MOST OF THE ISSUES ABOUT POLICE PENSION HAPPENED BEFORE MY TIME - OKONJO-IWEALA

I, Ngozi Okonjo-Iweala do solemnly swear and affirm that the evidence I shall give shall be the truth, the whole truth and nothing but the truth, so help me God, (amen).

Please Mr. Chairman, I have to just make a statement before I answer any of your questions. Most of the issues about Police Pension happened before my time and I know absolutely nothing about them before I came into this business in September of 2011. I assumed office here on August 17, 2011 and it was at the beginning of September that Mr. Menah came to me to make certain reports. That's why I said that I don't have too much to say because I was not there. I am not aware of these details, so what I would like to do with your permission is to tell you exactly what has transpired since I got a Task Force that came to me, and what has happened since then. So, approving Diaspora and all that, I don't know what you are talking about.

Sorry Mr. Chairman, I apologize for saying that. What I mean is that this is before my time; so I don't have any information.

There was a request from Mr. Maina, who came to me as Chairman of the Pensions Reform Task Team to inform me that he has certain information about things that were not right in the Police Pensions. So, I received him and he mentioned to me that he was the head of a task team that has been constituted under the aegis of the Head of Service sometime back, charged with the issue of doing biometrics capture and data in order to sanitize the Police Pension. Of course, I was happy to hear that and received him, and talked to him, because I knew that the biometrics has been helping us even in the past time in trying to know whether we have ghost workers, ghost pensioners and so on. What he recounted to me was that they have done it well, that prior to their wok, the Police Pensions budget office has been paid about a 1.5 billion naira per month for the payments of pensions, gratuities and so on. He said what they had done has been successful by whittling this amount down to something about N500 million. That to me was very important news because what we want to do is to make sure everywhere we can drive out fraud to make money for the government and reduce the outlets for the budget offices and reduce inefficiencies. He further said that there were irregularities with the management of Police Pensions which the Task Force had been able to fish out and movements of monies between accounts they have had to deal with.

The minute he told me that, and the fact that they were evidence of some fraudulent activities, my reaction was as Minister of Finance, as soon as I was told that there was a part of public money which has issues that were not straight forward, my natural instinct was that they must stop the activities immediately, so that no more money can move in or out. I immediately informed Mr. President of this, to freeze the account and so that no one, neither the Task Force nor the Police Pensions nor anybody would be able to move monies from these accounts. So I wrote to the President for permission to freeze these accounts so that monies belonging to government would not move out. 

So that was the action I took and I further met with the banks and asked Mr. Maina and he made available to me the banks that were handling these monies. I met with the CEOs and told them that because of these allegations, they have to stop movement of monies, that no one was to be allowed to move monies from these accounts without express authorization from the Minister of Finance. So that was all in September of 2011. As soon as that happened, I felt maybe the best thing to do was again with the permission of Mr. President ask an independent authority to look at these accounts.  Of course, as at that time, there were numbers of allegations that monies were moved between here and there. I did talk to the Head of Service, (Professor Afolabi) to also apprise him what I have heard from the Task Force to seek his views.

However, at a certain point in time, I really got confused about what was happening and I asked the permission from Mr. President to invite an independent audit firm to really look into the Police Pensions. He gave that permission and I asked KPMG to look through the Police Pensions and at the same time maintain the accounts frozen, so that no government money would go amiss.

KPMG talked to as many people as they could who were involved with the then Head of Service, to the people in the Police Pensions who were available, including Mr. Maina and the Task Force. The findings were summarized and duly submitted to Mr. President who then asked that (sitting with the Minister of Police Affairs with the new Head of Service and myself) we take caution of these findings and try to see how we can help straighten the affairs of the Police Pensions Office financially so that we hand back the management of the pensions to the office.

But it would not be right to hand it back without making sure that we have straightened out the things that we have found to be wrong, and basically we related with the Head of Service and Minister of Police Affairs to take a look at the findings.

When you view some of these findings, they showed that the demand being made by Police Pensions was two times or three times more than what was needed and an amount of 24 billion naira that was released in 2010 meant for payment of certain gratuities for Police Pension was sitting in an account; and there were monies in other accounts like, such as Ecobank, Fidelity bank, First bank, GTB bank, Skye bank, UBA bank and Unity Bank. As at 30th September 2011 when they did the work, a total of about 32 billion naira belonging to the Police Pensions was holed up in these banks.

The findings also showed that there was unhealthy struggle among various authorities in the Police Pension Office, Head of Service, Task Force as to who controls these accounts and movements of monies in these accounts. So I thought that freezing and not allowing anyone was probably the right cause of action at that time until we could sanitize these accounts. There were so many of them, and some of them were opened apparently without the authorization of the Accountant General which is what is required. KPMG recommended that we needed to collapse these accounts to a very few.  The Accountant General during the meeting we had, was given the mandate of looking at these accounts and making sure that instead of accounts being opened in so many banks with interests been kept on them, few manageable accounts should be authorized before going forward to hand them back to the Police Pension Office.

The issue of the constitutional weakness of controls in the way that the Police Pension accounts were being managed was also brought up.

In summary, with the administrative anomalies in the Police Pension, the anomalies with the movement of funds within the numerous accounts, the overpayments of funds to the Police Pensions with the balance yet to be returned to the treasury, there is a need to clean up this system.