The Nigerian National Petroleum Corporation, NNPC, has been indicted by renowned international auditors, PriceWaterHouseCoopers Limited, PWC, for operating a fraudulent accounting system.

The scathing indictment is contained in the 199-page report on the allegations of unremitted funds to the Federation Accounts by the NNPC.

In the report, the audit firm said the accounting and reconciliation system for crude oil revenues used by all government agencies appears to be inaccurate and weak, with discrepancies in data from different sources in the course of carrying out the audit.

Former Central Bank Governor, Sanusi Lamido Sanusi, blew the whistle on the fraudulent accounting system of the NNPC and its subsidiaries when he wrote a letter on 25 September, 2013 to President Goodluck Jonathan, stating that from January 2012 to July 2013, NNPC had lifted $65b worth of crude on behalf of the Federal Government but remitted only $15.2b into the Federation Accounts, with $49.8b as outstanding to the Federal Government.

But NNPC responded that no money was missing and a reconciliation committee was set up to probe the claim and it came up with a report that the estimated unremitted funds was $40.8b while Central Bank stated that the amount was $12 billion.

On 4 February, 2014, the Central Bank of Nigeria, CBN, informed the Senate Committee on Finance that NNPC needs to account for $20 billion as the CBN could only confirm receipt of $47 billion of the $67 billion revenue.

Then, on 13 February, 2014, NNPC provided explanation about the $20 billion shortfall. Dr. Ngozi Okonjo-Iweala, Minister of Finance and Coordinating for the Economy, recommended that an independent Forensic Audit be conducted to unravel the controversy surrounding the alleged missing funds.

That was how PriceWaterHouseCoopers Limited was hired to audit NNPC’s accounts and it came up with the scathing report.

The initial report which was submitted in November last year was later updated when the audit firm got more documents from the NNPC.

The report ordered released by President Goodluck Jonathan, more than two months after it was submitted by PriceWaterHouseCoopers, confirmed that the NNPC illegally expended $18.53 billion on operational costs, kerosene and petrol subsidies, without authorisation from the National Assembly.

Part of the money was also withheld by an NNPC subsidiary, without National Assembly authorisation. NNPC is under the Ministry of Petroleum Resources headed by Mrs. Diezani Alison-Madueke.

Although the audit found that the firm overpaid the state by almost $750 million, within the 19 months probed, it recommended a refund of $1.5 billion to government coffers. The audit covered January 2012 to July 2013.

Outgoing President Jonathan released the audit days after his elected replacement, Muhammadu Buhari, pledged to probe the allegation all over again and crack down on corruption in the energy company once in office.

The probe of NNPC’s books was instituted last year after Sanusi said the firm had withheld $20 billion in oil revenue from government coffers, jeopardising the country’s finances.

Sanusi had told a Senate committee in 2014 that NNPC had received $67 billion and handed over only $47 billion.

After the allegations, Jonathan publicly dismissed the claim and replaced Sanusi, saying the banker had mismanaged the Central Bank’s budget. Sanusi has since become Emir of Kano, the country’s second-highest Islamic authority.

The PWC audit, however, said NNPC and its upstream subsidiary, the Nigerian Petroleum Development Company, should hand over $1.48 billion arising from unsubstantiated costs, duplicated subsidy claims and computation errors.

The report also recommended an overhaul of how NNPC is run.

“The NNPC model of operation must be urgently reviewed and restructured, as the current model which has been in operation since the creation of the corporation cannot be sustained,” it said in the 200-page document.

An earlier one-page version of the report, which had been due out in September, was released in February.

During the period under review, oil blocks were also sold for $6 billion without the revenue remitted into the Federation Accounts.

The alleged fraud was perpetrated in the NNPC when oil prices were very high in the international market.

In the course of auditing NNPC accounts, PWC said it could not meet some officials to seek more clarifications and also had to rely on outside sources to get some information.

It also said: “We did not have access to NPDC’s full accounts and records and we have not ascertained the amount of costs and expenses which should be applied to the US$5.11 billion crude oil revenue per the NPDC submission to the Senate Committee hearing in order to arrive at the Net Revenue (in line with the AG-Attorney General’s opinion), which should be subjects to dividend remittance.”

It recommended that proceeds from the Federal Government’s crude oil sales should be remitted entirely into the Federation Accounts and commissions for the corporation’s services can then be paid on agreed terms.