House of Representatives To Probe N35bn Insurance Expenditure | Independent Newspapers Limited
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House of Representatives To Probe N35bn Insurance Expenditure

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Posted: Jul 20, 2016 at 4:34 am   /   by   /   comments (0)

The House of Representatives on Tuesday dropped a bomb shell, alleging that over N35 billion was appropriated and expended on the insurance cover of fixed and non-fixed government assets in the 2015 appropriation.

The House, therefore, resolved to constitute an ad-hoc committee to compel the Head of Service of the Federation and other statutory government establishments that purchase direct insurance covers to provide detailed data of all premiums paid on group life (general) and related government assets within the last three months.?

It also resolved to investigate the complicity of brokerage firms, insurance and reinsurance companies in the alleged multi-billion naira return on premium practice and also carry-out an in-depth audit of the selection process and execution of such covers by government assets underwriters with a view of “eradicating this fraudulent process.”

The resolutions were reached following a motion on notice tagged ‘urgent need to investigate the fraudulent multi-billion naira cash payments to government officials annually by insurance companies mandated to insure government fixed and non-fixed assets by way of return on premium’.

Hon. Prestige Ossy (PDP, Abia), who brought the motion noted that every N10 billion paid as insurance premium by government, N5 billion is returned to corrupt government officials.

Explaining how the alleged scam was hatched and carried out, Hon. Prestige said: “At the beginning of every financial year, brokerage firms, insurance and reinsurance companies are invited to bid for insurance of government fixed and non-fixed assets. That, although the processes are presumably carried out in line with the Public Procurement Act, it is generally believed that some companies are unduly favoured during such bid”.

“The unduly favoured companies reciprocate by engaging in a fraudulent practice termed ‘return on premium’, whereby a percentage as much as fifty percent (50%) of the premium paid by government are returned to government officials as cash pay back thus creating the biggest recurring fraud in the public sector.

“To best appreciate the magnitude of fraud being perpetrated, for every N10 billion paid as insurance premium by government N5billion is returned to corrupt government officials.”

The lawmaker pointed out that if this alleged criminal practice is not checked, billions of naira meant for other pressing national needs, would continue to go into private pockets not to mention the adverse effects on the national economy.

The resolution which received overwhelming support was unanimously adopted when the presiding Speaker, Hon. Yakubu Dogara, put it into voice vote.