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The decision to suspend the Central Bank of Nigeria Governor, Sanusi Lamido was based on a report of the Financial Reporting Council of Nigeria dated June 7, 2013.
The report was made after a review of Sanusi’s response to the query issued to him by the President over the apex bank’s financial statement of 2012. His response was dated May 20, 2013.
According to a copy of the report obtained by our correspondent on Thursday, the council indicates that the explanation provided by the suspended CBN governor is “a clear display of incompetence, nonchalance, fraud, wastefulness, and abuse of due process and deliberate efforts to misrepresent facts on the part of the leadership of the CBN.”
The council advised the President to exercise the powers conferred on him by Section 11(2)(f) of the CBN Act 2007 or invoke Section 11(2)(c) of the said Act “and cause the governor and the deputy governors to cease from holding office in the CBN.”
The report read: The particulars of the infractions against Sanusi are:
Persistent refusal and/or negligence to comply with the Public Procurement Act in the procurement practices of the Central Bank of Nigeria.
(A) By virtue of Section 15 (1)(a) of the Public Procurement Act, the provisions of the Act are expected to comply to ‘all procurement of goods, works and services carried out by the Federal Government of Nigeria and all procurement entities.’ This definition clearly includes the Central Bank of Nigeria.
(B) It is however regrettable that the Central Bank of Nigeria, under his leadership, has refused and/or neglected to comply with the provisions of the Public Procurement Act (PPA). You will recall that one of the primary reasons for the enactment of the PPA was the need to promote transparency, competitiveness, cost of effectiveness and professionalism in the public sector procurement system.
(C) Available information indicates that the Central Bank has over the years engaged in procurement of goods, works and services worth billions of Naira each year without complying with the express provisions of the PPA.
(D) By deliberately refusing to be bound by the provisions of the Act, the CBN has not only decided to act in an unlawful manner, but has also persisted in promoting a governance regime characterised by financial recklessness, waste and impunity, as demonstrated by the contents of its 2012 Financial Statements.
Unlawful expenditure by the Central Bank of Nigeria on ‘Intervention Projects’ across the country
(A) the unacceptable level of financial recklessness displayed by the leadership of the Central Bank of Nigeria is typified by the execution of ‘Intervention Projects’ across the country. From available information, the bank has either executed or is currently executing about 63 such projects across the country and has committed over N163billion on them.
(B) 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 CBN’s statutory mandate. It is trite that the expenditure of public funds by any organ of government must be based on clear legal mandates, prudent costing and overriding national interest.
Financial infractions and acts of financial recklessness committed by the Central Bank as reflected in its audited financial statements of 2012
(A) pursuant to Section 50 of the CBN Act 2007, a copy of the audited financial statements of the CBN for the year ended 31st December 2012 was sent to Mr. President. Based on the issues raised in the financial statement, a reaction was requested from you to enable a proper appreciation of the nation’s economic outlook.
(B) the response to this query was further referred to the Financial Reporting Council of Nigeria. The review by the council, rather than allay the fears of government, further confirmed concern bout the untidy manner in which you have generally conducted the operations of the CBN.
Some of the salient observations arising from the review are;
(A) 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 (IFFS) whereas Deposit Money Banks that the CBN is supervising have complied with this national requirement since 2012.
Undoubtedly, this laxity on the part of our apex bank, apart from calling to question its capacity for proper corporate governance, is capable of sending wrong signals to both domestic and international investors on the state of the Nigerian economy.
(B) the provisions of the Memorandum of Understanding (MOU) signed by the CBN and other Deposit Money Banks on Banking Resolution Sinking Fund have been breached in a material manner. For example, a Board of Trustees (BOT) to manage the Fund has not been constituted since 2010 when it was established. The CBN has however continued to utilise the Fund for certain operations without approval of the said BOT.
(C) contrary 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,m CBN in 2010, acquired 7% shares of International Islamic Management Corporation of Malaysia to the tune of N0.743 billion. This transaction was neither brought to Mr. President’s attention nor was a board approval obtained before it was entered into.
(D) the CBN has failed or refused to implement the provisions of the Personal Income Tax (Amendment) Act 2007. Accordingly the Pay-As-You-Earn (PAYE) deductions of its 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.
(E) the CBN had an additional brought forward to General Reserve Fund of N16.031bn in 2012 but proceeded on a boy age of indefensible expenses in 2012 characterised by inexplicable increases in some heads of expenditure during the year. Examples include:
1. The bank spent N3.086bn on “promotional activities” in 2012 (up from N1.084bn in 2011). The bank spent this sum even when it is not in competition with any other institution in Nigeria;
2. The CBN claimed to have expended N20.202bn on ‘Legal and Professional Fees’ in 2011 beyond all reasonable standards of prudence and accountability;
3. Between expenses on ‘Private Guards’ and ‘Lunch for Policemen’, the CBN claimed to have spent N1.257 billion in 2012;
4. While 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, the bank has consistently observed this provision in breach and even went to the extent of changing one of the Joint External Auditors without notifying the office of the President.
5. In the explanations offered by the CBN pursuant to presidential directives, it offered a breakdown of ‘Currency Issue Expenses’ for 2011 and 2012. Interestingly, it claimed to have paid N38.233bn to the Nigerian Security Printing and Minting. Company Limited
