The World Bank has flagged $32 million in unaccounted funds in a Nigerian water sector project, raising concerns about potential embezzlement and mismanagement. The discrepancies were identified through a forensic review by the Bank’s Integrity Vice Presidency (referred to as ‘INT’) and were detailed in the newly released FY2024 Sanctions System Annual Report.
The unaccounted funds were intended to support the development of water infrastructure, but they were not properly documented, prompting the World Bank to intervene to protect the integrity of the project. In response, the World Bank engaged with key project stakeholders, including Nigeria’s Task Team Leader, Operations Manager, and Financial Management Specialist, to address the issue.
To mitigate further risks, the World Bank recommended a series of actions to recover the missing funds. As a result, the Central Bank of Nigeria has been instructed to reimburse $22 million, while $6 million remains in the project account to cover ongoing operational expenses. Additionally, the World Bank has restricted the project’s financial operations to direct payments, aiming to prevent further irregularities.
The report obtained by the media states: “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 also imposed a 1.5-year debarment with conditional release on a Nigerian engineering firm and its managing director for fraudulent practices related to the Nigeria Erosion and Watershed Management Project. The debarment follows an investigation by INT, which uncovered instances of misrepresentation during the bidding and execution phases of the project.
