21 February 2014

Nigeria: Outrage Trails Lamido Sanusi's Suspension

Reserve Bank Governor Lamido Sanusi.

In an unprecedented action by the federal government, President Goodluck Jonathan yesterday removed the Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi, who was in neighbouring Niger Republic where he was attending a meeting of West African central bank governors.

Though the presidency called its action "suspension from office", Nigerians from different walks of life have expressed divergent views on Sanusi's removal.

Many individuals and groups who spoke to LEADERSHIP yesterday expressed anger over his sudden removal, insisting that he was being punished because of his revelations about the unremitted $20 billion oil revenue by the Nigerian National Petroleum Corporation (NNPC).

Sanusi, who was away on official assignment in Niamey, the capital of Niger Republic, when his suspension was announced, returned to the country later in the day only to be accosted by members of the State Security Service (SSS) and questioned for several hours.

Sanusi vows to challenge suspension, hands over to Alade in Niamey

But in a swift reaction to the development , Sanusi said yesterday that he would go to court to determine the propriety of the president's power to suspend him.

Sanusi, who said he was not interested in returning to the CBN top job, however, said he was challenging the suspension to establish the independence of the CBN governor.

Speaking during an interview with CNBC Africa, Sanusi said: "There may also be the legal issue of whether the president, who does not have the power to remove the governor, has the power to suspend him or whether it is suspension and not removal. I do plan to have the court confirm if indeed that authority exists and I will challenge it.

"Even if I challenged it, I am not going back to the job; certainly I will not go back, but I think it will be in the interest of the institution to crosscheck once and for all whether the Presidency has the power to do that. The reason is that if it is not challenged, then, the next CBN governor cannot be independent for fear of being suspended by politicians."

Sanusi also said he had already handed over to Dr Sarah Alade, who was in Niamey with him when he got the news of his suspension.

According to him, he was in Niamey, Niger, to attend a meeting of West African central bank governors when he received the news and immediately he left the meeting and handed over to Alade, who was with him at the meeting.

He said, "I flew this morning to Niamey along with other governors of West African central banks to meet with the presidents of Niger and Ghana as part of the working group of the West African Currency Zone. Fortunately, I came in with my DG, Sarah Alade, whom I was asked to hand over to. I left the meeting and handed over to her. I have... met with the Nigerian ambassador to Niger who told me that the Presidency asked him to inform me of the decision.

But Jonathan yesterday released a fresh set of allegations against Sanusi as reason for his suspension, besides the initial allegations of financial recklessness and misconduct levelled against him earlier.

Special adviser to President Jonathan on media and publicity Dr Reuben Abati, at a press conference with State House correspondents in Abuja, said the particulars of misdeeds of Sanusi included persistent refusal and/or negligence to comply with the Public Procurement Act in the procurement practices of the CBN.

Jonathan nominates Emefiele as new CBN gov

Jonathan has however nominated the Zenith Bank managing director and chief executive , Godwin Emefiele, to replace Sanusi. The federal government led by President Jonathan had, in a letter to the Senate president, David Mark, and read on the floor of the Senate prayed the upper house to approve Emefiele's appointment. When his appointment is approved by the Senate, Emefiele will emerge as the 11th governor of the Central Bank of Nigeria.

The president also nominated an executive director of First Bank, Mr Adelabu Adebayo, as deputy governor to replace Tunde Lemo who retired from the apex bank recently.

Meanwhile, former president of Chartered Institute of Bankers of Nigeria Okechukwu Unegbu has said the appointment of Mr Emefiele by President Jonathan is illegal and contradictory. Unegbu said the nomination is illegal because Sanusi has not been removed from office, adding that even when someone is acting, Sanusi still remains the CBN governor until June 2014.

Explaining that the removal of CBN Governor can only be determined by a 2/3 majority in the Senate, he noted that the Naira will take a backseat in the foreign exchange market because of the uncertainty in the economy.

According to Abati, some of the alleged financial infractions include:

1. Persistent refusal and/or negligence to comply with section 15 (1)(a) of the Public Procurement Act in the procurement practices of the Central Bank of Nigeria; hence, acting in an unlawful manner and promoting a governance regime characterised by financial recklessness, waste and impunity, as demonstrated by the contents of its 2012 Financial Statements.

2. Reckless and unlawful expenditure by the leadership of the Central Bank of Nigeria on 'Intervention Projects' across the country.

3. Financial infractions and acts of financial recklessness committed by the Central Bank as reflected in its audited financial statements of 2012.

4. Inability of the CBN 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. This laxity calls to question CBN's capacity for proper corporate governance, as it sends wrong signals to both domestic and international investors on the state of the Nigerian economy.

5. Breaching in a material manner the provisions of the Memorandum of Understanding (MOU) signed by the CBN and other Deposit Money Banks on Banking Resolution Sinking Fund, particularly the refusal by the apex bank to constitute a Board of Trustees (BOT) to manage the Fund since 2010 when it was established and its continued utilisation of the Fund for certain operations without approval of the said BOT.

6. Acquiring 7% shares of International Islamic Management Corporation of Malaysia to the tune of N0.743 billion without bringing this transaction to Mr. President's attention or a board approval obtained before it was entered into in disregard 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.

7. Failing to implement the provisions of the Personal Income Tax (Amendment) Act 2007, thus effectively assisting its staff to evade tax despite the generous wage package in the CBN, relative to other sectors of the economy.

8. Spending N3.086 billion on "promotional activities" in 2012 (up from N1.084 billion in 2011) even when the CBN is not in competition with any other institution in Nigeria.

9. Claiming to have expended N20.202 billion on 'Legal and Professional Fees' in 2011 beyond all reasonable standards of prudence and accountability as well as claiming to have spent N1.257 billion in 2012 between expenses on 'Private Guards' and 'Lunch for Policemen'.

10. Breaching 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 and even going to the extent of changing one of the Joint External Auditors without notifying the office of the President.

11. Offering 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 when 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).

12. Claiming that CBN 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, when in essence 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 turnover for 2011 because upon enquiry, 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.

13. Difficulties in understanding CBN 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.

14. 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.

15. CBN's failure to properly follow "Know Your Customer" policy to the extent that the apex bank had unknown customer with account balance of N1.423 billion since 2008, while claiming that they are taking steps to obtain the required details regarding the address of the customer.

16. Wasteful training and travel expenses to the tune of N9.24 billion in 2012 up from N7.65 billion in 2011 and expenses on "ATM offsite policy change" coming to N1.045 billion.

17. Apart from expenses on "Non Interest Banking" N1.359 billion in 2012 up from N0.977billion in 2011, the CBN is still very heavy on expenses on "Project Eagles" spending N0.606 billion in 2012 up from N63million in 2011.

18. Spending N1.678 billion in 2012 up from N1.670 billion in 2011 on newspapers, books and periodicals (excluding CBN's publications).

APC faults Sanusi's removal

The All Progressives Congress (APC) has faulted the suspension of Malam Sanusi Lamido Sanusi as governor of the CBN.

In its reaction yesterday, the APC in a statement by its interim national publicity secretary, Alhaji Lai Mohammed, said the move is "patently illegal, poorly thought-out and in bad taste".

According to the statement made available to LEADERSHIP yesterday, the APC in appraising the situation noted that the action will definitely have negative consequences for the nation's economy if allowed to pass.

Mohammed on behalf the party also said the action is the clearest indication yet that President Jonathan, whose body language does not abhor corruption, is willing to silence any whistle-blower, no matter his or her status.

"As the country wallows in unprecedented corruption under the rudderless and corruption-hugging Jonathan administration, the president may have finally decided to send a strong signal to all Nigerians that it will not tolerate any exposure of corruption under any circumstance. What better way to do this than to silence the man who has exposed the alleged missing 20 billion dollars in the NNPC accounts?" it said.

APC also stated that Sanusi's suspension has also depicted President Jonathan as a leader who does not care if he destroys national institutions on the altar of personal ego and political expediency.

"First it was the judiciary which came under his sledge hammer, when he suspended then president of the Court of Appeal, Justice Ayo Salami, just to satisfy the hawks in his party. Then, it is the turn of the National Assembly, the police and now the financial sector. President Jonathan should not destroy our institutions before he bows out of office next year," the party stated.

Quoting Section 11 (f) of the CBN Act 2007 that empowers the president to remove the CBN governor, the APC reasoned that the section is clear that he can only do so if he has the support of two-thirds majority of the Senate.

"Nowhere in the Act is it said that the president can suspend the CBN governor, as he has done in another of his serial rape of the country's laws," it said, adding that the reasons given by the presidency for Sanusi's suspension are as puerile as they are unprecedented, and amount to calling the dog a bad name just to hang it.

Lagos Chamber of Commerce condemns action

Also reacting to the suspension, director-general, Lagos Chambers of Commerce and Industry (LCCI), Muda Yusuf, said Sanusi's suspension may have some negative implications on the confidence and continuity of some of the monetary policies in the country. Yusuf stressed that most of the CBN governor's policies are credible and enduring, adding that they have brought a lot of stability to the financial system.

"Given the fact that Sanusi has just about three months to the end of his tenure, I feel that he should have been allowed to stay on especially when the allegations relate to his activities over the last five years. The action by Mr President could easily be interpreted to mean that it is a way of getting back at Sanusi because of his pronouncements on the issue of non-remittance of funds by the NNPC into the federation account. It is difficult to convince people otherwise. Given the strategic nature of the CBN as an institution and because of the circumstances of the suspension, the confidence of investors in this economy will be negatively affected."

Experts react

Dr Biodun Adedipe, chief consultant, B. Adedipe Associates Limited, a prominent firm of management and financial consultants, said: "My view is that it is an ill-advised decision because it fails to recognise the importance of the office of CBN governor. The action of Mr President has serious implication for both the management and reporting of the economy, issues which indeed have been at the centre of recriminations between Sanusi and some other government agencies for some time.

"For the economy, it portends a government that does not want to face the reality of the potent threat to its major source of revenue, that funds its fiscal operations and also drives most economic activities.

"For investor confidence, both local and foreign, this development is worrisome because what investors want to see is clearly good governance underscored by business-friendly economic reforms. Decisions of this nature are not in any way confidence-inspiring."

Likewise, Olubunmi Asaolu, analyst at FBN Capital, said what will throw the market off a bit is the speed and surprise at which "this happened, given all the noise Sanusi has been making in defence of the naira and 'alleged' missing monies and kerosene subsidies. The independence of the next CBN governor will be even more questionable now - that is the real negative here".

He however noted that banks' share prices may see a bit of relief. "Assuming that the hawkishness of the Monetary Policy Committee and the Central Bank (MPC/CBN) may soften a bit if Sanusi is out, but at the same time investors may question how resolute the MPC/CBN will be in defending the naira since that was all what Sanusi's qualms have been about.

On his own part, Sonnie Ayere of DunnLoren Merrifield, said the policies of the CBN may not be overturned considering that Alade has been on the board and part of the MPC. He noted that she is expected to keep up with the ongoing policies.

However, financial analyst Henry Boyo said the suspension had been long overdue, noting that central bank governors worldwide are judged based on price stability and low level of inflation which Mr Sanusi had failed to implement. Boyo also urged the next apex bank governor to recognise that interest rates should be brought down to at least 6 or 7 per cent and inflation rate at not more than 2 per cent.

According to the president of Association of Stockbroking House of Nigeria (ASHN), Mr Emeka Nwosu, "The suspension of the CBN governor may create uncertainty in the economy." He noted that the country has relied on individuals rather than institutions, urging the country to build institutions.

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