Business day has unravelled what could very well be the biggest FX racket since the days of military dic ta tor Sani Abacha.
Investigations reveal that face less agents in Nigeria are exploiting the country’s multiple exchange rates to devastating effect and they allegedly have the backing of regulators.
Business day has learnt that these agents, hand picked by the Central Bank for oil and non-oil exporters who need naira to settle domestic administrative obligations from workers’ salaries to overhead costs, could be making exchange rate gains of over N32 billion annually.
Here’s how the racket plays out.
When an exporter notifies the CBN of intentions to buy naira, the regulator recommends an agent who will man age the transaction. The agent then accepts dollars from the exporter in exchange for naira at an exchange rate of N306 per US dollar. This faceless agent then heads to the black market to sell same dollars at N360, helping himself to a gain of N54 per dollar.
Business day estimated these faceless agents to be making no less than N32 billion annually. That’s how much they pocket from crude oil exporters alone.
The figure could increase an other 5 percent if non-oil ex porters are factored in, given that oil exports account for 95 percent of dollar inflows into the country while non-oil exports take up the remaining 5 per cent.Five per cent will equate to N1.68 billion for a total of N33.68 billion.
The amount these agents make on a yearly basis is enough to build 6,400 housing units in Nigeria’s hinterlands. That’s assuming each unit costs N5 mil lion. It is also enough to provide eight ultra modern hospitals, at an average cost of N4 billion each, across the country.
The inferences are being made because housing and health care are two of the most critical yet under- funded sectors in Nigeria.
In making our assumptions, Business day obtained the financial report of indigenous oil company, Seplat, to extract its administrative expenses and render it as a percentage of total revenues.
Seplat’s estimated full-year 2018 revenue is $757 mil lion. In the nine months ended Sept 2018, the company’s revenue was $568 million. That gives a monthly av er age of $189 mil lion.
The company’s general and administrative expenses totalled $55 mil lion in the nine-month period. The monthly average comes to $18 mil lion. To roughly es ti mate full-year administrative expenses, we added $18 million to $55 mil lion and arrived at $73 mil lion. It means 9.6 percent of Seplat’s revenue went to ad min expenses.
We assumed that the IOCS spent $505 mil lion in administrative expenses in Nigeria. This we derived by applying Seplat’s administrative expense as a per cent age of revenue – 9.6 per cent on the total Joint Venture share of the IOCS.
The NNPC in its September 2018 report stated that the IOCS’ JV share totalled N581 billion between September 2017 and 2018, while the Federal Government claimed N924 bil lion, which implies a sharing formula of 61 per cent for the FG and 39 per cent for the IOCS. The report was based on an ex change rate of N306 per dollar, which means the IOCS’ share in dollar terms was $1.9 billion.
To estimate how much of that amount is likely committed to administrative expenses, we calculated 9.6 per cent of $1.9 billion, which gave $505 million. We arrived at this figure after adopting the Seplat model, wherein 9.6 percent of total revenue is spent on administrative costs.
Seplat’s admin costs of $73 million added to the IOCS’ $505 million equals $578 mil lion. At an exchange rate of N306 per dollar, it means the IOCS and Se plat may have spent N176 billion on admin expenses in 2018. When the N360 per dollar exchange rate is factored in, the amount swells to N208 bil lion, leaving a difference of N32 bil lion.
Given that our conservative estimate leaves out the transactions of other indigenous companies, it is safe to assume these faceless agents make no less than N32 billion an nu ally in exchange rate gain.
Our estimate also leaves out non oil exports, which when roughly estimated translate to a total of N33.68 billion, as stated earlier in the story.
“The FX arbitrage in the country is hardly the best kept secret,” a source who did not want to be named told Business day. “Every bank chief executive officer knows about it, but the fear of the regulator keeps them mum ,” the source said.
Two other sources confirmed they were also aware of the deal ings.
“Every large importer of dollars who goes through the official channel is a victim,” one of the sources said.
“The arbitrage opportunity is the reason why the N306 rate still exists, when most market transactions happen at the N360 rate,” the second source said.
Treasury sources tell Business Day that the practice has forced some exporters to circumvent official channels in order to get a market-re effective rate for their dollars. That has curbed dollar supply, piling pressure on the exchange rate.
To address the rising tide of exporters boycotting offcial channels, the Central Bank has threatened to sanction the banks.
According to sources familiar with the matter, the CBN is convinced that the banks could be help ing some of their clients divert their dollars and is bent on discouraging that.
“The CBN is penalising banks whose clients don’t bring their dol lars through official channels,” a source said. “The banks argue that it is not their fault if clients are bent on diverting their money.”
The diversion threatens to take the country back to a period in 2016 when exporters and Nigerians in the diaspora side-stepped official channels because of the country’s long standing naira peg of N199 per dollar.
The black market rate at that time was as high as N300 per US dollar, yet the CBN force fully exchanged dollars at the N199 rate, deny ing in di vid u als and businesses, whose costs were anchored on the black market rate, of a spread of N101. The impact was an acute dollar shortage that contributed to Nigeria’s worst economic recession in 25 years.
“It is perhaps the biggest FX racket since the days of Abacha,” one of our sources said.
In the early 1990s, Abacha gave dollars away to his cronies at an official ex change rate of around N20 per dollar when the parallel market rate was anywhere between N70 and N80 per dollar, creating an arbitrage op por tu nity of between N50 to N60 per dollar.
Court filings made available to PREMIUM TIMES Friday evening by Mr. Keyamo said Mr. Umar collected N10 million from Rasheed Taiwo, a former Customs official who was facing false assets declaration charges before the Code of Conduct Tribunal sometimes in 2012.
The prosecution also accused Mr. Umar of receiving N1.8 million of the N10 million bribe sum through one of his personal assistants, Gambo Abdullahi.
cc ngeneukwenu and all the other zombies.
This case has been re-opened more than 2 times. They bury it each time and if the man doesn't comply, they bring it up again.
Same corruption issue they used to hold Akpabio and Orji Kalu to the devilish party.
The modus operandi is this, file corruption charges against you, if you do their bidding, you are safe, if you don't the 'anti-corruption' will open office on your head.
So this is what APC is using to hold this man brookus?
The game plan is this; File charges against the man and promise not to prosecute unless he does their bidding.
And some people are still supporting this gross corruption and destruction of our judicial system.
Here is what premium times wrote. Mind you, premium time even obtained the actual court filings.
The Economic and Financial Crimes Commission has filed fresh charges of fraud against the chairman of the Code of Conduct Tribunal, Danladi Umar.
The charges, prepared by Festus Keyamo, an EFCC prosecutor, came two years after the anti-graft agency last absolved Mr. Umar of any wrongdoing in a case of judicial bribery and racketeering.
Court filings made available to PREMIUM TIMES Friday evening by Mr. Keyamo said Mr. Umar collected N10 million from Rasheed Taiwo, a former Customs official who was facing false assets declaration charges before the Code of Conduct Tribunal sometimes in 2012.
The prosecution also accused Mr. Umar of receiving N1.8 million of the N10 million bribe sum through one of his personal assistants, Gambo Abdullahi.
The two counts of fraud contradicted Section 12(1) (a) and (b) of the Corrupt Practices and Other Related Offences Act, 2003, Mr. Keyamo stated in charge affidavit prepared on January 25 and stamped on February 2 at the Federal High Court, Abuja.
The CCT chair could face up to seven years’ imprisonment if convicted of the charges.
A spokesperson for the CCT, Ibrahim Al-Hassan, told PREMIUM TIMES Friday night that he could not immediately give a reaction to the development. He said he needed time to study the court filings against his principal, promising to revert by Monday.
A PREMIUM TIMES’ examination of the charges indicates that they carry the same substance as the grounds for which anti-graft detectives had earlier cleared the tribunal chief.
The EFCC first cleared Mr. Umar of the bribery allegations in March 2015. When the trial of Senate President Bukola Saraki reached its peak in 2016, the anti-graft office wrote another letter clearing the jurist of any wrongdoing in Mr. Taiwo’s case.
‘‘We would like to reiterate the Commission’s position in regard to this matter as earlier communicated to you and stated that the allegations levelled against Justice Umar were mere suspicious and consequently insufficient to successfully prosecute the offence,” the EFCC said in an April 20 letter to the Office of the Secretary to the Government of the Federation, which supervises the Code of Conduct Tribunal.
In the same letter, the EFCC concluded that there was no strong case against Mr. Umar but that there was prima facie evidence to prosecute Mr. Abdullahi, his personal assistant “who could offer no coherent excuse for receiving N1.8 million naira into his salary account from Taiwo who is an accused person standing trial at the Tribunal.”
The EFCC was compelled to clear Mr. Umar after he came under intense scrutiny since the commencement of the trial of Mr. Saraki, over alleged false assets declaration, with many accusing him of being equally tainted and calling on him to excuse himself from Mr. Saraki’s case.
In December 2016, a group, the Anti-Corruption Network, had also alleged that Mr. Umar used his office to purchase N34.9 million exotic vehicles, furniture and other household items without following due process.
The first clearance notice was written on March 5, 2015 through the office of the then-SGF, Pius Anyim.
The anti-graft agency wrote another letter in April 2016 following concerted attempts by Mr. Saraki and his associates to force Mr. Umar’s hands to stand down from the top lawmakers’ false assets declaration trial.
In June 2017, Mr. Umar ultimately found Mr. Saraki not guilty on all the 18 counts of false assets filings when he was governor of Kwara State between 2003 and 2011.
In December, the Court of Appeal in Abuja affirmed the conclusion of the tribunal on all but three counts, a decision the Senate President immediately appealed to the Supreme Court.
A spokesperson for the EFCC, Wilson Uwujaren, did not respond to PREMIUM TIMES’ requests for comments about why the agency brought the same charges for which it had previously cleared Mr. Umar.
Mr. Keyamo declined further comments to PREMIUM TIMES about the charges Friday night.
But a source informed about the case told PREMIUM TIMES on Friday that the anti-graft commission would enlist Mr. Umar’s assistant, Mr. Abdullahi, as a prosecution witness.
They wouldn't have made that prediction if they do not see a greater chance of him, Atiku Abubakar winning. That's taking a bet against buhari because if this article is to believed, they spitted buhari for atiku and would sure draw buhari's anger. But they see Atiku as a likelier win so they placed the bet on him. And knowing USA, they do not act in ignorance.
omohayek: WASHINGTON/ABUJA (Reuters) - Nigerian presidential candidate Atiku Abubakar visited Washington two weeks ago to meet with top U.S. diplomats and lawmakers thanks to a temporary suspension of a travel ban linked to decade-old bribery scandals, according to people familiar with the matter.
The U.S. administration has not commented on Atiku’s status or his travel, but several U.S. diplomats and others familiar with the visit told Reuters the former vice president has been banned from entering the United States for the past several years after he figured prominently in two corruption cases.
For Atiku’s supporters, the fact he was able to visit Washington on Jan. 17 and 18 without being arrested was proof that the allegations were baseless.
“It is fake news, and we showed that,” said Harold Molokwu, who heads the U.S. chapter of Atiku’s People’s Democratic Party of Nigeria.
Several U.S. government officials said the travel ban was waived temporarily by the U.S. State Department after lobbyists mounted a campaign among congressional lawmakers arguing that the administration should not snub the leading challenger to Nigerian President Muhammadu Buhari in the Feb. 16 election.
One person familiar with the matter, speaking on condition of anonymity, said Atiku was allowed to enter because the United States saw little benefit to creating bad blood with the man who might be the next leader of Africa’s most populous nation and the continent’s biggest oil producer.
Lobbyists hired by Atiku said they sought to overcome resistance at the State Department by securing support from members of Congress for the visit, as well as arguing that the top U.S. official for African affairs, Assistant Secretary Tibor Nagy, had an obligation to encourage democracy in the seventh most populous country in the world.
The bolded is the greatest point from this article. It means the USA already have intelligence that Atiku is most likely to be the next president of Nigeria.
All hail His Excellency, Incoming President Atiku Abubakar.
Atiku Abubakar was born on November 25, 1946 to a Fulani trader and farmer Garba Abubakar, and his second wife, Aisha Kande, in Jada village of Adamawa State. Atiku Abubakar became the only child of his parents when his only sister died at infancy. Atiku’s father and mother divorced before his father died in 1957 and his mother remarried. Atiku said:
“As a young boy growing up in Kojoli, my parents doted on me. They tried their best to provide for me and to ensure that I grew up in a wholesome environment of love and spirituality. My father saw me as a rare gift, a child of destiny.”[3]
Eventually, his mother died in 1984 of a heart attack. Atiku Abubakar could not start school when he grew old enough to because his father was opposed to him obtaining Western education. When his not going to school was noticed, his father was arrested and jailed until he paid a fine. Consequently, Atiku Abubakar was admitted into Jada Primary School at the age of eight.
After completing primary school, Atiku was admitted into Adamawa Provincial Secondary School, Yola in 1960. He graduated from secondary school in 1965 after he made grade three[definition needed] in the West African School Certificate Examination. Abubakar then proceeded to attend Nigerian Police College, Kaduna. He left the college for a position as a tax official in the Regional Ministry of Finance. Later he received admission to study at the School of Hygiene, Kano in 1966. In 1967, he graduated with a diploma. That same year, Atiku Abubakar was admitted for a Law Diploma at Ahmadu Bello University on a scholarship. He graduated in 1969 and was employed by Nigeria Customs Service that same year.
afroniger: The owners of the helicopter already confirmed the incident. Should the accident have claimed lives in order for you to believe it? This sort of politics you are playing is disgusting.
the owner of the heli can be an accomplice to the whole thing. This is not politics. Nigerians demand the truth.
Politics › Re: Corrupt CBN EXPOSED: The Sleazy Face Of N306/$ | Business Day by naijapips02(op): 9:33am On Feb 05, 2019
a case that is at the supreme court?
