The Nigerian economy has suffered from a series of deliberate manipulation by those saddled with the responsibility of managing it to the detriment of its citizens. In this report, FESTUS OKOROMADU reviews the outcome of the presidential investigation panel on the CBN under the immediate past administration and its effects on the economy .
Worried by the perceived atrocities perpetuated by the Central Bank of Nigeria under the leadership of Godwin Emefiele, President Bola Tinubu on July 28, 2023 appointed Jim Obazee as a Special Investigator charged with responsibility of examining the operations of the apex bank and associated entities.
Guided by the fundamental objectives outlined in Section 15(5) of the Nigerian constitution, the President mandated Obazee to assemble a competent team and collaborate with relevant security and anti-corruption agencies for the investigation.
In addition, Obazee, the former CEO of the Financial Reporting Council of Nigeria from 2011 to 2017, was also directed to promptly enhance the integrity of key Government Business Entities and curtail financial leakages within the CBN and related GBEs.
The investigative team was equally tasked to furnish a comprehensive report on the current status of public wealth held by both corrupt individuals and entities, whether in the private or public sector.
While delivering his initial report titled ‘Report of the Special Investigation on CBN and Related Entities (Chargeable offences)’, to President Tinubu on December 9, 2023, Obazee acknowledged that his team uncovered a web of atrocities.
Amidst numerous allegations said to have been perpetuated by Emefiele and his associate was the operations of 593 foreign bank accounts scattered across the United States, United Kingdom, and China, purportedly housing Nigerian funds. Unfortunately, these accounts were allegedly operated without proper authorization from the CBN’s Board and Investment Committee.
Another obnoxious discrepancy reported by the Special Investigator was a contentious $6.23 million cash withdrawal (approximately N2.9 billion) linked to Emefiele and other officials.
Emefiele, according to the report, allegedly held 543.4 million pounds in fixed deposit accounts in the UK while being accused of manipulating the Naira exchange rate and orchestrating fraudulent activities tied to the CBN’s e-Naira project.
The report further alleged that Emefiele manipulated the Naira exchange rate and was involved in fraudulent activities within the CBN’s e-Naira project.
On the controversial Naira redesign which commenced in October 2022, the Obazee’s investigative panel alleged that the programme was carried out without requisite approvals from the CBN Board or President Muhammadu Buhari as mandated by the CBN Act.
It was alleged that a staggering N61.5 billion was incurred in expenses, while another sum of N1.7 billion was purportedly spent on legal fees.
“It was a conspiracy against the Nigerian people and specifically the political class by the then CBN Governor (Mr Godwin Emefiele) and one of the erstwhile CBN Deputy Governors (Mr Folashodun Shonubi). The idea was that Mr. Shonubi (claiming interwoven challenges) and Mr Godwin Emefiele designed and approved the currency on 19th October 2022.
“It was indeed meant to frustrate the political class and make their election agenda very difficult. It turned out to be a huge punishment to Nigerians and the Nigerian Economy coincidentally,” the report said.
Abuse of power and other offenses
According to the report, the financial instrument, “Ways and Means” which is intended for temporary government advances, allegedly fell prey to misuse by Emefiele, former Minister of Finance, deputy CBN governors, and other high-ranking officials, leading to substantial financial irregularities as N26.627 trillion disbursed without approval.
Ordinarily, Section 38 of the CBN Act, 2007 authorizes the CBN to offer temporary advances to the Federal Government to cover shortfalls in budget revenue, subject to interest. This practice is commonly known as “Ways and Means.”
The same section also specifies that these advances must be repaid by the end of the Federal Government’s financial year in which they were provided. Failure to repay within this timeframe results in the CBN being barred from granting such advances in subsequent years. More importantly, repayment cannot be made through methods like Promissory notes, Securitization, or the issuance of Treasury Bills.
“It was a surprise, Mr President, that under the last administration, the noble outlet became a huge source of fraudulent drain pipe for the then Minister of Finance, Mrs Zainab Ahmed, the erstwhile CBN Governor, all the four deputy CBN Governors (under the guise of COG), the Permanent Secretary of the Ministry of Finance, the Accountant General of the Federation and even the then Chief of Staff. In an instance, they padded what the former President Muhammadu Buhari approved with N198, 963,162,187 (approximating an approval of N801, 036,937,813 to N1 trillion),” the report said.
“There are instances where no approvals are received from the former President Muhammadu Buhari and yet, N500 billion is taken and debited to Ways and Means.
“There are more shocking instances when the erstwhile CBN Governor and his four deputy Governors connived to steal out-rightly in order to balance the books of the CBN. This was by violently taking (sic) money from the Consolidated Revenue Fund (CRF) account and then charging it to “Ways and Means,” They even created the narration as a Presidential subsidy and expanded the “Ways and Means” portfolio to accommodate the crime,” the report said.
Obazee noted that the CBN officers and even the then Acting CBN Governor could not produce the Presidential Approval of most of the expenses described as “Ways and Means”.
He reported that when confronted to provide the breakdown of the supposed N22,719,703,774,306.90 that was presented to the 9th National Assembly to illegally securitize the “Ways and Means” financing, they were only able to partially explain a total of N9,063,286,720,318.92 or N9,258,040,720,318.92 (depending on which official you are considering his submission) and an unreasonable attribution of non-negotiated/unadvised interest element of N6,678,874,321,541,97.
“This shows that this was the point where the officers of the immediate past administration as well as the erstwhile CBN Governor and his four Deputy Governors connived, defrauded, and stole from the commonwealth of the country with the aid of civil servants,” he said in the report.
The report added that the true position of the “Ways and Means” as documented from the reconciliation between the CBN and the Ministry of Finance at the time is N4, 449,149,411,584.54.
Furthermore, the investigation uncovered an alleged theft of $6.23 million from the CBN’s vault. Purportedly executed under the guise of funding foreign election observer missions, CCTV footage reportedly captured individuals within the CBN involved in the removal of the funds, raising serious concerns about transparency and accountability.
“As of date, Abdulwaheed Muhammed has admitted in a written statement that he acted in collaboration with one Bashirdeen Mohammed Maisanu, an assistant director in the Banking Supervision Department of the Central Bank of Nigeria and some persons he is yet to identify, to conceive and carry out the act of stealing the sum of $6.23 million out of the vault of the Central Bank of Nigeria.
“A fraudulent cash withdrawal of $6.23 million perpetrated since February 8th 2023 was not discovered nor taken seriously till the 4th of December when a Request for Information was issued by the Office of the Special Investigator. There is therefore an appearance of concealment by officers,” the report stated.
Fallout of special investigation
The Federal Government last week took two decisive steps in an attempt to right some of the atrocities identified by the Obazee investigative team. First was the visit of the Economic and Financial Crimes Commission to the corporate headquarters of the Dangote Group in Lagos and the dissolution of the boards and managements of three banks.
During the visit to the Dangote Group headquarters, the EFCC officers were said to have explicitly requested for documents pertaining to the allocation of foreign exchange to the group over the past decade. Report also had it that 50 other companies are under similar investigation by the EFCC.
While the dust raised by the EFCC’s operatives to the Dangote Group corporate headquarters was yet to settle, the Governor of CBN, Yemi Cardoso announced the sack of the board and management of Union, Keystone, and Polaris Banks.
Cardoso who acted with the approval of President Tinubu said the development was part of the implementation of the report of the Special Investigation conducted by Obazee.
A statement by the apex bank said, “This action became necessary due to the non-compliance of these banks and their respective boards with the provisions of Section 12(c), (f), (g), (h) of the Banks and Other Financial Institutions Act, 2020.”
It added that, “The Bank’s infractions vary from regulatory non-compliance, corporate governance failure, disregarding the conditions under which their licenses were granted, and involvement in activities that pose a threat to financial stability, among others.”
Economic implications
Although the raid of the Dangote Group headquarters by EFCC operatives was part of the government’s efforts to further scrutinize and ascertain the authenticity of the investigations conducted by Obazee, many persons have questioned the timing and approach of the move.
Reacting to the development, the chairman of the House of Representatives Committee on Petroleum Resources, Downstream Ikenga Ugochinyere Ikeagwuonu, said the raid on Dangote Group was capable of worsening the economic situation in Nigeria and scaring away current and potential investors.
He stated that raiding the company at a time when the nation was grappling to save its fragile economy is a wrong move which will further erode efforts to stabilise the economy.
Expressing his concerns in a statement, Ugochinyere said, “I’m of the view that the timing of the raid on Dangote Group is not only very suspicious, but most importantly capable of worsening the economic situation and scaring investors. In the last few months, our nation has lost so many foreign investors. While some of the foreign companies operating in the country are leaving, potential investors are also sidelining us. Now you have the EFCC, despite what the nation is currently facing, raiding the headquarters of the largest industrial conglomerate in West Africa, the Dangote Group, with investments in several sectors and across 14 countries in Africa.
“This is not a good look for us internationally. What will the international community think of Nigeria when they read about news like this? Dangote Group’s impact for decades has been felt through various facets of Nigeria’s economy.
“The President of Dangote Industries Limited, Aliko Dangote, has helped transform our economy from heavy import dependence to a net exporter in some critical industries, including cement and fertiliser. And given our current fragile economic situation, I believe this move by the EFCC will worsen things. Now is not the time for this; it’s time for the nation to focus on integration of African economies and expansion of trade and investments across the continent to stimulate growth and create employment opportunities, not carrying out raids on its largest conglomerate.”
Speaking in a similar tune, the chairman of the House of Representatives, North West Caucus, Sada Soli condemned the raid and called on President Tinubu to intervene in the matter.
Sada in a statement said, “As a concerned citizen and member of parliament, my foremost concern is that this country remains stable, progressive and united and when actions capable of causing disharmony are taken, I have a sworn duty to speak out and express an opinion.
“I write to express concern over the recent invasion of the premises of the Dangote Industries Limited in Ikoyi, Lagos, by operatives of the anti-graft agency, ostensibly to collect documents relating to alleged abuse of foreign exchange allocations during the nine-year tenure of the immediate past governor of the Central Bank of Nigeria, Godwin Emefiele.
“There is the added concern that some fifty other companies, some of them the biggest private businesses in the country, including BUA Group and Flour Mills, TGI and Wale Tinubu’s Oando PLC, among sundry others, all of whom have denied wrongdoing, are being probed for details of the forex allocations to them between 2014 and June 2023 following the report of the Special Investigator on the CBN and Related Entities, Jim Obazee.
“While there is no denying the fact that the anti-graft agency is within its rights to undertake such a probe, or that it has done a very good job of ridding the nation of economic saboteurs in the past, it is nonetheless necessary to point out that the way the agency had gone about this probe, by storming offices and making a spectacle of itself in the public space, is both counterproductive and capable of sending the wrong signals. It must resist the temptation of acting on the impulse of some influential people in government with dubious agenda,” he stated.
However, an economist and public affairs analysts Monday Osasah, said the challenge with Obazee’s investigation on the CBN activities as well as the EFCC’s operative visit to Dangote Group is media hype.
“The government and her agencies could have done all these things without the media buzz.
“The truth is that there are indications that there were infractions in the way and manner the CBN was run in the last administration, since President Tinubu decided to carry-out an investigation, the government and its agencies can execute the findings without the media involvement.
“For instance, I expect EFCC to be wise; do your job and remove the theatrics because Nigeria needs the economy to grow, and the optics of non-strategic raiding companies cannot be positive as we look for foreign direct investments.
“Look at what the CBN did with regards to the banks, the transition was handled in a way that stakeholders and the public interest were not undermined or endangered,” he said.
The effects of the CBN’s action of sacking the banks’ boards and management are not likely to be felt directly, said Olumide Sole, sub-Saharan Africa’s banking research analyst at Vetiva Capital.
“It is not good generally for the banking system in Nigeria,” as it could breed distrust in the system, Sole added.
He argued that the cycles of banks’ board dissolution, initiated by the CBN over the years, could weaken public confidence in the industry.
“The main pillar of the banking system is confidence. This makes the financial system very sensitive to developments that could undermine the confidence of depositors and investors,” said Muda Yusuf, founder and CEO of Lagos-based Centre for the Promotion of Private Enterprise.
“This is why the handling of current investigations concerning these banks needs to be done with utmost discretion, caution and care. We cannot afford a run on any of our banks at a time like this,” Yusuf added.
He also noted that shareholders deserve to be assured of the safety of their investments even though the CBN has given some comfort to depositors by assuring them of the safety of their funds.
Also reacting, the Group Managing Director, Cowry Asset Management Limited, Johnson Chukwu, said, “In terms of investors’ confidence, I don’t think it will be affected. If the banks were acquired with illicit funds, then I don’t see how the investors would say that the government should have allowed it to be sustained.”
On Keystone and Polaris banks, Chukwu said, “Operators in the industry were quite suspicious that some underground arrangements were put in place. So, it didn’t come as a surprise to any of them when the report of the special investigator came out. And if that report is accepted by any government, the actions were not unexpected; I mean a reversal of the transactions because it was not an arm’s length transaction.”
About depositors’ concerns for their funds, Chukwu said, “I don’t think the CBN’s action will in any way affect the depositors’ money in the banks. It will not affect the banks’ capacity to meet their obligations.”
Also speaking on the development, the Vice President of Highcap Securities, David Adonri, said that the apex bank’s move would boost depositors’ confidence as well as that of investors.
A stockbroker, Ambrose Omorude said, “The financial sector is crucial to the economy and the way this one has been managed is fine with me. The CBN highlighted some sections of the BOFIA which were breached by the affected banks. It is good that an acting Managing Director and one director have been appointed.
