House Summons FIRS Over $30b Revenue Leakages

The House of Representatives Committees on Finance and Banking
and Currency have summoned the Federal Inland Revenue Service
(FIRS) to appear before them next Monday as investigation continues
into $30 billion annual revenue leakages from 2004 to 2019.

The leakages allegedly arose from payments on account of foreign
currency denominated contracts by companies in engineering,
procurement, construction, installation, marine transportation, and
likewise foreign exchange allocation to companies from sources such
as the Central Bank of Nigeria, autonomous inter-bank domiciliary
and over the counter purchases for the importation, payments of
foreign service vendors, dividend repatriation foreign
loan/interest payments.

Chairman Finance, James Abiodun Faleke and Chairman Banking&
Currency, Victor Nwokolo, were worried that the value of the naira
to the dollar was dropping drastically, with dire consequences for
the Nigerian people, despite the enormous inflows of capital
importation and foreign direct investment over the years, which
were expected to translate into revenue generation for the Nigerian
government and stabilising the exchange rate.

“Hence, a question we would like to pose to the stakeholders
today is, why are the skyrocketing amounts of foreign direct
investments and capital importations not being reflected in the
economic progress of the country? Therefore, it is for this reason
that the House of Representatives through its Joint Committees of
Finance, and Banking and Currency launched the investigation.

“The necessity and commencement of this investigation was as a
result of growing problems in the financial management of all the
God-given resources in our country, Nigeria, from our vast natural
resources to the value added by these resources in the form of
foreign exchange earnings and revenue generation etc. into these
investment environments and opportunities.

“Thus, this committee deemed it imperative to investigate
revenue leakages and loopholes in the system that have contributed
to a loss of over $30 billion dollars in annual federation tax
revenue between 2005 and 2019,” they said in a joint statement.

They said the investigation was premised on the documents
received from target agencies and companies in banking, oil
exploration, engineering, procurement, construction, installation,
marine transportation, manufacturing and telecommunications upon
which the Committee -noted significant foreign exchange and revenue
shortfall infractions against the Federal Republic of Nigeria by
these stakeholders.

“This places an imperative need to put an end to, or at best,
minimise all attributable infractions that have been instruments in
the hands of some stakeholders in bringing economic woes to this
country and her people.

“During our documentation compilation and a further look at the
economic woes caused the country by some companies, the Committee
has noted the following major infractions which have multiplier
effects on other infractions:

“Liftings of some crude oil and gas by oil exploration companies
that were not wholly and legally allocated to the Consignors in JV,
PSC and PSA exploration activities including those whose crude oil
Certificates of Quantity were not signed by the Department of
Petroleum Resources and terminal operators.

“Concealment and non-disclosure of some crude oil liftings that
ought to have been subjected to Petroleum Profit Taxation at PPT
rates ranging between 50% of profit for PSC and PSA companies, and
85 per cent of profit for JV companies.

“Inflow of foreign investments in the form of equity, foreign
cash loans, equipment loans whose utilizations are majorly subject
to tax, end up in transactions, foreign transfers that were at
variance with the purpose of such inflows.

“Overnight and fictitious disappearance of Naira proceeds of
foreign inflows from the bank accounts of Nigerian beneficiaries,
and subsequent allocations of foreign exchange by CBN for capital
repatriations, principal loan repayments and interest payments.

“Multiple foreign exchange allocations to holders of foreign
inflow certificates of capital importation (CCI) over and above the
amount brought into the country, leading to capital flight of the
country’s much needed and scarce foreign exchange.

“Loan backed certificates of capital importations without
evidence of transfer to the foreign lenders in the form of
principal repayment and interest payments. Some expected imports
that were funded by foreign equipment loans and other direct
allocations of foreign exchange for foreign exchange valid
transactions were neither translated to imports nor their import
duties paid to the Nigerian Customs Service.

“Capital Flight using the FORM ‘M’ valid for forex and forex
obtained by the beneficiary companies without utilization of the
Forex to reflate the economy and taxes paid. Export proceeds for
both Oil and other commodities repatriation by exporters meant to
reflate the economy which were diverted by selling directly to
other customers without corresponding taxes paid

“The committee shall extensively review all of the above
infractions among others, to ensure that all federally collectible
revenues are not only identified and recovered, but also to
sanction companies involved in the other non-civil infractions in
order to serve as a deterrent to potential classmates of the
affected companies.

“These measures shall in the foreseeable future, lead to
plugging all revenue loopholes, toward saving the country from
recurring upsurges in foreign exchange rates,” they said.

Representatives of Citibank and Fidelity Bank, Mrs Ngozi Omoke
and Hassan Imam, were grilled on several alleged infractions
running into billions of dollars.

The committee chairmen, who did seem satisfied with the
presentation adjourned till next Monday July 5, 2021 to make proper
presentations to explain the infractions.

The House of Representatives Committees on Finance and Banking
and Currency have summoned the Federal Inland Revenue Service
(FIRS) to appear before them next Monday as investigation continues
into $30 billion annual revenue leakages from 2004 to 2019.

The leakages allegedly arose from payments on account of foreign
currency denominated contracts by companies in engineering,
procurement, construction, installation, marine transportation, and
likewise foreign exchange allocation to companies from sources such
as the Central Bank of Nigeria, autonomous inter-bank domiciliary
and over the counter purchases for the importation, payments of
foreign service vendors, dividend repatriation foreign
loan/interest payments.

Chairman Finance, James Abiodun Faleke and Chairman Banking&
Currency, Victor Nwokolo, were worried that the value of the naira
to the dollar was dropping drastically, with dire consequences for
the Nigerian people, despite the enormous inflows of capital
importation and foreign direct investment over the years, which
were expected to translate into revenue generation for the Nigerian
government and stabilising the exchange rate.

“Hence, a question we would like to pose to the stakeholders
today is, why are the skyrocketing amounts of foreign direct
investments and capital importations not being reflected in the
economic progress of the country? Therefore, it is for this reason
that the House of Representatives through its Joint Committees of
Finance, and Banking and Currency launched the investigation.

“The necessity and commencement of this investigation was as a
result of growing problems in the financial management of all the
God-given resources in our country, Nigeria, from our vast natural
resources to the value added by these resources in the form of
foreign exchange earnings and revenue generation etc. into these
investment environments and opportunities.

“Thus, this committee deemed it imperative to investigate
revenue leakages and loopholes in the system that have contributed
to a loss of over $30 billion dollars in annual federation tax
revenue between 2005 and 2019,” they said in a joint statement.

They said the investigation was premised on the documents
received from target agencies and companies in banking, oil
exploration, engineering, procurement, construction, installation,
marine transportation, manufacturing and telecommunications upon
which the Committee -noted significant foreign exchange and revenue
shortfall infractions against the Federal Republic of Nigeria by
these stakeholders.

“This places an imperative need to put an end to, or at best,
minimise all attributable infractions that have been instruments in
the hands of some stakeholders in bringing economic woes to this
country and her people.

“During our documentation compilation and a further look at the
economic woes caused the country by some companies, the Committee
has noted the following major infractions which have multiplier
effects on other infractions:

“Liftings of some crude oil and gas by oil exploration companies
that were not wholly and legally allocated to the Consignors in JV,
PSC and PSA exploration activities including those whose crude oil
Certificates of Quantity were not signed by the Department of
Petroleum Resources and terminal operators.

“Concealment and non-disclosure of some crude oil liftings that
ought to have been subjected to Petroleum Profit Taxation at PPT
rates ranging between 50% of profit for PSC and PSA companies, and
85 per cent of profit for JV companies.

“Inflow of foreign investments in the form of equity, foreign
cash loans, equipment loans whose utilizations are majorly subject
to tax, end up in transactions, foreign transfers that were at
variance with the purpose of such inflows.

“Overnight and fictitious disappearance of Naira proceeds of
foreign inflows from the bank accounts of Nigerian beneficiaries,
and subsequent allocations of foreign exchange by CBN for capital
repatriations, principal loan repayments and interest payments.

“Multiple foreign exchange allocations to holders of foreign
inflow certificates of capital importation (CCI) over and above the
amount brought into the country, leading to capital flight of the
country’s much needed and scarce foreign exchange.

“Loan backed certificates of capital importations without
evidence of transfer to the foreign lenders in the form of
principal repayment and interest payments. Some expected imports
that were funded by foreign equipment loans and other direct
allocations of foreign exchange for foreign exchange valid
transactions were neither translated to imports nor their import
duties paid to the Nigerian Customs Service.

“Capital Flight using the FORM ‘M’ valid for forex and forex
obtained by the beneficiary companies without utilization of the
Forex to reflate the economy and taxes paid. Export proceeds for
both Oil and other commodities repatriation by exporters meant to
reflate the economy which were diverted by selling directly to
other customers without corresponding taxes paid

“The committee shall extensively review all of the above
infractions among others, to ensure that all federally collectible
revenues are not only identified and recovered, but also to
sanction companies involved in the other non-civil infractions in
order to serve as a deterrent to potential classmates of the
affected companies.

“These measures shall in the foreseeable future, lead to
plugging all revenue loopholes, toward saving the country from
recurring upsurges in foreign exchange rates,” they said.

Representatives of Citibank and Fidelity Bank, Mrs Ngozi Omoke
and Hassan Imam, were grilled on several alleged infractions
running into billions of dollars.

The committee chairmen, who did seem satisfied with the
presentation adjourned till next Monday July 5, 2021 to make proper
presentations to explain the infractions.