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ENUGU FIRM FINGERED AS WORLD BANK DETECTS $32M WATER PROJECT FRAUD
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The World Bank has identified $32m in unaccounted funds in a Nigerian water sector project, raising concerns over likely embezzlement and mismanagement.
According to the newly released FY2024 Sanctions System Annual Report, the Bank’s Integrity Vice Presidency (referred to as ‘INT’ in the report) flagged the discrepancies after a forensic review
The funds, intended to bolster water infrastructure, were not adequately accounted for, prompting an intervention to safeguard the project’s integrity.
In a decisive move to mitigate risks, the World Bank engaged with the project team, including Nigeria’s Task Team Leader, Operations Manager, and Financial Management Specialist.
The bank recommended steps to recover the funds and prevent further losses. Consequently, the Central Bank of Nigeria has been asked to reimburse $22m, while $6m remains in the project account to cover anticipated operational expenses.
The bank has also limited the project’s financial operations to direct payments to curb further irregularities.
A copy of the report obtained by Sunday PUNCH read, “INT followed up on risks identified regarding a project in Nigeria’s water sector and flagged to operations the risk, which was associated with $32m of unaccounted funds.
“INT met with the Task Team Leader, Operations Manager, Programme Leader, and Financial Management Specialist to identify steps to reduce the risk of embezzlement. As a result, the project team asked the Central Bank (of Nigeria) to reimburse the full amount ($22m) and limited the remainder of the project to direct payments.
“The local account remained with about $6m in undisbursed balance, a little more than the anticipated PIU expenses for the remainder of the project.”
Further investigations showed that the World Bank has imposed a 1.5-year debarment with conditional release on a Nigerian engineering firm and its managing director for fraudulent practices in the Nigeria Erosion and Watershed Management Project.
This decision follows an investigation by the bank’s Integrity Vice Presidency, which uncovered instances of misrepresentation during the bidding and execution phases of the project.
A document from the World Bank obtained by Sunday PUNCH provided more information on the project, noting, “This case arises in the context of the Nigeria Erosion and Watershed Management Project (the “Project”) in the Federal Republic of Nigeria.
“The project sought to reduce vulnerability to soil erosion in targeted sub-watersheds in Nigeria. On April 16, 2013, Nigeria entered into a financing agreement with IDA for an amount equivalent to Special Drawing Rights (‘SDR’) 321.4m (approximately $500m at the time of signature) to support the project.
“Simultaneously, the bank and Nigeria entered into two grant agreements under the Global Environment Facility and the GEF Special Climate Change Fund, for $3.96m and $4.63m, respectively, to support the project.
“On February 12, 2019, the bank provided additional financing to Nigeria in the amount of SDR 208.7m (equivalent to $300m), plus a Scale-up Facility Additional Credit in the amount of $100m. The project became effective on September 16, 2013, and closed on June 30, 2022.”
The NEWMAP project, financed by the International Development Association and supported by the Global Environment Facility, was designed to reduce soil erosion in targeted Nigerian sub-watersheds.
The $900m project spanned multiple states, including Abia, where the firm under scrutiny was contracted.
The engineering firm, part of a joint venture, was awarded a $1.22m contract in 2015 to provide design and supervision services for erosion control.
The investigation revealed that during the selection process, the firm misrepresented the availability of key staff and the role of one of its JV partners.
Also, during project implementation, the firm replaced key personnel without notifying the project management unit, violating contract terms.
The investigation uncovered that two key staff members listed in the firm’s proposal were unavailable during the project.
The firm’s managing director admitted during the hearing that the staff’s availability was never confirmed before submission.
This act constituted a fraudulent misrepresentation, according to the World Bank’s Consultant Guidelines.
The firm also falsely claimed that a JV partner actively participated in the project.
While the partner was listed in the proposal, it neither contributed to the work nor received payment for its involvement.
The firm’s justification that the partner was included for its political connections was deemed unsubstantiated by the World Bank.
The firm and its managing director are barred from participating in any World Bank-financed projects for a minimum of 1.5 years.
This sanction extends across the World Bank Group and may be enforced by other multilateral development banks under a cross-debarment agreement.
The document read, “The Respondent Firm, together with any entity that is an Affiliate directly or indirectly controlled by the Respondent Firm, 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.”
It added, “the Respondent Managing Director, together with any entity that is an Affiliate 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.”
Reinstatement after the debarment period is contingent on the firm implementing compliance measures, including the establishment of an integrity compliance program.
Further checks by Sunday PUNCH showed that a firm, Diyokes Consultants Limited, based in Enugu State, Nigeria was declared ineligible by the World Bank for a period of 1.5 years (from March 11, 2024, to September 10, 2025) for fraudulent practices.
The individual associated with the same firm, Innocent Diyoke, shared the same ineligibility period and grounds for sanction.
Both the firm and individual were linked to fraudulent activities uncovered in connection with the World Bank-financed project.
It was earlier reported that the Federal Government, under the leadership of President Bola Tinubu, secured loans worth $6.45bn from the World Bank in just 16 months.
The amount increased to the new figure following the recent approval of three new loans totalling $1.57bn from the World Bank for various projects in Nigeria and is expected to increase further in the coming months.
This was as the international lender approved no fewer than 36 loan requests to the Federal Government, amounting to a substantial total of $24.09bn within five years.
These approvals, aimed at financing various development projects nationwide, arrive alongside increasing concerns about the country’s escalating debt profile, prompting questions about the sustainability of these financial commitments and their potential long-term effects on the economy.
Some of the projects under Tinubu include loans for power ($750m), women empowerment ($500m), girl’s education ($700m), renewable energy ($750m), economic stabilization reforms ($1.5bn) and resource mobilization reforms ($750m).
For many Nigerians, long years of infrastructure decay and increased unemployment have triggered an increased feeling of bitterness whenever they hear the government’s intention to borrow.
Although some of them realistically agree that resources are thin, considering an outsized population; however, they believe the past borrowings have not been justified.
