Secrets Reporters
Federal auditors are currently in awe at how tax deductions and payment procedures at the National Petroleum Investment Management Services (NAPIMS) during the tenure of its former Chief Operating Officer, Bala Wunti went down the drain
Paper trails by them indicate a withholding tax shortfall of ₦192,418,921.11 arising from consultancy-related payments and also question a ₦262,102,785.00 consultancy payment reportedly made into a personal bank account rather than a corporate account.
According to the audit records reviewed by SecretsReporters, consultancy payments made to several companies and service providers attracted a 5 per cent withholding tax deduction, whereas the auditors assessed that a 10 per cent deduction should have applied under the relevant tax provisions.
The documents identify consultancy engagements involving companies including Schlumberger Tech Nigeria, Broader Petroleum Ltd, Shefa Engineering Ltd, Aquarian Oil & Gas Ltd, Diddan and Associates, Amach Security Services Ltd, and the NNPC Leadership Academy.
For each transaction reviewed, the auditors compared the amount of withholding tax deducted with what they considered the appropriate statutory deduction. Based on that review, the documents put the cumulative withholding tax shortfall at ₦192,418,921.11.
The documents reference Sections 81, 82 and 84 of the Companies Income Tax Act, which provide for the deduction and remittance of withholding tax on qualifying payments made to companies.
Section 81 authorises the deduction of tax at source from specified payments, while Sections 82 and 84 require the remittance of deducted taxes within the prescribed period and outline the consequences of failure to deduct or remit such taxes in accordance with the law. It also referred to the the Federal Inland Revenue Service (Establishment) Act, which empowers the relevant authorities to recover unremitted taxes from government agencies and prescribes penalties for failure to deduct or remit taxes as required by law.
Against that legal framework, the audit documents question why a 5 per cent withholding tax deduction was applied to the consultancy payments reviewed instead of the 10 per cent rate assessed by the auditors, resulting in an estimated revenue shortfall of ₦192.4 million.
One of the red flags raised was a separate consultancy payment valued at ₦262,102,785.00, which they stated was paid into an account bearing the name Olaniwun Ajayi on December 7, 2022, at approximately 9:09 a.m. According to the audit records, the payment was made into what was described as a personal account.
Financial Regulation 713, provides that public funds should not be paid into private accounts and prescribes sanctions where public money is improperly handled.
Payment vouchers, Remita records and related financial documents were reviewed before the transaction was flagged. The auditors further stated that withholding tax and stamp duty were not deducted from the payment, resulting in an estimated revenue loss of ₦45,106,060.67.
The documents therefore raise two principal questions: first, why a consultancy payment of ₦262.1 million was reportedly made into a personal account; and second, why the applicable withholding tax and stamp duty deductions were not made before the payment was processed.
