Government’s action solely based on probe by Financial Reporting Council of Nigeria
Presidential spokesman, Dr. Reuben Abati has disclosed that the suspension of the Governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi earlier announced yesterday was purely based on the investigation being carried out by the Financial Reporting Council of Nigeria since May last year.
Briefing State House correspondents at the Presidential Villa, he said that the suspension has nothing to do with the appearances of Sanusi or his claims before the Senate Investigative committee on the alleged missing money from the Federation Account.
Sanusi Lamido had claimed that huge sums of money has been missing and not remitted to the Federation Account by the Nigerian National Petroleum Corporation (NNPC).
Abati said that there is no cause for anxiety by the stakeholders and the international community as Nigeria’s monetary policy remains the same despite the suspension.
He said that the Government remains committed to the stability of the economy, stability of the naira and stability of the country’s monetary policies.
Stressing that the investigation on Sanusi Lamido’s financial recklessness is still on-going, he said that there is nothing wrong in naming a successor for his position months to the expiration of his tenure.
According to him, President Goodluck Jonathan has not flouted the CBN Act or any law as he did not ‘remove’ the CBN governor but ‘suspended’ him, adding that he who has the power to hire also has the power to suspend.
He said: “On the suspension of the CBN governor, the statement was very clear that the president has had to take this decision as part of attempt to strengthen the CBN to ensure that that apex bank continues to be symbol for prudence, integrity and accountability.”
“That statement also made it clear that there has been issue regarding the financial recklessness and also violation of due process and the mandate of the CBN. And in that statement of course it was then made clear that with Mallam Sanusi proceeding on suspension, the most senior Deputy governor Dr. Sarah Alade will assume the office in an acting capacity until various reported breaches have been investigated and resolved.”
“Since that announcement there has been many inquiries particularly with regards to the point of financial recklessness and breaches, there has also been a lot of speculation in both local and foreign media. There has been an expression of anxiety.”
Continuing, Abati said: “On the issue of anxiety, I think nobody needs to be anxious this decision has not been taken on the country’s monetary policy, the monetary policy of the country remains the same and there is stability in the system and so investors in the Nigerian economy have no reason whatsoever to fear.”
“That decision was taken only with regards to internal governance issue within the central bank. In the statement issues raised were very clear that there are issues of internal governance. Government remains committed to the stability of the economy, stability of the naira and stability of the country’s monetary policies.”
“The lady who has taken over in acting capacity has been long within the system and so everyone can remain assured that there will be stability and that the institution will remain very strong.”
Abati noted that the second concern been expressed has to do with the issue of financial recklessness.
“I will like to say that there were issues of financial recklessness and unprofessional conduct but that did not happen today. It is not as if this is a sudden development, but that it’s been a long process dating back to last year.”
“Last year when the CBN submitted it’s financial statement for the year ended 31st December 2012, a query was raised about some of the issues in the financial statement and the CBN governor was asked to offer some clarification with regards to these issues. This was around first week of May 2013. A response came from the CBN which was then forwarded to the Financial Reporting Council of Nigeria.”
“And the Financial Reporting Council of Nigeria by its Act is empowered to review the accounts of the CBN and if there is course for investigation, to conduct such investigation. And if there is need also to invite other bodies to further investigate, the law makes allowance for that.”
“And that took place. And some of the outcomes of that process relates to the issues raised about financial recklessness.” He added
Listing some of the alleged offences, Sanusi Lamidobis being investigated, he said: “If I may just draw attention to a few of them: the persistent refusal and negligence to comply with public procurement act in the procurement practices of the CBN; unlawful expenditure by the CBN on intervention projects across the country, deploying huge sums of money as the CBN did under the watch of Mallam Sanusi without appropriation and outside the CBN’s statutory mandate.”
“It is said that the expenditure of public funds of course by any organ of government must be based on clear legal mandate, prudent constrain and overriding nation interest. And then financial infraction and act of financial recklessness committed by the CBN and reflected in its audited financial statement for 2012.”
“If you need more details I will be glad to provide those details because is a long list of infractions. But it is on the basis of all of this and to allow for further investigations that the CBN governor has been asked to step aside.”
He said that rather than alley the fear of government on those allegations, the Financial Reporting Council of Nigeria confirmed concerns about the untidy manner in which the affairs of the CBN were conducted.
On allegation that the suspension was aimed at disrupting Sanusi Lamido’s testimony before the Senate Investigative panel, Abati said: “The question has also been raised on whether this has to do with the ongoing appearances in the National Assembly by the suspended CBN governor. I will like to state very clearly that this has nothing to do with that. I have given you the background so that you can see that this is the process.”
“This government remains committed to ensuring integrity and accountability and discipline in every sector of the economy. And it encourages persons who have issues, who have things to say to expressed their rights through the freedom of expression under the constitution. Indeed the government of Nigeria is also interested in what the legislature is doing and do not be surprise if government goes further to initiate further audits as has been suggested in some quarters.”
“And indeed we look forward to a situation whereby Mr. Sanusi will continue to assist the legislature in their investigations and will continue to testify because what government is interested in really is transparency and accountability and anything that will further promote that objective is perfectly welcome.” He said
Asked why the government didn’t wait till Sanusi’s retirement in June before forwarding his replacement to the Senate, he said: “Well, I do not see untidiness in this. You know there are two vacancies, the suspended governor was due to retire in June and with the retirement of former Deputy governor Tunde Remo, there was also a vacancy at the deputy governor’s level.”
“In many countries of the world, you do not wait till the last minute before you appoint successor particularly into a position in such a strategic institutions as the CBN. You allow room for proper transition and for the market to get to know who the new persons are.”
“And with regards to the position of the CBN governor, I think announcing the nomination for that position is good for the market, it builds confidence, it reassures the market that there is no crisis, there is stability and that the institution is in good standing.”
“It has nothing to do with the CBN governor, as I told you there has been a process of investigation with issues raised with regards to internal governance system in the CBN. In the country like the UK, the appointment of the current head of the Bank of England was announced about four months ahead. So this helps the systeml, it builds confidence and doesn’t keep the market in the dark. I think if anything, the president should be commended for immediately making these nominations to show that the institution remains strong and in very good standing.”
Abati said that he was not aware of the alleged threat by Sanusi to challenge the illegality of his suspension or any order given for Sanusi’s arrest
He said: “I’m not aware of any directive that he should be arrested as at this moment. But of course you know that under the enabling act of the Financial Reporting Council of Nigeria, where an indictment is established and all that, the law could take its course but as at this moment I’m not aware of any directive that he should be arrested.”
“The second one when you say the illegality of his suspension, I do not understand what you mean by that, although I am aware that some people are saying oh this is illegal but it is not.”
“People who talk about illegality, they are referring to Section 11 Sub Section 2 of the CBN Act. Now under that provision, the reference is to removal of the CBN governor by the president and there is a qualification there saying that provided that removal is supported by 2/3rd majority of the Senate.”
“But what the president has done, is not removal, it is suspension. You know you do not read the provision in isolation, you read them together and the interpretation Act, if you read all of these provisions together,the thrash point is that he who hires can also has the power to suspend.”
“So if you have the power to appoint, you also have the power to suspend. What has happened is not removal, it is suspension and that is perfectly within the purview of the law.”
On why he was not suspended before now, Abati: “I spoke of investigation. Investigation is a process. It is not that you raise a query and that query is answered and then you immediately take a decision. And of course even with the report from financial reporting council, I told you that investigation are still continuing because there are so many issues from the FRC running into pages upon pages with annexus.”
From a document of the Financial Reporting Council of Nigeria sighted in Abuja yesterday, the particulars of the infractions against Sanusi are:
“Persistent refusal and/or negligence to comply with the Public Procurement Act in the procurement practices of the Central Bank of Nigeria.
“(A) 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.
“(B) it is however regrettable that the Central Bank of Nigeria, under your 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.
“(C) 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.
“(D) 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.
“Unlawful expenditure by the Central Bank of Nigeria on ‘Intervention Projects’ across the country
“(A) 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.
“(B) 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.
“Financial infractions and acts of financial recklessness committed by the Central Bank as reflected in its audited financial statements of 2012
“(A) pursuant to Section 50 of the CBN Act 2007, a copy of the audited financial statements of the CBN for the year ended 31st December 2012 was sent to Mr. President. Based on the issues raised in the financial statement, a reinsertion was requested from you to enable a proper appreciation of the nation’s economic outlook.
“(B) the response to this query was further referred to the Financial Reporting Council of Nigeria.
“The review by the council, rather than allay the fears of government, further confirmed concern bout the untidy manner in which you have generally conducted the operations of the CBN.
“Some of the salient observations arising from the review are;
“(A) 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.
“(B) 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.
“(C) 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,m 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.
“(D) 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.
“(E) the CBN had an additional brought forward to General Reserve Fund of N16.031 billion in 2012 but proceeded on a boy age of indefensible expenses in 2012 characterised by inexplicable increases in some heads of expenditure during the year. Examples include:
“1. The bank spent N3.086 billion on “promotional activities” in 2012 (up from N1.084 billion 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 N20.202 billion 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;
“4. 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.
“5. 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 N38.233 billion 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 N29.370 billion for all its transactions with all clients (including the CBN).
“6. 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.
“Questionable write-off of N40 billion loans of a bank
“The above issues are only a few of the infractions highlighted by the review and which point to the gross incompetence and recklessness which characterised the operations of the CBN in the period under review.”
Meanwhile the Minister of Petroleum Resources, Daizani Allison-Madueke, the Group Managing Director of NNPC, Andrew Yakubu and the Chairman of the Senate Committee on Finance, Ahmed Makarfi were at the Villa to meet with President Jonathan yesterday evening.
When asked what his mission was in the Villa, Makarfi said: “No comment.”
