The discrepancies were highlighted in the recently published FY2024 Sanctions System Annual Report, where the Bank’s Integrity Vice Presidency (referred to as ‘INT’) conducted a forensic review.
These funds, earmarked for enhancing water infrastructure, were inadequately tracked, necessitating intervention to maintain the project's integrity. In a proactive effort to address the risks, the World Bank collaborated with the project team, which included Nigeria’s Task Team Leader, Operations Manager, and Financial Management Specialist.
The Bank proposed measures to recover the misallocated funds and avert further financial losses. As a result, the Central Bank of Nigeria has been instructed to reimburse $22 million, while $6 million remains in the project account to support expected operational costs. Additionally, the Bank has restricted the project's financial activities to direct payments to prevent any further irregularities.
A report obtained stated, “INT followed up on risks identified regarding a project in Nigeria’s water sector and flagged to operations the risk, which was associated with $32 million of unaccounted funds. INT met with the Task Team Leader, Operations Manager, Programme Leader, and Financial Management Specialist to identify steps to reduce the risk of embezzlement.
As a result, the project team asked the Central Bank (of Nigeria) to reimburse the full amount ($22 million) and limited the remainder of the project to direct payments. The local account remained with about $6 million in undisbursed balance, a little more than the anticipated PIU expenses for the remainder of the project.”
Further investigations revealed that the World Bank has imposed a 1.5-year debarment with conditional release on a Nigerian engineering firm and its managing director due to fraudulent activities related to the Nigeria Erosion and Watershed Management Project.
This decision is the result of an investigation conducted by the bank’s Integrity Vice Presidency, which revealed instances of misrepresentation during both the bidding and implementation stages of the project.
A document from the World Bank has shed light on the project, stating, “This case pertains to the Nigeria Erosion and Watershed Management Project (the ‘Project’) in the Federal Republic of Nigeria.
The initiative aimed to mitigate soil erosion vulnerability in specific sub-watersheds across Nigeria. On April 16, 2013, Nigeria signed a financing agreement with IDA for an amount equivalent to Special Drawing Rights (‘SDR’) 321.4 million (approximately $500 million at the time of signing) to support the project.
In addition, the bank and Nigeria entered into two grant agreements under the Global Environment Facility and the GEF Special Climate Change Fund, amounting to $3.96 million and $4.63 million, respectively, to further support the project.
On February 12, 2019, the bank extended additional financing to Nigeria totaling SDR 208.7 million (equivalent to $300 million), along with a Scale-up Facility Additional Credit of $100 million. The project was initiated on September 16, 2013, and concluded on June 30, 2022.”
The NEWMAP project, funded by the International Development Association and backed by the Global Environment Facility, was established to address soil erosion in targeted sub-watersheds in Nigeria.
The $900 million initiative covered several states, including Abia, where the engineering firm under investigation was contracted. This firm, part of a joint venture, received a $1.22 million contract in 2015 to deliver design and supervision services for erosion control.
The investigation found that the firm misrepresented the availability of essential personnel and the involvement of one of its joint venture partners during the selection process.
Furthermore, during the execution of the project, the firm replaced critical staff without informing the project management unit, which breached the terms of the contract. It was revealed that two key personnel listed in the firm's proposal were not available for the project, yet their resumes and qualifications were included to enhance the bid's credibility.
The managing director of the firm acknowledged in the hearing that the availability of these staff members was never verified prior to the proposal submission. This action was classified as fraudulent misrepresentation in accordance with the World Bank’s Consultant Guidelines.
Additionally, the firm inaccurately asserted that a joint venture partner was actively involved in the project. Although the partner was mentioned in the proposal, it did not contribute to the work nor received any payment for its supposed participation.
The firm's explanation that the partner was included due to its political connections was found to be unsubstantiated by the World Bank. As a result, both the firm and its managing director are prohibited from engaging in any World Bank-financed projects for at least 1.5 years. This sanction applies to the entire World Bank Group and may also be enforced by other multilateral development banks under a cross-debarment agreement.
The document read, “The Respondent Firm, together with any entity that is an Affiliate directly or indirectly controlled by the Respondent Firm, shall be ineligible to (i) be awarded or otherwise benefit from a Bank-financed contract, financially or in any other manner; (ii) be a nominated sub-contractor, consultant, manufacturer or supplier, or service provider of an otherwise eligible firm being awarded a Bank-financed contract; and (iii) receive the proceeds of any loan made by the Bank or otherwise participate further in the preparation or implementation of any Bank-Financed Projects.”
It added, “the Respondent Managing Director, together with any entity that is an Affiliate that he directly or indirectly controls, shall be ineligible to (i) be awarded or otherwise benefit from a bank-financed contract, financially or in any other manner; (ii) be a nominated sub-contractor, consultant, manufacturer or supplier, or service provider of an otherwise eligible firm being awarded a Bank-financed contract; and (iii) receive the proceeds of any loan made by the Bank or otherwise participate further in the preparation or implementation of any Bank-Financed Projects.”
Reinstatement following the debarment period is dependent on the firm adopting compliance measures, which must include the creation of an integrity compliance program.
Subsequent investigations revealed that Diyokes Consultants Limited, located in Enugu State, Nigeria, has been deemed ineligible by the World Bank for a duration of 1.5 years (from March 11, 2024, to September 10, 2025) due to fraudulent activities.
Innocent Diyoke, an individual associated with the firm, shares the same period of ineligibility and the reasons for the sanction.
Both the firm and the individual were implicated in fraudulent activities related to a project financed by the World Bank.
It was previously reported that the Federal Government, under President Bola Tinubu, obtained loans totaling $6.45 billion from the World Bank within a span of 16 months.
This figure has risen following the recent approval of three additional loans amounting to $1.57 billion for various projects in Nigeria, with expectations of further increases in the upcoming months.
The international lender has approved at least 36 loan requests from the Federal Government, totaling a significant $24.09 billion over five years.
These approvals, intended to fund various development initiatives across the country, come amid growing concerns regarding the nation’s rising debt levels, raising questions about the sustainability of these financial obligations and their potential long-term impact on the economy.
Projects initiated under Tinubu's administration include loans for power ($750 million), women’s empowerment ($500 million), girls’ education ($700 million), renewable energy ($750 million), economic stabilization reforms ($1.5 billion), and resource mobilization reforms ($750 million).
For many Nigerians, the prolonged deterioration of infrastructure and rising unemployment has fostered a sense of resentment whenever government borrowing is mentioned.
While some acknowledge the reality of limited resources in light of a large population, they contend that previous borrowings have not been warranted.