How Forensic Audit Report Indicted Ex-Governor Ikpeazu, Ferotex Construction Company In N10bn ‘Non-Existent’ Abia Airport Projec (PART I). THE WHISTLER.

By Ifeanyi Onuba, Oliver Iro On May 3, 2024.

…Ex-Governor Secured Lawmakers Approval Within 24 Hours To Borrow N10bn From UBA For Airport Project, 3 Weeks After Funds Were Disbursed To Ferotex

…Ferotex Fails To Respond To THE WHISTLER’s FOI Request On Involvement In Abia Airport Contract Sag

…We Are Studying Forensic Audit Report From Abia Govt – EFCC

Facts have emerged as to how the immediate past Governor of Abia State, Okezie Ikpeazu claimed to have paid the sum of N10bn to Ferotex Construction Company for the execution of the controversial ‘non-existent’ Abia Airport Project.

Details of the alleged payment are contained in the forensic audit report on the eight-year administration of the former governor of Abia State, exclusively obtained by THE WHISTLER.

The Abia Airport project has become an issue of controversy following revelation by the administration of Governor Alex Otti that funds were collected for several projects which were never executed.

The collection of funds for various projects without evidence of execution is a reflection of the huge corruption that has characterized the tenure of public officeholders in Nigeria.

How Ferotex Raised N10bn Loan From UBA For Abia Airport Project Execution
An investigation by THE WHISTLER has uncovered how the sum of N10bn was secured by Ferotex Construction Company for the construction of Abia Airport project through a term loan.

THE WHISTLER gathered that through a letter dated September 25, 2020, Ferotex had requested a term loan of N10bn (which is 80 per cent contract amount) to continue the execution of the contract awarded to them during that period by the state government for the construction of Abia State Airport.

Two weeks later, specifically by October, 8 2020, records available to THE WHISTLER revealed that the Abia State Government, under Ikpeazu, issued an Irrevocable Standing Payment Order to United Bank of Africa confirming the purpose of Ferotex’s request for the construction of Abia State Airport.
An Irrevocable Standing Payment Order (ISPO) is an order issued by a state government requesting a bank to deduct funds from its accounts and credit a nominated party, usually a contractor or creditor.

Findings revealed that the ISPO instructed United Bank for Africa to debit its ABSG Federation Account Allocation Committee/Value Added Tax Accounts with a repayment amount of ₦406,620,817.24 for a period of 30 months, and credit the contractor’s account domiciled with UBA the ₦10bn term loan.

According to investigations, UBA was said to have disbursed the ₦10bn term loan to the contractor on September 25, 2020, which was before the October 8, 2020 date that Abia State Government sent the ISPO to UBA.

A Forensic Audit Report commissioned by the administration of Governor Alex Otti which was conducted by KPMG Advisory Services revealed that the schedule of the contract awarded by the state government under Ikpeazu’s watch does not include any contract for the Abia Airport project as the project was confirmed to be non existent by the Ministry of Works.

KPMG’s Forensic Audit Report:
“The schedule of contract awarded by ABSG during the period under review, does not include any records of the contracts, and upon enquiry the Government Officials in the Ministry of Works stated that the Contract does not exist,” the audit report reads in part.

In a bid to get the Abia State House of Assembly to appropriate funding for the Abia Airport project, investigations by THE WHISTLER showed that the immediate past Governor, Okezie Ikpeazu wrote a letter to the Speaker to achieve his objective.

Specifically, it was gathered from documents obtained by THE WHISTLER that the ex-governor, through a letter dated October 13, 2020, addressed to the then Speaker of the Abia State House of Assembly, Chinedum Orji, had requested for approval for his administration to use the FAAC/VAT Accounts to guarantee a loan of N10bn.

In the letter to the Speaker which was also exclusively obtained by THE WHISTLER, Ikpeazu explained that the funding would enable the state to “start and complete on time, an international airport for the state.”

The letter to the House of Assembly Speaker, was personally signed by Ikpeazu, dated October 13, 2020 and titled “Request for approval for Abia State Government to use the FAAC/VAT accounts of the state to guarantee a loan of N10,000,000,000.00 (TEN BILLION NAIRA).”

It reads, “In a bid to start and complete on time, an International Airport for the State, the State Government is requesting the House Authorization to use the State FAAC & VAT Accounts to guarantee a loan of N10,000,000,000.00 from UBA Plc to the contractor handling the Project.”

Abia House Of Assembly Approves Ikpeazu’s N10bn Loan Request For Airport Project
Abia State House Of Assembly quickly approved and appropriated N10bn to Ikpeazu within 24 Hours of the receipt of the request vide its letter dated October 14, 2020.

Further investigations by THE WHISTLER revealed that the request of the former governor to the lawmakers was approved and communicated through a resolution dated October 14,2020.

The resolution which was jointly signed by the then Speaker of the Abia State House of Assembly, Chinedum Orji, and the Clerk of the House, JohnPedro Irokansi, authorized the former governor to proceed with the N10bn loan request for the airport project.

The implication of this approval is that the N10bn appropriated by the State Assembly cannot be used to finance any project other than the airport project without a virement which must be duly approved by the lawmakers.

Budget Virement means the process of transferring budgeted funds from one line item to another, with the approval of the lawmakers, to enable budget managers to amend budgets in the light of experience or to reflect anticipated changes.

There are no records from the administration of Ikpeazu that the N10bn funds were reallocated to another project as no virement request was received by the lawmakers for that purpose.
The lawmakers’ resolution approving the N10bn request from the ex-governor reads, “Pursuant to His Excellency’s letter of October 13, 2020 on the above subject matter, the Abia state House of Assembly sitting in an Executive session on Tuesday 13th October 2020 considered the said letter and agreed that there is need for the state to use the FAAC/VAT accounts to guarantee a loan of N10,000,000,000.00 only from the UBA PLC to the contractor handling the International Airport project.

“Consequently, the House unanimously resolved as follows: That the Abia State Government is hereby authorized to use the FAAC/VAT accounts to guarantee a loan of N10,000,000,000.00 from UBA PLC.”

Ferotex Fails To Respond To THE WHISTLER’s FOI Request On Involvement In Controversial Abia Airport Contract
THE WHISTLER confronted the Managing Director of Ferotex Construction Company, Mr Festus Onu through a Freedom of Information request dated April 30, 2024, containing details of our findings.

In the FOI request sent to him, he was asked to state how much has so far been released by the Abia State Government for the implementation of the project to his company, the level of implementation/execution of the project, and when the project will be delivered and handed over to Abia State Government.

The letter was delivered on Wednesday, May 2 to the Managing Director in the headquarters of the company located in Port Harcourt.

We rejected Airport Project From Ex-Governor Ikpeazu – Ferotex MD
Upon receipt of the letter, the Managing Director, who was in his office with the Company’s Legal Adviser told THE WHISTLER that the company rejected the contract from Abia State Government.

He said the reason for the rejection of the contract was because Ferotex Construction Company specializes in road construction projects and does not have the needed expertise to handle airport projects.

He said, “Our company is majorly into road construction. We don’t handle airport projects.

“So, when the government of Ikpeazu brought the airport project to our company, we rejected it and told the Governor that we don’t handle such project.

“Our company did some road constructions and supervised some other projects in Abia during the last administration.

“There’s no contract agreement between the company and the Abia State concerning any airport.

“We don’t have any information regarding the Abia airport project by the Ikpeazu administration.

“Our company is a reputable construction company. We deliver in all our projects to the standard stipulated in our contract agreement.”

Conspiracy Of Silence: No Evidence From Ferotex That Airport Project Contract Was Rejected

Not satisfied with the explanation of the MD that the company rejected the contract from the ex-governor, THE WHISTLER probed further by requesting that the company provide the following information to support its claims.

Letter of contract award sent to Ferotex Construction Company by the Abia State Government for the award of Abia Airport Project.
Acknowledgement copy of Ferotex letter to Abia State Government rejecting the contract.
Evidence that Ferotex Construction Company returned the term loan of N10bn that it took from the bank for the project given the fact that the money was withdrawn from Abia State Account all through the period.
Letter from Abia State Government confirming that it accepted Ferotex’s rejection of the Abia Airport Contract project
Any other supporting document(s) to substantiate the fact that the contract was rejected by Ferotex Construction Company and monies returned to the coffers of Abia State Government.
But the request by THE WHISTLER for the above information to support the company’s claim that it rejected the contract was ignored and not responded to as of the time of going to press.

The Managing Director did not also pick up repeated calls to his mobile phone number.

Ex-Governor Ikpeazu Should Be Investigated, Prosecuted By EFCC, ICPC For Misappropriating N10bn For Airport Project- Lawyers
Lawyers who spoke to THE WHISTLER during separate interviews are demanding a probe and prosecution of the former governor and officials of Ferotex by the Economic and Financial Crimes Commission.

They said those Indicted in the contract saga can be prosecuted for various offences ranging from money laundering, obtaining money under pretense, fraud, stealing, conversion of public funds, breach of public trust and misappropriation among others.

Speaking to THE WHISTLER, Barrister Maxwell Okpara said the ex-governor Ikpeazu and Ferotex Construction Company can be prosecuted by the EFCC for obtaining money under pretense,

He said, “The EFCC can handle that. The EFCC can charge them for advanced fee fraud. They can charge them for obtaining money by false pretence.

“They can charge them for fraud. The EFCC can even claim that the money was used for funding terrorism and even money laundering.”

Also speaking, another Legal Practitioner based in Gombe State, John Wunfe Nimfas, said a charge under the Money Laundering Prohibition Act can be brought against the former Governor and Ferotex Construction if the company truly benefited from the proceed of the said loan.

He said, “Based on the fact as reflected above, a charge under Money Laundry (Prohibition) Act (As Amended) can be brought against the former Governor and the company, that is if the company truly benefited from the proceed of the said loan.

“But for the offense to be charged, one need to peruse through the provision of the Act to know under which section the duo can be properly changed. Thus, the former Governor and the company can be charged for money Laundering.

“With regard to which Agency can change them to court, the law by virtue of Economic and Financial Crimes Act vested EFCC with the powers to prosecute for any financial crime of which, money Laundering is one of them.

“Again, if the investigation reveals that the Governor used his position while in office to confer or gives undue advantage to the said company or perhaps, the Governor has a stake in the company, the ICPC can frame a charge pursuant to Independent Corrupt Practices and other Related Offices Act.

“However, the particular offence to be charged or the section of the law to frame the charge depends on the facts revealed by the investigation.”

In her reaction to the controversial contract, an Abuja-based Legal Practitioner Blessing Ogbu, told THE WHISTLER that the Appropriation Law of the State – just as the Appropriation Act at the Federal level – forbids monies that have been appropriated to be used for another purpose.

She added that a “breach of this law is what we call misappropriation.”

The legal practitioner said, “The EFCC and ICPC can prosecute, though EFCC is more suited for the prosecution since it may be argued that the ex-governor, no longer in service, cannot be prosecuted by ICPC. But, it is debatable since the criminal act was done when the ex-governor was in service.

She listed some of the offences which the ex-governor could be charged for to include stealing, conversion of public funds, breach of public trust

“To be charged for stealing, a person must have taken a property that belongs to another person, without that other person’s consent, with the intention of depriving that other person it’s use, possession and ownership permanently.

“Conversion of public funds happens when someone takes a property belonging to another person and begins to use the property as if it is his own. The difference between conversion and stealing is that while in the case of stealing, the thief takes the property without the consent of the owner, in the case of conversion, the property must have come into the person’s possession legally. But, instead of keeping it or using it for the purpose for which it was delivered to the person, this person, that is, the criminal, begins to use the property for his own benefit and enjoyment.

“Beach of public trust. The money is meant for the people of Abia State in order to construct an airport for them. They are the beneficiaries. The House of Assembly approved the fund. The governor holds it in trust. So, we have the House of Assembly as the settlor, the governor as the trustee and the people of Abia State as the beneficiaries.

“Now, the governor, instead of using the money for the purpose for which it was approved for him, now squandered it or turn it into his personal property. That is criminal breach of trust. He can be charged for a range of offences.”

For Barrister Nelson Kebordih, he said the former governor could be prosecuted by either the EFCC or ICPC depending on the way the alleged offences are approached by the law enforcement agencies.

He said, “The offence can be embezzlement, self-aggrandizement and even corruption. So, if its corruption that deals with economic and financial crimes, then the EFCC Act provides that the commission can prosecute on that.

“Now, if you talk of embezzlement and undue enrichment, diversion of contract using his position as a public servant, then the ICPC can also deal with him depending on how they want to approach the case.

“So, both the ICPC and EFCC can prosecute him. But based on the activities so far, the EFCC has been forward in prosecuting people that are political exposed who use their office for undue enrichment to the detriment of the state.

“So, EFCC will actually be in the front burner to start the prosecution against him. Being abuse of office, in his capacity as a public officer, the ICPC Act empowers the commission to also investigate and prosecute him.

“If found culpable, he could get between three and seven years in prison. That is the range of the punishment for the offences.”

When THE WHISTLER contacted the Economic and Financial Crimes Commission, the Commission confirmed that it had received the entire audit report and was studying the contents of the report.

– The second part of this story will explain how the funds for the Abia airport project were disbursed by the Ikpeazu administration.