BVN and payroll fraud

The Bank Verification Number (BVN) system adopted in this country from last year has already exposed fraudulent practices on the federal Government’s payroll with one worker alone collecting 20 salaries every month. Minister of Finance Mrs. Kemi Adeosun revealed this recently during her ministry’s budget defence session before the Senate Finance Committee. Adeosun said the […]

The Bank Verification Number (BVN) system adopted in this country from last year has already exposed fraudulent practices on the federal Government’s payroll with one worker alone collecting 20 salaries every month. Minister of Finance Mrs. Kemi Adeosun revealed this recently during her ministry’s budget defence session before the Senate Finance Committee. Adeosun said the adoption of BVN in processing Federal Government workers’ salary payments has exposed 23,000 names fraudulently smuggled into the payroll.
Adeosun’s revelation raises serious concern about the huge amount of monies that have been stolen from the nation’s coffers over the years due of loose accounting procedures and fraudulent activities. According to the Finance Minister, the combined use of the Integrated Personnel and Payroll Information System (IPPIS) alongside BVN has helped the ministry to discover 20 names linked to one BVN on the federal payroll. She lamented how payroll scam exposed the nation’s revenue system to serious financial leakages.
Adeosun said the World Bank-funded IPPIS programme which started five years ago requires every worker on the federal payroll to appear physically for biometric data capture. According to her, only 295,000 federal civil servants’ biometric data were captured in the last five years. These represent 20 percent of total personnel on the federal payroll.
To accelerate the process of getting more workers enrolled on to IPPIS, Adeosun said rather than wait endlessly for every worker to appear for physical capture, the ministry resolved to access staff biometric data from the BVN of every federal worker’s bank account. She said after adopting this approach, the Finance Ministry was able to enrol 320,000 workers on to the IPPIS within two months as against 295,000 captured in the previous five years.
Payroll fraud has for a long time been an intractable financial crime at the federal, state and local government structures of the civil service. For instance, the on-going staff verification exercise by the Niger State government has so far revealed that a messenger in the state Ministry of Finance earned N265, 000 monthly while a cleaner at the General Hospital, Minna earned N375, 000 monthly, all due to payroll fraud. In addition, three permanent secretaries in the Niger State civil service earned N1.3million each monthly.
It would be recalled that in October 2014, the federal government uncovered 60, 000 frivolous names of workers in federal establishments across the country. This followed the staff audit of federal ministries, departments and agencies (MDAs) for the implementation of the IPPIS. The use of BVN by the Federal Ministry of Finance to check the long-standing problem of payroll scam is highly laudable. The effectiveness of the BVN policy in detecting fraudulent practices is indeed revolutionary in Nigeria. The large number of persons placing change of name advertisements on the pages of newspapers daily while asking banks and their workplaces to take note illustrates how criminally-minded many Nigerians have been over the years by opening accounts with different names in different banks.
In view of the fact that IPPIS does not allow for a worker’s name to appear more than once on the payroll, we urge the Finance Ministry to provide an appropriate platform for staff of universities and research centres or institutes who are entitled to collect two salaries while on sabbatical leave. A technological solution should be devised to accommodate this category of staff before their enrolment on to the IPPIS.
With a target already set by the minister of finance, we encourage government to get every federal worker on to the IPPIS by June 2016. The more number of workers on the IPPIS, the less would payroll scam persist and the lower the total workers’ wage bill. State governments could also borrow from the IPPIS regime of the federal government.
All individuals, firms and banks that connived to aid the payroll fraud that involves 23,000 non-existent workers should be prosecuted while those that received the funds should equally be made to refund same to the treasury.