The Charges against Sanusi, By Financial Reporting Council of Nigeria

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Abati: No plans to arrest suspended CBN gov

The Financial Reporting Council of Nigeria (FRCN) on Thursday unveiled the charges against the suspended governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi.
According to the document, the FRCN’s grouse against Sanusi’s his “Persistent refusal and/or negligence to comply with the Public Procurement Act in the procurement practices of the Central Bank of Nigeria.”
The document insisted that: “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.
“ It is however regrettable that the Central Bank of Nigeria, under your 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.

“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.

“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

“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 N163 billion 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 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

“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 reinsertion was requested from you to enable a proper appreciation of the nation’s economic outlook.

“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 about the untidy manner in which you have generally conducted the operations of the CBN.”

Some of the salient observations arising from the review are;

“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.

“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.

“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.

“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.

“The CBN had an additional brought forward to General Reserve Fund of N16.031 billion 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 N3.086 billion on “promotional activities” in 2012 (up from N1.084 billion 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 N20.202 billion 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 remuneration 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 N38.233 billion to the Nigerian Security Printing and Minting. Company Limited (NSPMC) in 2011 for ‘Printing of Banknotes.’ 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).

“6. It is significant to note that the external audit revealed balances of sundry foreign currencies without physical stock of foreign currencies in the CBN Head Office.
The FRCN also included what it called questionable write-off of N40 billion loans of a bank.
It added that: “The above issues are only a few of the infractions highlighted by the review and which point to the gross incompetence and recklessness which characterised the operations of the CBN in the period under review.”
Meanwhile, Dr Reuben Abati, the Special Adviser to President Goodluck Jonathan on Media and Publicity, on Thursday said he was not aware of any directive to arrest the suspended CBN governor.

Abati, who stated this in Abuja while fielding questions from State House correspondents, denied any knowledge on the purported arrest order by the Federal Government.

He, however, maintained that any person or organisation indicted under the enabling act of the Financial Reporting Council of Nigeria must face prosecution.

‘‘I’ m not aware of any directive that he (Sanusi Lamido Sanusi) should be arrested as of this moment, I’m not aware of that.

‘‘But, of course you know that under the enabling act of the Financial Reporting Council of Nigeria, where an indictment is established and all that, the law could take its course.

‘‘But, as of this moment, I’m not aware of any directive that he should be arrested.’’

Abati also dismissed the assertion in some quarters that the suspension of Sanusi was illegal and ill-motivated.

According to him, those describing the removal of Sanusi as illegal are referring to the Section 11 Sub sections 2-F of the CBN Act which talks about removal of the Governor of the CBN.

He, however, stated the suspension of Sanusi by the President was not in violation of the CBN Act because Sanusi was not removed as the Governor of the CBN, but suspended from office.

‘‘When you say the illegality of his suspension, I do not understand what you mean by that, although I am aware that some people have been saying ‘oh, this is illegal, this is illegal’ but it is not.

‘‘The people who talk about illegality, they are referring to Second 11 Sub Second 2-F of the CBN Act.

‘‘Now under that provision, the reference is to removal of the CBN governor by the president and there is a qualification there, saying that provided that removal is supported and endorsed by 2/3rd majority of the Senate.

‘‘But what the president has done, is not removal, it is suspension. You know you do not read the provision in isolation, you read them together and the interpretation Act, if you read all of these provisions together, the thrash point is that he who hires can also have the power to suspend.

‘‘So, if you have the power to appoint, you also have the power to suspend. What has happened is not removal, it is suspension and that is perfectly within the purview of the law.’’

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