21 February 2014

Nigeria: Expressing Surprise It Took So Long to Remove Him, CBN Gov Vows to Challenge Suspension in Court As SSS Seizes His Passport

The non-compliance with the Public Procurement Act by the Central Bank of Nigeria (CBN) as well as the misstatement of the central bank's 2012 financial accounts have been identified as some of the reasons for the suspension of Mallam Sanusi Lamido Sanusi from his position as the CBN governor.

THISDAY had exclusively reported in July last year that the Financial Reporting Council of Nigeria (FRC) had objected to 22 items in the accounts of the CBN, thereby rejecting the approval of its 2012 financials.

Confirming THISDAY's report, the letter suspending Sanusi, which was dated February 19 and signed by the Secretary to the Government of the Federation, Chief Anyim Pius Anyim, showed that President Goodluck Jonathan took the decision to suspend the governor following the report of the FRC on the audited financial statements of the CBN for the year ended December 31, 2012 and other related issues.

The CBN governor, who has been having a running battle with Jonathan over his allegation on the non-remittance of oil revenue to the Federation Account by the Nigerian National Petroleum Corporation (NNPC), was suspended by the president Thursday.

In his place, the Deputy Governor, Economic Policy, Dr. Sarah Alade, was appointed by Jonathan to act as governor.

The president also submitted the names of the Managing Director/CEO of Zenith Bank Plc, Mr. Godwin Emefiele, to the Senate as the new CBN governor designate, while Mr. Adelabu Adebayo Adekola's name was submitted as deputy governor designate.

However, Sanusi has vowed to challenge the legality of his suspension by the president, stating that it was necessary to protect the central bank's independence.

On hearing of his suspension, Sanusi, who was away in Niger Republic, where he was attending a meeting of West African Central Bank Governors, departed the country immediately for Nigeria.

On his arrival on board a Bombardier Global Express aircraft, operated by Hangar Limited, at the Execujet Terminal of the Murtala Muhammad International Airport, he was accosted and temporarily detained by officials of the Department of State Security (DSS), who insisted on seizing his international passport before letting him go with his retinue of aides.

Sanusi's associates and friends, led by former Minister of the Federal Capital Territory, Nasir el-Rufai, were on hand to receive him at the airport.

They drove out of the airport in a convoy heading towards Ikoyi. A member of the delegation said Sanusi went to a friend's place to relax.

However, in the seven-page letter suspending Sanusi, which was posted on the website of online news medium, Premium Times, Anyim noted that of particular concern to the president was the fact that under Sanusi, the CBN had carried its functions in a manner characterised by disregard for due process and accountability.

It stated: "By virtue of Section 15(1)(a) of the Public Procurement Act (PPA), the provisions of the Act are expected to apply to all 'procurement of goods, works and services carried out by the Federal Government of Nigeria and all procurement entities.' The definition clearly includes the CBN.

"It is however regrettable the CBN under your leadership, has refused and/or neglected to comply with the provisions of the PPA. You will recall that one of the primary reasons for the enactment of the PPA was the need to promote transparency, competitiveness, cost effectiveness and professionalism in the public sector procurement system." It revealed that available information indicated that the central bank, had over the years engaged in the procurement of goods, works and services worth billions of naira each year without complying with the express provisions of the PPA.

"By deliberately refusing to be bound by the Provisions of the Act, the CBN did not only decide to act in an unlawful manner, but also persisted in promoting a governance regime characterised by financial recklessness, waste and impunity, as demonstrated by the contents of the 2012 financial statements.

"No responsible government will tolerate this blatant disregard for its laws and procedures by any person or institution. The central bank, by its unique position, ought to show good example and be the leading light in the promotion of the culture of observance of due process," the letter added.

Continuing, the letter faulted what it described as the unlawful expenditure by the CBN on 'Intervention Projects' across the country, saying it typified the unacceptable level of financial recklessness displayed by the leadership.

"From available information, the Bank has either executed or is currently executing about 63 of such projects across the country and has committed over N163billion on them. 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 the CBN's statutory mandate," it pointed out. It also noted that pursuant to Section 50 of the CBN Act 2007, a copy of the audited financial statement of the central bank for the year ended 31st December 2012 was sent to Mr. President. Based on the issues raised in the financial statement, a response was requested from Sanusi to enable a proper appreciation of the nation's economic outlook. Thereafter, Sanusi's response to the query was further referred to the FRC by a letter dated April 12, 2013, for review.

The review of the FRC, the letter said, rather than allay the fears of government, further confirmed concern about the untidy manner in which "you have conducted the operations of the CBN".

Issues raised by FRC, as highlighted in the letter were as follows: "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 (IFRS), whereas deposit money banks (DMBs) that the CBN is supervising have complied with this national requirement since 2012."

It further revealed that CBN had failed or refused to implement the provisions of the Personal Income Tax (Amendment) Act 2007. "Accordingly the Pay-As-You-Earn (PAYE) deductions of 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," it said.

The letter equally listed questionable write-off of N40 billion loans of a bank as one of the infractions of the CBN governor. Furthermore, FRC observed in the letter that the "CBN also claimed that it paid Air Charter, such as paid to Emirates Airline (N0.511 billion), Wing Airline (N0.425 billion) and Associated Airlines (N1.025 billion) to distribute currency by air nationwide.

"Emirates Airline does not fly local charter in Nigeria, Wing Airline is not registered with Nigeria Civil Aviation Authority and Associated Airlines 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.

"There are also 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. These are difficult to understand."

Other areas of fraudulent activities included: -Facility Management N7.034 billion in 2012 (N5.751 billion in 2011).

-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. -The "Know Your Customer" policy is not properly followed by the CBN to the extent that the CBN has an unknown customer with an account balance of N1.423 billion since 2008. The CBN claims that it is taking steps to obtain the required details regarding the address of the customer. -Wastefulness - Training and travel expenses - N9.24 billion in 2012, up from N7.65 billion in 2011.

-Expenses on "ATM offsite policy change" came to N1.045 billion. -Expenses on "Non Interest Banking" - N1.359 billion in 2012, up from N0.977 billion in 2011. -The CBN is still very heavy on expenses on "Project Eagles", spending N0.606 billion in 2012 up from N63 million in 2011.

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

The council noted that the above issues were only a few of the infractions highlighted by the review and which pointed to the gross incompetence and recklessness which characterised the operations of the CBN in the period under review.

Lending more insight into some of the infractions under Sanusi's watch, a source at the FRC told THISDAY that the letter written by Sanusi to the president last September on the alleged unremitted oil proceeds, as well as the inconsistency in his figures, was meant to distract attention from the issues with the central bank's financial account.

He said Sanusi had known he was in trouble a long time ago and resorted to playing politics with numbers as a diversionary tactic.

The source said: "Nigerians are so gullible. How can someone who said the NNPC did not remit $49.8 billion, but later after a reconciliatory meeting which he was part of, had agreed was $10.8 billion and apologised to Nigerians. Then thereafter, he changed the sum to $12 billion and later he came up with another figure of $20 billion?

"The inconsistency was just meant to distract everybody from the whole mess in the CBN annual report so that while Nigerians are busy debating over the figures, his tenure will end and that will be swept under the carpet. If the issues with the CBN's 2012 results are properly investigated, Sanusi might go to jail."

In addition, the presidency yesterday moved swiftly to douse investors' concerns about the economy, stating that Sanusi was asked to step aside in order to ensure the prudence, integrity and accountability of the central bank.

It equally disclosed that there were issues regarding his financial recklessness and violation of due process, which were listed by the FRC.

Giving reasons for Sanusi's suspension yesterday, Special Adviser to the president on Media and Publicity, Dr. Reuben Abati, said since the announcement of the governor's suspension, there had been many inquiries, particularly with regards to the allegations on financial recklessness and breaches, as well as the anxiety it had generated in the local and foreign media.

"On the issue of anxiety, I think nobody needs to be anxious. This decision has not be 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 issues within the central bank. In the statement released earlier, 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.

"Dr. Alade 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 explained.

The president's media aide reiterated the second concern that stemmed from Sanusi's alleged financial recklessness, stating, "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; it's been a long process dating back to last year."

He said questions had also been raised as to whether Sanusi's suspension had to do with the ongoing probes in the National Assembly and the appearance by the suspended CBN governor. In this regard, Abati said: "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 express 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 surprised if government goes further to initiate further audits as has been suggested in some quarters.

"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."

Meanwhile, the suspended CBN governor has vowed to challenge the legality of his suspension at the law courts, saying he is out to protect the independence of the central bank.

"It has never been my desire to hold on to a job. However, I believe if the CBN governor cannot be removed from office, then he cannot be suspended. He can be queried, but the exercise of the arbitrary decision to remove him must be challenged," he said.

Sanusi spoke on CNBC Africa, from Niamey, the Nigerien capital, shortly after the news broke that he had been suspended from office.

Sanusi said he had to hurriedly leave the venue of the meeting shortly after the Nigerian Ambassador to Niger confirmed to him the directive by the presidency to inform him of the suspension.

Though he said he was not bothered about the suspension as an individual, as he was proud about his achievements and legacies, Sanusi said his plan to challenge the action bordered on the need to protect the independence of the CBN as an institution.

"There is the view by some people on whether the president has the authority to remove or suspend the Central Bank governor, or whether the action is not illegal. I am not interested.

"As an individual, I was invited to serve my country, and I have always known that at any point the government feels it is time to go, I will go. But, in terms of the institution, it would be helpful to establish the principle by the court, and I think that is the step I intend to take," Sanusi said. In spite of his decision to challenge the decision in court "to establish once and for all if the president has the powers to do what he has done," Sanusi said he would not return to the job, as it was not his desire to hold on to any office.

Expressing surprise that the decision took so long in coming, he pointed out that though one can suspend an individual, he did not believe the truth can be suspended. "This is all about concerns around oil revenues and corruption in the oil sector. If the suspension is going to bring back the missing $20 billion, then it is fine," he said.

He said his major concern was for the financial system, particularly the negative impact of the decision on the Nigerian economy and the need to protect the interest of the CBN.

On allegations by the presidency that his suspension was based on the report received from FRC and other investigating agencies about various acts of financial misconduct that characterised his tenure, Sanusi said he intends to see what those allegations were.

Sounding dismissive of the allegations, Sanusi said the only thing he was aware of, which was not new, were the questions asked by FRC about the published CBN audited account, which he had since sent a response to the president, who did not give any feedback.

He dismissed insinuations that the decision was politically motivated, saying he had opted not to comment on that, adding that he believed it was the consequence of the actions he took while in office.

On the capacity of his successor, Alade, to sustain the momentum of his achievements, Sanusi described her as a very competent person, whom he has every confidence in to run the CBN successfully.

"I wish her the very best. I have no ill feeling. I am happy and proud of what I have done. I am looking forward to the future. I am very happy with what I have done during my tenure," he said.

More on This

SSS Detains, Seizes Sanusi's Passport

On his arrival in Nigeria from Niger Republic, the State Security Service had apprehended the ousted CBN governor Sanusi … see more »

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