugu State, Nigeria, was deemed ineligible by the World Bank for a period of 1.5 years (from March 11, 2024, to September 10, 2025) due to fraudulent actions, according to additional investigations conducted by Punch News. The same period of ineligibility and reasons for sanction applied to the person connected to the same company, Innocent Diyoke.
Fraudulent acts discovered in relation to the World Bank-financed project were connected to both the company and the individual. According to earlier reports, the Federal Government, led by President Bola Tinubu, obtained $6.45 billion in World Bank loans in just 16 months.
Following the recent acceptance of three fresh loans totalling $1.57 billion from the World Bank for various projects in Nigeria, the amount grew to the current amount, and it is anticipated to rise even more in the months ahead.
This occurred over the five years when the foreign lender authorised no fewer than 36 loan requests to the Federal Government, totalling a whopping $24.09 billion. These licenses, which are intended to fund different development projects across the nation, come as worries about the nation’s growing debt load are growing.
This raises concerns about the viability of these financial commitments and their possible long-term implications on the economy.
Among the initiatives under Tinubu are the following: economic stabilisation reforms ($1.5bn), resource mobilisation reforms ($750m), loans for electricity ($750m), women’s empowerment ($500m), girls’ education ($700m), and renewable energy ($750m).
Long years of deteriorating infrastructure and rising unemployment have made many Nigerians more resentful whenever they learn that the government plans to borrow money.
Some of them believe that previous borrowings have not been justified, even though they genuinely acknowledge that resources are limited due to an excessive population.
