The 27 financial infractions of Sanusi Lamido Sanusi as CBN Governor
The Financial Regulatory Council [FRC] audit report on the Central Bank of Nigeria which led to the suspension of Sanusi Lamido Sanusi from office accused the apex bank management of several financial practices that border on fraud; listed below are some of these:
- There is a provision for “Facility Management of N7.034 billion in 2012; N5.751 billion in 2011
- A breakdown of these figures reveals that this is just an expense head where the leadership of the CBN dumps what ordinarily should have been accounted for as their Benefit-in-Kind for tax purposes. A closer look at the breakdown shows that it is just an expense head that is used for fraudulent activities as they have items such as “Profit from sale of Diesel” indicating that the CBN at some point operates in the downstream sector of the Petroleum industry
- Currency issue Expenses” of N1.158 billion and Sundry Currency charges of N1.678 billion under “CURRENCY ISSUE EXPENSES.” As they are in 2011 so are similar expenses in 2012. These are difficult to understand.
- The CBN accounts revealed it paid Nigerian Security Printing and Minting Plc N38.233 billion in 2011 for “Printing of Banknotes” whereas the entire Turnover of NSPM Plc Group is N29.370 billion.
- It also therein claimed that it paid Air Charter, such as paid to Emirate Airline N0.511 billion; Wing Airline, N0.425 billion and Associated Airline N1.025 billion 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 turn-over for 2011 because upon inquiry, 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.
- There are also breakdown such as “Currency issue Expenses” of N1.158 billion and Sundry Currency charges of N1.678 billion under “CURRENCY ISSUE EXPENSES.” As they are in 2011 so are similar expenses in 2012. These are difficult to understand.
- Facility Management N7.034 billion in 2012 N5.751 billion in 2011. A further breakdown of these figures reveals that this is just an expense head where the leadership of the CBN dumps what ordinarily should have been accounted for as their Benefit-in-Kind for tax purposes. A closer look at the breakdown shows that it is just an expense head that is used for fraudulent activities as they have items such as “Profit from sale of Diesel” indicating that the CBN at some point operates in the downstream sector of the Petroleum industry.
- Within the “Administrative expenses” is an item they referred to as “Loan write-off.” This accounts for loans supposedly given to staff and written off thereafter. It came to a total of N3.855 billion in 2012. There is the need to review the Board approval for this loan write off if any.
- Within the “Administrative expenses” is an item they referred to as “Fixed Assets Clearing Account.” These are properties acquired by the CBN for which it does not expect to derive future economic benefits. These properties are written off by the CBN on a yearly basis. This came to N4.076 billion in 2012; up from N1.324 billion in 2011.
- This should not be mistaken for “Disposal of Fixed Assets Schedule.The report further said “Foreign Bank accounts that have been closed offshore were still operational in the General Ledger for over six months after they have been confirmed as closed accounts by the offshore Banks. A thorough investigation will reveal how the balances in the now fictitious foreign accounts are treated. It also said that “There are long outstanding invoices that make up the liability account from as far back as 2005. The External Auditors have to request, in their draft management letter, the management or whoever deems it fit to carry out a thorough investigation in this area to ensure items standing in this account are valid invoices.
- The “Know Your Customer” policy is not properly followed by the CBN to the extent that the CBN has an unknown customer with account balance of N1.423 billion since 2008. The CBN claim that they are taken steps to obtain the required details regarding the address of the customer.
- “Real time Gross Settlement Clearing Account, that is supposed to be reconciled on a daily basis, has long standing reconciling items that could not be substantiated. The external audit revealed debit/credit balances of sundry foreign currencies without physical stock of foreign currencies in CBN Head Office account. At no point should one expect to have fictitious Naira balances without the foreign currencies to back them up. It is important to know who is or was with the foreign currencies at the time.
- According to the Financial reporting council an organization that had an additional brought forward to General Reserves Fund of a mere N16.031billion in 2012 could still go ahead to spend uncontrollably in 2012 and in some cases even increase the expenses.
- The CBN it said spent on promotional activities; N3.086 billion in 2012 up from N1.084 billion in 2011; even when the CBN does not have a competitor in Nigeria which may require a “fight” over brand and customer size. The figures are too high.
- Between expenses on ‘Private Guards’ and ‘Lunch for Policemen’, the CBN claimed to have spent N1.257Bn in 2012
- Expenses on Newspapers, Books and Periodicals excluding CBN’s Publications is N1.678 billion in 2012; up from N1.670 billion in 2011.
- The CBN spent N20.202 billion on “Legal and Professional Fees” in 2011 and N0.460 billion in 2012. What could the CBN have had to spend N20.202 billion on in 2011?
- It also spent N1.197 billion on “sundries” unexplainable expenses in 2011 to N0.690 billion in 2012. One is at a loss why the CBN still carry “unexplainable expenses” and of this magnitude.“
- The CBN also magnanimously reduced expenses on “Ethics and Anti-Corruption” from N34 million in 2011 to N18 million in 2012. This is an area that they are supposed to strengthen their activities and unearth unethical and corrupt practices.
- The CBN preferred to reduce their financing by almost 50 per cent. The CBN, outside the agreed audit fee of N300 million paid to their External Auditors and which was reviewed upward in 2012 from N200 million in 2011, the CBN showed within “Administrative Expenses” that they paid the External Auditors another N140 million. Section 6 (3c) of the CBN Act, 2007 provides that the Board of the CBN is to make recommendation to His Excellency on the rate of remuneration to External Auditors. An investigation need to be carried out to know whether the Board secured the approval on this review.
- The leadership of the CBN also wrote off loans to the tune of N3,856 billion in 2012. Since this was disclosed in under “Administrative expenses”, it was supposedly made to staff members.
- The FRC outlined the CBN of due process and said that “Non compliance with laws and relevant regulatory guidelines could lead to reputational damage for CBN. Examples are: The provisions of the Memorandum of Understanding (MOU) signed by the CBN and other Deposit Money Banks (DMBs) on Banking Resolution Sinking Fund are not being complied with by the CBN. “A Board of Trustees (BOT) to manage the fund has not been put in place since it was established in 2010. (The BOT is supposed to consist of two representatives of the CBN, the Permanent Secretary of the Ministry of Finance, a representative of the Debt Management Office and five members of the eligible financial institutions. The CBN went ahead to issue the Nigerian Treasury bill investment using part of the money in this banking resolution sinking fund account without the settling up and approval of the said Board of Trustees in accordance with the signed MOU.
- Some parastatals deposit accounts with the CBN have debit or overdrawn positions. This is contrary to government policy on the CBN’s management of parastatals accounts with the CBN. Amongst the MDAs listed by the CBN, with overdrawn positions to which the CBN is now accounting as loan provisioning are Federal Ministry of Science and Technology, Nigeria Deposit Insurance Corporation, Nigerian Security and civil Defense, Ministry of Foreign Affairs and Federal Civil Service Commission. It will be necessary to circularise these MDAs to ascertain the veracity of this claim by the CBN
- The CBN under Sanusi has executed 63 Projects across the country to the tune of N163Bn with absolute disrespect of the Public Procurement Act [PPA]
- The CBN under Sanusi acquired 7% shares in International Islamic Liquidity Management Corporation Bank of Malaysia N0.743Billion contrary to Section 34[b] of CBN Act 2007 – this was done without the approval of such a body to do so and without informing the President
- The CBN under Sanusi refused to implement the provisions of the Personal Income Tax [Amendment] Act 2-007. Accordingly the PAYE deductions of its staff are still being computed in accordance with the defunct Personal Income Tax Act 2004, this effectively assisting its staff to evade tax, despite the generous wage package on the CBN, relative to other sectors of the economy.
- The CBN under Sanusi wrote-off N40Bn loan of a bank
Compiled by Favour B. Afolabi