Huhuonline.com has obtained the report of the Financial Reporting Council of Nigeria recommending the suspension of former Governor Central Bank of Nigeria Governor, Sanusi Lamido.
Issued on 7th June 2013, the report followed the council’s appraisal of the response of the ex-CBN governor to President Goodluck Jonathan’s query on the bank’s financial statement of 2012.
Sanusi had replied the president on 20th May 2013, but the council deemed the explanation “a clear display of incompetence, nonchalance, fraud, wastefulness, and abuse of due process and deliberate efforts to misrepresent facts on the part of the leadership of the CBN”.
It advised the president to exercise his powers based on Section 11(2)(f) of the CBN Act 2007 or invoke Section 11(2)(c) of the said Act and “cause the governor and the deputy governors to cease from holding office in the CBN”, in order for it to conduct further independent investigations on CBN’s activities.
In a part of the report, CBN, under Sanusi’s watch, was accused of persistent refusal and/or negligence to comply with the Public Procurement Act in its procurement practices.
By virtue of Section 15 (1)(a) of the Public Procurement Act, the provisions of the Act are expected to comply to ‘all procurement of goods, works and services carried out by the Federal Government of Nigeria and all procurement entities.’ This definition clearly includes the Central Bank of Nigeria”, a part of the report read.
“It is however regrettable that the Central Bank of Nigeria, under his leadership, has refused and/or neglected to comply with the provisions of the Public Procurement Act (PPA). You will recall that one of the primary reasons for the enactment of the PPA was the need to promote transparency, competitiveness, cost of effectiveness and professionalism in the public sector procurement system.
“Available information indicates that the Central Bank has over the years engaged in procurement of goods, works and services worth billions of Naira each year without complying with the express provisions of the PPA.
“By deliberately refusing to be bound by the provisions of the Act, the CBN has not only decided to act in an unlawful manner, but has also persisted in promoting a governance regime characterised by financial recklessness, waste and impunity, as demonstrated by the contents of its 2012 Financial Statements”.
Another part cited unlawful expenditure by CBN on intervention projects across the country.
“The unacceptable level of financial recklessness displayed by the leadership of the Central Bank of Nigeria is typified by the execution of ‘Intervention Projects’ across the country. From available information, the bank has either executed or is currently executing about 63 such projects across the country and has committed over N163billion on them.
“It is inexcusable and patently unlawful for any agency of government to deploy huge sums of money as the CBN has done in this case, without appropriation and outside CBN’s statutory mandate. It is trite that the expenditure of public funds by any organ of government must be based on clear legal mandates, prudent costing and overriding national interest”.
There were also allegations of financial infractions and acts of financial recklessness, as reflected in CBN’s audited financial statements of 2012, while the bank was also accused of inability to prepare its financial statements in accordance with global best practice.
“In a most ironical manner, it has become obvious that the CBN is not able to prepare its financial statements using applicable International Financial Reporting Standards (IFFS) whereas Deposit Money Banks that the CBN is supervising have complied with this national requirement since 2012.
“Undoubtedly, this laxity on the part of our apex bank, apart from calling to question its capacity for proper corporate governance, is capable of sending wrong signals to both domestic and international investors on the state of the Nigerian economy.
“The provisions of the Memorandum of Understanding (MOU) signed by the CBN and other Deposit Money Banks on Banking Resolution Sinking Fund have been breached in a material manner. For example, a Board of Trustees (BOT) to manage the Fund has not been constituted since 2010 when it was established. The CBN has however continued to utilise the Fund for certain operations without approval of the said BOT.
“Contrary to Section 34 (b) of the CBN Act 2007 which provides that the CBN shall not, except as provided in Section 31 of the Act, inter alia, purchase the shares of any corporation of company, unless an entity set up by the approval or authority of the Federal Government, CBN in 2010, acquired 7% shares of International Islamic Management Corporation of Malaysia to the tune of N0.743 billion. This transaction was neither brought to Mr. President’s attention nor was a board approval obtained before it was entered into.
“The CBN has failed or refused to implement the provisions of the Personal Income Tax (Amendment) Act 2007. Accordingly the Pay-As-You-Earn (PAYE) deductions of its staff are still being computed in accordance with the defunct Personal Income Tax Act 2004, thus effectively assisting its staff to evade tax despite the generous wage package in the CBN, relative to other sectors of the economy.
“The CBN had an additional brought forward to General Reserve Fund of N16.031bn in 2012 but proceeded on a voyage of indefensible expenses in 2012 characterised by inexplicable increases in some heads of expenditure during the year. Examples include:
1. The bank spent N3.086bn on “promotional activities” in 2012 (up from N1.084bn in 2011). The bank spent this sum even when it is not in competition with any other institution in Nigeria;
2. The CBN claimed to have expended N20.202bn on ‘Legal and Professional Fees’ in 2011 beyond all reasonable standards of prudence and accountability;
3. Between expenses on ‘Private Guards’ and ‘Lunch for Policemen’, the CBN claimed to have spent N1.257 billion in 2012;
“While Section 6(3)(c) of the CBN Act 2007 provides that the board of the CBN is to make recommendations to Mr. President on the rate of renumeration to Auditors, the bank has consistently observed this provision in breach and even went to the extent of changing one of the Joint External Auditors without notifying the office of the President.
“In the explanations offered by the CBN pursuant to presidential directives, it offered a breakdown of ‘Currency Issue Expenses’ for 2011 and 2012. Interestingly, it claimed to have paid N38.233bn to the Nigerian Security Printing and Minting. Company Limited (NSPMC) in 2011 for ‘Printing of Banknotes.’ Paradoxically however, in the same 2011, NSPMC reported a total turnover of N29.370bn for all its transactions with all clients (including the CBN).
“It is significant to note that the external audit revealed balances of sundry foreign currencies without physical stock of foreign currencies in the CBN Head Office”.
The report further mentioned questionable write-off of N40bn loans of a bank, adding:
“The CBN also claimed that it paid Air Charter, such as payments to Emirate Airline (N0.511bn), Wing Airline (N0.425bn) and Associated Airline (N1.025bn) to distribute currency by air nationwide. Emirate Airline does not fly local charter in Nigeria, Wing Airline is not registered with Nigeria Civil Aviation Authority and Associated Airline does not have a billion turnover for 2011 because upon enquiry, the management claimed that they have no financial statements and have not had any significant operations for the past two years that will warrant preparation of financial statements”.
The bank was also accused of wastefulness for putting training and travel expenses at N9.24bn in 2012 (up from N7.65bn in 2011), expenses on ATM offsite policy change at N1.045bn, expenses on Non Interest Banking at N1.359bn in 2012 (up from N0.977bn in 2011), being very heavy on expenses on “Project Eagles” spending at N0.606bn in 2012 (up from N63m in 2011), expense on newspapers, books and periodicals (excluding CBN’s publications) at N1.678 billion in 2012 (up from N1.670bn in 2011), and the cost of facility management atN7.034bn in 2012 (up from N5.751bn in 2011).
Meanwhile, it has emerged that suspended Sanusi began getting into the bad books of President Goodluck Jonathan from as far back as January 2012, when, in an interview with the Financial Times, he delivered a scathing review of the government’s handling of the Boko Haram insurgence and linked the spate of violence in the North to uneven distribution of resources.
“There is clearly a direct link between the very uneven nature of distribution of resources and the rising level of violence”, Sanusi had told the London-based paper.
“When you look at the figures and look at the size of the population in the North, you can see that there is a structural imbalance of enormous proportions. Those states simply do not have enough money to meet basic needs while some states have too much money. The imbalance is so stark because the state still depends on oil for more than 80 per cent of its revenues”.
Clearly unimpressed by the comment and the analysis that the paper curled out from that interview, the president directed then National Security Adviser, late General Andrew Owoye Azazi to issue a query to the then CBN president.
Your recent statements in an interview with the Financial Times is the subject of this correspondence”, Azazi wrote to Sanusi in a query dated 2nd February 2012 and titled, ‘recent Interview With Financial Times’.
“In the interview, you were alleged to have made statements to the following effects:
“That, the uneven pattern of distribution of resources is directly linked to the rising level of violence in Nigeria.
“That, it is now necessary to focus funds on regenerating other regions of Nigeria, other than the Niger Delta.
“That, the additional federal funds allocation to the Niger Delta states has created ‘a structural imbalance of enormous proportions’, with some states not having enough money and others having too much.
“That, when the theft of oil by profiteers is considered, this imbalance between oil producing states in the South-South (or Niger Delta States) and states in the North is compounded.
“That, the supplemental distribution of funds to the oil producing states, on top of the standard federal allocations, which was effected to reduce inequity in resources in the first place, has now created new disparity in the state resource, fostered resentment in the poorest states, and encouraged the despicable terrorist activities of the Boko Haram sect.
“Your alleged assertions directly attribute the activities of the Boko Haram sect to the current formula for allocating funds from the federal account. Not only is there no empirical evidence to support such a statement, conventional wisdom in Nigeria refutes that assertion. Experts obviously have provided numerous explanations for the emergence of Boko Haram activities and the general consensus is that there are no silver bullets.
“Your statements to the Financial Times do not only have no basis in fact, but they are divisive, inflammatory, inciting and inappropriate of a senior Officer of the federal Government whose responsibility includes the national stability and state continuity. This statement has already caused a lot of angst among the populace and raised significant questions as to your intent and motives. These statements bring disrepute to the administration and current and past leadership of Nigeria. While I understand your right to free speech and some of the independence your office enjoys, I must also caution you that an officer of the government of Nigeria and one entrusted to promote state stability, your utterances through this interview are not in the interest of Nigeria’s national security.
“I encourage you to explore and peruse approaches that will ameliorate the problems that your statements have caused, including a retraction or clarifying statements, possibly through the same me”.
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