Gbajabiamila warns MDAs against diversion of retention funds

House of Representatives Speaker Femi Gbajabiamila yesterday warned that Ministries, Departments and Agencies (MDAs) that have formed the habit of not remitting retention funds to the treasury will be punished.

Gbajabiamila, who spoke at a public hearing on the need to investigate the failure of MDAs to remit retention funds, said such action is denying the government the much-needed resources to fund annual budget, especially at a time when the global price of fossil fuel is going down.

Retention funds often five per cent of contract sum are regularly held back from contractors by MDAs and kept for either six months or one year while the project is being observed to ensure that it meets specification.

It is either paid to the contractor after six months or paid back to government treasury.

The Fiscal Responsibility Commission had accused about 122 MDAs of failure to remit N 1.2 trillion in 2020.

Gbajabiamila spoke just as the Chairman of the Ad hoc Committee investigating the non-remittance, Aniekan Umanah, frowned at failure of MDAs to honour invitation from the parliament.

He said such action was not good for democratic practice and good governance.

The Speaker, who was represented by Deputy Chairman of the House Committee on Public Accounts, Abdullahi Sa’ad, said: “On Tuesday, March 23, 2021, the House of Representatives resolved to investigate the reasons why MDAs have routinely failed to payout or return to the coffers of the Federal Government, the retention funds withheld by them as part of the procurement processes in the different institutions.

“Retention funds are not intended to be converted by the MDAs. Where those funds are not paid out as required by the law, they ought to be properly accounted for, and refunded to the coffers of the Federal Government to address the substantial revenue shortfalls resulting from the ongoing collapse in the international value of fossil fuels, as well as significant contraction in the global and local economy owing to the COVID-19 pandemic and other adverse factors.

“Where this has not been done, it is a violation of the law, and those involved in this practice will because of this investigation account for the use of these funds.

“This public hearing and the mandate of the Ad-Hoc committee is in fulfillment of our commitment in the 9th House to ensure due process practices in the management of public finances. As such, I want to personally as all stakeholders, heads of Ministries, Departments and Agencies, who may be invited to participate in this public hearing and any other activities of the committee to engage with good faith, and in the knowledge that we are all engaged in the difficult yet necessary work of building a nation where all government actions are underpinned by clue process and the rule of law.”

Committee Chairman Aniekan Umanah said the practice was inimical to the growth of small and medium scale enterprises (SMSEs) as it denied them the much-needed capital to stay afloat while part of the funds formed part of N 1.2 trillion the Fiscal Responsibility Commission accused about 122 MDAs of failure to remit in 2020.

He said: “In view of the importance of the subject matter, constituted an Ad-hoc Committee to carry out investigation on this matter and report back to the House their findings and recommendations.

“However, it is pertinent to note that that the idea of this investigative hearing is a direct response to the yearning of the public outcry with the need to resolve some pending issues in a contractual relationship with various MDAs.”