The 2023 KPMG audit report showed N31.8 billion (N31,841,133,582) worth of contracts were awarded to inactive companies under the administration of the immediate past Governor of Abia state, Mr. Okezie Ikpeazu.
The contract audit review between 2015-2023 on the Abia state procurement performance shows that different Ministries, Departments and Agencies (MDAs) contracted projects to contractors whose status is against the Corporate Affairs Commission law.
Meanwhile, awarding contracts to inactive companies contravenes the Companies and Allied Matters Act, 2020 which states that “every company must make and deliver their annual returns to the CAC every year.”
Contracts Awarded to Inactive Companies; a Violation of Law
An inactive company is a registered entity that has failed to file its returns for at least two consecutive years.
However, the audit on conflict of interest checks on the contracts awarded shows that some of the contracts were awarded to some of the directors who were government officials on the ABSG roll under former governor Okezie Ikpeazu.
‘‘We carried out a conflict of interest checks on the 73 contractors by comparing names of the directors of the 73 companies with the Government Officials on ABSG nominal roll, noting a possible conflict of interest.’’ the report says.
For instance, the Abia State Ministry of Works contracted a sum of N55 million (N55,000,000) to Amatec Integrated Service to expand and excavate Aba Urban Creek Road in Aba. The company belongs to Mrs Rosemary Nwogu, a Director of Amatec Integrated Service and also a Senior Accountant in the Judicial Service Commission of Abia State
Also, it awarded a total of N42 million (N42,000,000) to Seafair Project Limited belonging to Mrs Ihuoma Omekwe, a Director in Seafair and the Deputy Director, State Counsel in Abia State Liaison Office, Abuja.
The Abia state Ministry of Works awarded N3.8 billion (₦3,820,618,639.40) contract to Arab Contractors for the Reconstruction of Aba Road Umuahia from Enugu – Port Harcourt Express-way junction to Railway Crossing at Old Umuahia and the Reconstruction of Aba Road Umuahia from Railway Crossing to Eastern Comfort Hotel Dual Carriageway.
Tunnel End Investment Company Limited was awarded 9 contracts on the construction of roads for the sum of N25 Billion (N25,702,628,441). The project was awarded to Mr Nwafor Enyinnaya Chima, the son of a former deputy Governor of Abia state and a Governorship Candidate of the Young Progressives Party (YPP) in the 2023 Abia Gubernatorial election.
Meanwhile, a contract worth N27 million (N27,000,000) was awarded to Conduit Resource Limited with no purpose or description.
Aside from Conduit Resources, Fincep Construction Company Limited and Pal Bese Global Enterprises received contracts worth N25 million (N25,000,000) and N17 million (N17,850,000) respectively with no purpose of payment despite their inactive status. Worldcorp Nigeria Limited received N6 million without purpose.
However, an unregistered company, Sannan Jadoon International Limited was awarded a contract worth 2.1billion ( N2,151,886,502) by the Abia State Government for the construction of Roads and Drainages in the state.
The CAC describes an inactive company as “a registered entity that has not filed its annual returns up to date.” This contravenes sections 417 – 424 of the Companies and Allied Matters Act, 2020, which states that “every company must make and deliver their annual returns to the CAC every year.”
Expert Reaction
A legal expert, Barrister Awosusi Kehinde (Esq), told Dataphyte that it is illegal for an inactive company to get contracts from the government.
“You cannot take contracts from the government because after filing your annual returns, you are expected to get a tax clearance certificate from the Federal Inland Revenue Service and a certificate of your annual return from the Corporate Affairs Commission. That is when you are eligible to be awarded any contract. The annual return is duly signed by an accountant, a practising accountant preferred to be a chartered accountant”, Awosusi noted
However, efforts by Dataphyte to get comments from the former governor of Abia state through his Chief Press Secretary, Mr. Onyebuchi Ememanka proved abortive as no timely response was given on the issue after several calls and texts.