How Federal Mortgage Bank Wasted N17.35 Billion On Abandoned Housing Projects

How Federal Mortgage Bank Wasted N17.35 Billion On Abandoned Housing Projects

An audit of the housing contracts awarded by the Federal Mortgage Bank of Nigeria, FMBN, has revealed how N17.35 billion was wasted on the construction of housing units and estates that had been abandoned.

It was discovered that there were irregularities in payments to developers in an audit carried out by the Office of the Auditor General for the Federation (AuGF) in 2018.

The AuGF alleged wasted and possible of diversion of government funds.

The report added that he should be sanctioned in line with the provision of Financial Reporting Regulation 3104, FR 3105, FR 3122 and 3106 for various infractions.

The MD of FMBN was asked to account for the sum of N17.35 billion disbursed to contractors for the housing contracts in question or face sanctions.

Abandoned N14.28 Billion Legacy Estate Project

Investigation showed that FMB awarded a contract for the construction of 963 units of residential building called Legacy Estate, which was later abandoned by the developer.

The AuGF said the contract cost was N10 billion, the sum of N14.28 billion was paid to the contractor.

This meant the contractor was overpaid by N4.28 billion with no reason given for the additional payment, the report stated.

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This, according to the audit report, is in contravention of the Financial Regulation 708 which states that on no account should money be paid for services not yet performed or for goods not yet supplied.

“Audit further observed, from physical inspection of the site on 7th July 2017, that the project had

been abandoned since 2014, some months after payments were made, with less than 10 per cent of the tune of N4,281,749,370.71, without any justification for the over-payment,” the AuGF report said.

The Managing Director of the bank at that time was asked to recover the sum of N14.28 billion from the contractor, failing which sanctions stated within FR 3104 and FR 3105 should apply.

Loss Of N27 Million To Primary Mortgage Bank

The audit report stated that in 2009, the bank approved a loan of N184,274,350.00 to a developer for the development of 75 units of houses, out of which the sum N125,747,079.00 was released to a primary mortgage bank for onward disbursement to the developer.

 However, findings showed that only the sum of N98.75 million was disbursed by the primary mortgage bank, as the balance of N27 million was withheld by the primary mortgage bank without any justifiable reason for withholding the amount.

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It was also discovered that the project site had since been abandoned without any concrete explanation provided.

The MD was asked to recover the N27 million from the Primary Mortgage Bank and ensure that the developer returns to site or face sanctions stated in FR 3104.

Disbursement Of N1.54 billion To Nonperforming Developers

Investigations by the AuGF revealed that the bank disbursed a total of N1.54 billion to three Estate Developers for the construction of units of houses.

It was however, observed that these developers have since abandoned the sites and that the minimal construction work carried out was also found to be of poor quality

The MD was asked to recover the sum of N1.54 billion from the developers or face sanction in FR 3104 and 3105.

Payment Of N1.4 billion For Uncompleted Projects

The audit discovered that the bank disbursed a total of N1,404,712,245.00 to two Estate Developers between 2012 and 2016 for the construction of housing units called “FMBN Housing Estate”.

The inspection of the sites however, revealed that the projects had been abandoned despite the financial commitment.

The Managing Director was asked to recover the sum of N1.4 billion and the accrued interest from the developers and pay same to the government treasury, otherwise sanctions stated in FR 3104.

About Author

Ife Ogunfuwa is an award-winning reporter who is versed in reporting business and economy, technology, gadgets reviews, telecoms, tax, and business policy review, among others. She loves telling stories behind the numbers. She has professional certifications in business and financial reporting. You can reach her via – [email protected]

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