…As CBN's financial recklessness threatens its regulatory roles Banks confess loss of confidence in regulator's abilities

AS 2013 is rounding off, the Central Bank of Nigeria (CBN) is yet to release its 2012 financial report and from all indications the apex bank will not be able to do this because of unanswered questions arising from a query Mr. President issued to the Governor of the Bank, Mallam Sanusi Lamido Sanusi, over questionable transactions.


Sources at the Bank say that though the Governor answered the query but the president was not satisfied as the key issues raised in that query were not addressed. His case is made worse as Mr. President, who is said to have expressed utmost disappointment in the conduct of Sanusi, has refused to communicate his decision to the apex bank, throwing the Board of Governors into a confused state.
This situation many say has started affecting the perception of industry players who are in the know over the apex bank's credibility. This is sequel to what insiders describe as loss of confidence emanating from the apex bank's inability to balance its own books. Some bankers who spoke to National Daily on condition of anonymity say that they are beginning to lose confidence in the Central Bank's regulatory abilities because it has shown inexplicable recklessness in the managing of its own finances which has been responsible for non-release of its 2012 financial report till date.
This situation is said to be giving the Central Bank Governor sleepless nights as he would prefer to see his tenure through without being sacked which will affect his perceived political career in future. He is said to have sent lobbyists after lobbyists to the president but to no avail. It could be recalled that few months ago, he led an entourage of some prominent emirs and traditional rulers on a courtesy visit to the president. A source at the presidency said that the purpose of the visit was aimed at pleading with President Jonathan to give Sanusi a soft landing as he prepares to leave office.
According to our impeccable source, the apex bank could not pass its 2012 financial statement because the President queried the Bank Governor over series of infractions detected in the apex bank's 2012 audited account, and since then the Bank has been running from pillar to post trying to lobby the presidency to overlook those infractions. A source at the Presidency however told this newspaper that what was discovered in the books of the apex bank are too serious to be waived aside, and because words have gone out that the Bank cannot balance its book, there is need to ensure due process is followed so as to restore confidence in the system.
It could be recalled that in early May, the Presidency rejected the audited report submitted by the Central Bank because it discovered about 22 issues bordering on massive fraud at the bank, and as a result a query was sent to the Governor on May 6, 2013 with express instruction that the query be replied to on or before May 8, but the Governor could not submit the reply until May 21, a situation a top staff of the Central Bank who spoke to the National Daily described as quite disturbing because the query took the Governor unawares.
The query from the presidency centered on the bank's account, which its auditors, Ernst and Young, passed without officially signing, a pointer to the fact that they are not convinced about the apex bank's account. An audit report is worthless if it does not carry the signature of the auditor.
A major aspect of the query bothers on issues such as investment of a huge amount of money in an Islamic bank in Malaysia without any guarantee of its generating returns.
Others are write-off of about N3.5 billion CBN staff housing loan and the donation of about one billion naira to a political party to open up offices across the country. This donation, which was given under the special access item in the account, is believed to be geared towards furthering Sanusi's alleged political ambition in the 2015 general elections.
The query touched other issues such as refusal of the apex bank to consolidate in its account, the trillion debt owed by the Asset Management Company (AMCON) and the non-disclosure of the total liabilities through the bond floated by the company. The governor was also asked to explain the discrepancies noted in the 2012 account regarding the Nigerian Security Printing and Minting Company, a subsidiary of the apex bank.
Other issues include the controversial donations made to some higher institutions in the country. Investigations have shown that some of the donations were inflated in the bank's books. For example, while the Bayero University Kano, BUK, was said to have collected N4billion, the school authorities claimed it got only N1billion.
The state of health of the apex bank's annual statement became suspicious when the governor refused to submit it to the Financial Reporting Council (FRC) the body with the mandate to ascertain the compliance of companies with accounting standards, and the International Financial Reporting Standards, IFRS. Rather than submitting it to the body, the governor requested for seven years' grace for the CBN to comply with FRC stipulations.
The audit report of the account, which was submitted directly to the President, was later forwarded to the economic adviser to the President for his appraisal. The official okayed the account and noted that it complied with the CBN Act. However, unhappy with the economic adviser's comment, Jonathan returned the report to him and drew his attention to the refusal of the auditor to sign the account.
National Daily gathered that some of the Bank CEOs who are in the know of this controversy have continued to enjoy unimaginable favours from Sanusi so as to continue to rally support from the industry for him.
This is not the first time the CBN account will be open to scrutiny but the bank has always hidden under its autonomy to stave off close inspection. The apex bank is on the first line charge and receives its appropriation directly from the federation account and exercises enormous financial autonomy.
In May, the public accounts committee of the House of Representatives also had cause to query several expenditure items amounting to N4.7 billion in the CBN accounts. This included the N2.8billion which the bank said it spent on the construction of its Port Harcourt branch.
The House in turn had worked with a report from the office of the auditor general of the federation which queried extravagant expenditure by the apex bank for which documents were not made available for verification.
Chairman of the House committee on public accounts, Solomon Olamilekan at a meeting with officials of the bank alleged that there were indications that due process was not followed in expenditure as no documents were provided.
Some of the transactions that the committee queried include the sums of N23m and N50m claimed to have been spent for the same purpose of renovating the governor's official residence as well as N848m spent on the purchase of a property from the National Planning Commission (NPC) without any transaction agreement.
However, like many probes of public institutions by the National Assembly, the matter appears not to have been pursued. The N4 billion donations to Bayero University Kano (BUK) also mentioned in the President's query had not even been known to the public. What had irked many Nigerians, including federal lawmakers, was the donation earlier in the year of N100 million to victims of terrorism in Kano, Sanusi's hometown.
It could be recalled that the House of Representatives entertained a motion on misuse of public funds on the donation which degenerated into a rowdy session. Many members accused Sanusi of misuse of public funds. Member from Yobe State, Goni Lawan, described Sanusi's donation of N100 million to Kano State and another N25m gift to Madalla bomb blast victims as “an act of terrorism”, arguing that attacks in Yobe and Borno states did not attract the same monetary consolations from the CBN governor.
“When I first heard of the action of the CBN governor, I was surprised. I asked whether Yobe and Borno states were not parts of Nigeria, as these attacks took place there first,” Lawan said.
It remains to be seen how the embattled CBN governor will wriggle his way out of this looming crisis that is set to rock the banking industry and undermine any perceived achieved gains.


SOURCE: http://www.nationaldailyng.com/latest/crisis-looms-in-banking-industry

i hv always had lots of respect for SLS, despite his short comings. But this report is just too damning. How extreem should a trusted public official go on spending spree for his personal ambition?

dgitrader: i hv always had lots of respect for SLS, despite his short comings. But this report is just too damning. How extreem should a trusted public official go on spending spree for his personal ambition?

most of the people in the leadership position in this country are the real enemy of this country. if all these things said about SLS is true, then, we are in big problem in this country. could this be the reason for him asking abt $49.8B? may be that will make the presidency to keep quite

Jeez! I have always thought of Sanusi as a man of impeccable integrity. I am waiting to see his response and how this unfolds.

Hope its not a case of do me i do you, man no go vex?