EXCLUSIVE: Consortium Of Ten Firms Write Imo Governor, Demand N2.59bn Unpaid Forensic Audit Fee

A consortium of ten Forensic Audit Firms have written to the Governor of Imo State, Senator Hope Uzodinma to demand the payment of the sum of N2.59bn for services rendered to the state that led to the recovery of N27.09bn illegal charges from Zenith Bank Plc.

The firms were engaged in September 2019 by the State Government to conduct a forensic audit of the State’s financial transactions covering all bank accounts operated by the State over the period of eight years from June 1, 2011 to May 31,2019.

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The ten firms are Ndubuisi Mgboko and Co(Chartered Accountants); Planet Capital Ltd; Fred Okonta and Co (Chartered Accountants); Alliance Audit and Consultancy Services and Franjul Management Consultants.

Others are Patrickonsult Ltd; Deem Forensic Integrated Global Services Ltd; McSAM Professional Services; C.I Okoro and Co (Chartered Accountants) and Younity Synergy Ltd.

The forensic audit was conducted by the firms to ensure that all charges as debited to the accounts of the State Government complied with the Central Bank of Nigeria guidelines, industry rates, and covenanted agreements between the State and the banks.

It was also meant to reconcile identified charges with the banks to determine and establish excess/over-charges from the account of the State Government as well as pursue the recovery of the determined excess/over charges with the banks.

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In the letter to the Governor dated December 21 and obtained by THE WHISTLER, the audit firms said that while a total of N111.5bn was established against Zenith Bank Plc and reported to the Imo State Government in December 2019 before the commencement of reconciliation and recovery session with the bank in March last year, an irrefutably proven recoverable liability of N27.09bn was established against the bank in the course of various reconciliation and recovery sessions.

The letter, was jointly signed on behalf of the consortium of audit firms by Mr Sammy Osondu and Chief Ndubuisi Mgboko.

The Audit Firms stated in the letter that the N2.59bn fee that was payable to them was agreed to be ten per cent of established and proven liabilities to be recovered from the banks.

It reads in part, “By the terms of our engagement and noting that the fee payable to the consortium shall be based on the amount recovered from the banks, it is required that the appointed representatives of the consortium,which have anchored all reconciliation sessions with the banks to date and who know and posses the record of the established and reconciled recoverable liabilities against each of the banks be compulsorily part of any negotiated settlement agreement with any of the banks to reflect and ensure that any such proposed settlement amounts are not below the established minimum recoverable liabilities against of the banks

“While the total of N111.5bn was established against Zenith Bank Plc and reported to the Imo State Government in December 2019 before the commencement of reconciliation and recovery session with the bank in March last year, an irrefutably proven recoverable liability of N27.09bn was established against the bank in the course of various reconciliation and recovery sessions.

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“We assert irrevocably, that this irrefutable minimum proven recoverable liability against Zenith Bank of N27,093,182,219.05 remains the minimum recoverable settlement amount from the bank on which the fee payable to the consortium of IMOFAC Consultants on the above subject matter must be based.

“Consequent upon the above, and noting that our interim invoice dated 30/11/2020 for N300,000,000 was based on the part payment of 3,000,000,000 by Zenith Bank as reported by us by the appointed Coordinator Consultant to the State on the project-Equinox Consulting Ltd, we hereby demand the payment of the outstanding balance fee of N2,590,017,164.8 as per attached interim invoice to the account of IMOFAC Consortium.”

THE WHISTLER had in June last year reported exclusively how nine Banks were asked to refund the sum of N112.82bn to the coffers of Imo State Goverment.

The Consultants during their forensic audit had discovered that the banks were involved in negative practices which include excess Commission on Turnover charges which was over and above agreement reached with the banks; multiple COT charges on transfers to related accounts in the same bank against an established rule that transfers to related accounts in same bank should not be subjected to COT charges.

The banks were also discovered to have engaged in charging excess lending fees over and above what was approved by the Central Bank of Nigeria Bankers’ Tariffs; unauthorized lending fees relative to approved CBN Bankers’ Tariffs; multiple lending fees on same transaction.

There are also situations where loan/overdrafts granted and disbursements do not comply with conventional rules and regulations. On addition, there were cases where loans/overdrafts were granted without documentations and appropriate approvals as usually required for such facilities.

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Other infractions committed by the banks are excess and unauthorized interest charges on loans and overdrafts; unauthorized granting of overdrafts and interest charges; diversion of loan proceeds to unintended purposes, debit transactions whose beneficiaries could not be determined; improper fixed deposits management with disbursed facilities being invested in Fixed Deposits without the knowledge of the Government at very low rates whilst charging exorbitant rates for such facilities.

There was also cases of inadequate documentations and inappropriate management of Leases and Bonds; collection of lending fees not known to regulatory provisions and extant guidelines; unethical and illegal practices of making refunds to the Government by debiting one Government account and crediting another instead of the bank bearing the cost of such refunds by a debit to the appropriate bank account.

The development had made the Government of Imo State to last year issued a 14 day ultimatum to Zenith Bank Plc to refund what it described as inappropriate charges totaling the sum of N111.5bn.

The amount, according to the government of Imo State, should be refunded into its account within 14 days.

The letter dated June 16,2020 was written by the Governor of Imo State, Mr Hope Uzodimma and addressed to the Managing Director of Zenith Bank Plc, Mr. Ebenezer Onyeagwu.

The Governor had in the letter recalled that the state had issued a demand notice dated December 6, 2019, which was responded to by the Bank on March 2, 2020.

It said another letter was issued by the State Goverment on March 13 2020, comprehensively addressing issues raised in the bank’s response.

However, it said due to the failure of the bank to respond to the State’s letter dated March 13, a reminder was issued on May 27 which gave the bank up to June 3, 2020 to respond to the issues earlier raised

The Governor had said following the inability of the Bank to respond to this reminder, it had become imperative to take steps to recover the N111.5bn inappropriate charges imposed on the State by the bank.

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