Devoid of politics, there have been serious allegations of financial irregularities against Mallam Sanusi Lamido Sanusi as Governor of the Central Bank of Nigeria (CBN) but SANYA ADEJOKUN of the Economic Confidential writes that timing of his removal by President Goodluck Jonathan sent wrong signals across the world with many linking government’s move to allegations of monumental fraud bedevilling the oil that Sanusi has been unravelling in recent times.
On December 30, 2013, there were clandestine but frantic calls across business, economic and high governmental circles around Nigeria where editors and correspondents made desperate efforts to scoop the rumour that Governor of the Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi had resigned his appointment. It turned out to be a hoax. Until the following morning when no medium reported it however, were afraid that they were missing an important story. Again during most of the second week of January 2014, speculations were rife that President Jonathan had asked the Governor to step down. By the end of the week however, unofficial but firm confirmation emanated from the apex bank that the President actually asked Sanusi to officially proceed on pre-disengagement leave to which the latter firmly declined.
Normally, most senior government or business executives go on pre-retirement leave but that would seem not to be the practice at the CBN where governors stay until the last day in office. Chief Joseph Sanusi expected that President Olusegun Obasanjo would announce a tenure extension for him. There were wicked insinuations about how badly the old man took news that the name of his successor had been forwarded to the Senate for confirmation. As for Soludo, he also had assurance from the then first lady that he would be re-appointed and so, he continued with his work until the last day. Following precedence therefore, Sanusi also decided to stay put until the final day of his tenure even though he said it several times that he was no longer interested in continuing as Governor upon the expiration of his term.
However, things were no longer at ease between Sanusi and President Jonathan. Before his appointment as Governor of the CBN, Sanusi had been a vocal activist and he found it impossible to curtail his activism and criticism even while serving as the apex banker. On many occasions, he publicly disagreed with economic policies of the Federal Government. At times, Sanusi’s view was populist and at other times like his vehement opposition to fuel subsidy, he was seen as elitist.
In July 2012, a House of Representatives report on the near collapse of the capital market says it has found evidence of forgery and fraudulent misrepresentation involving the Governor of the Central Bank of Nigeria, Sanusi Lamido Sanusi, and other top industry officials in the controversial nationalization of three commercial banks.
The report said nationalisation of Afribank Plc, Spring Bank and Bank PHB violated statutory provisions and remained a “major source” of investors’ loss of confidence in the troubled Nigerian capital market.
“This committee is of the view that due process was not followed, and that investors interests were not considered in nationalizing the banks. Public officers charged with the responsibility of protecting investors and depositors did not act in good faith, and there were evidence to suggest fraud, misrepresentations, and forgeries”, the report stated. The committee faulted Sanusi for a range of several other anomalies and breach of procedures, and accused him of deliberately withholding information from the lawmakers during the investigation.
The committee detailed shocking highlights of the behind-the-scenes leading to the change in the name of Afribank to mainstreet Bank Limited, a private company with share capital of 100,000 ordinary shares of N1 each, owned by two persons, Gideon Agbedo, a lawyer, and a certain Innocent Obi.
The committee said it discovered the Articles and Memorandum of Association transferring the ownership to the individuals, was stamped and verified by the CAC authorizing them to “assume all or part only of the deposits and liabilities of Afribank” and to “purchase such assets of Afribank” as are acceptable to the board.
For Bank PHB, changed to Keystone bank, the committee said a similar fraud was perpetuated with share capital of 100 000 ordinary shares of N1 each were owned by one Benson Igbanoi and the same Innocent Obi of Mainstreet Bank. The object of Keystone Bank ltd was similar to that of the Mainstreet Bank, and has a Certificate of Incorporation no RC 969956 which certifies that Keystone Bank Ltd was previously called Michi Noku Resolution Limited, another alleged fraud. This meant a publicly quoted company was acquired by a private company owned by two persons, the committee said.
Likewise in May 2013, the public accounts committee of the House also queried several expenditure items amounting to N4.7 billion in the CBN accounts including the N2.8 billion expended on the renovation of its Port Harcourt branch. Auditor General of the Federation had earlier observed the spending as extravagant more so, when documents were not attached for verification.
Chairman of the House Committee on Public Accounts, Solomon Olamilekan alleged that due process was not followed in expenditure as no documents were provided. Some of the bank transactions equally queried included the N23 million and N50 million claimed to have been spent for the same purpose of renovating the governor’s official residence as well as N848 million spent on the purchase of a property from the National Planning Commission without any transaction agreement.
Now, there are a number of powerful individuals who were not happy with the style of Sanusi especially because of the way he handled the financial sector upheaval of 2008/2009. Many of them believe that the CBN Governor himself was not an especially prudent and transparent person in the management of the bank’s finances and so it was hypocritical of him to continue to condemn corruption and lack of transparency in public while doing the exact opposite behind closed doors. In addition, Sanusi had greatly offended the National Assembly by branding them as corrupt and constituting a big drain to the national treasury. At a point, he alleged that the National Assembly was consuming a whooping five percent of the national budget despite their insignificant number. At a public hearing, Senators challenged the former governor about the budget of the CBN, which they put at N300 billion in that year but Sanusi refused to submit the bank’s budget for public scrutiny. This in fact prompted current attempt to amend the CBN Act.
According to top government sources, at a meeting abroad, some of these businessmen (Nigerians and foreigners) approached President Jonathan and intimated him about some of the alleged financial misdeeds. The CBN Act makes the Governor powerful such that an occupier of the office is also Chairman of the Board, Chairman of the powerful Monetary Policy Committee, approves the bank budget and also appoints external auditors to look into its books. The audit report is only presented to the President of the country. At that meeting, Jonathan was convinced of the need to send the 2012 audited report to the Financial Reporting Council of Nigeria (FRC) formerly Nigerian Accounting Standards Board for proper scrutiny. At that time, audit report was lying on the President’s table after his Economic Adviser had certified it fit and complying with the CBN Act.
Upon arrival, from the trip, Jonathan was said to have summoned Jim Obazee, Executive Secretary/ Chief Executive Officer at the Financial Reporting Council, Nigeria and handed the CBN audit report to him. It was the first time ever that CBN audited report was subjected to a forensic examination by the Presidency. Somehow, Sanusi got wind of the move and approached the Minister of Trade and investment, Mr. Olusegun Aganga who supervises Obazee. Aganga according to another source, asked Obazee to avail him with a copy of his observations but the Executive Secretary technically rebuffed the idea. The Council submitted its observations but Jonathan returned it, insisting that he was not satisfied with the initial job done. Finally on May 6, 2013, the President sent a 22-point query to the governor on the audit bank’s 2012 financial report audited by Ernst and Young an international audit firm, which incidentally did not sign it but penning the simple comment that it complied with the CBN Act.
Some of the issues to which the President sought clarifications included a huge but dubious investment in an Islamic bank in Malaysia; write-off of about N3.5 billion CBN staff housing loan; donation of about one billion naira to an opposition political party made under the special access item in the account; refusal of the apex bank to consolidate in its account, the trillion debt owed by the Asset Management Company, AMCON, and the non-disclosure of the total liabilities through the bond floated by the company; The governor was also asked to explain the discrepancies noted in the 2012 account regarding the Nigerian Security Printing and Minting Company, a subsidiary of the apex bank; donations made to some higher institutions in the country. Investigations have shown that some of the donations were inflated in the bank’s books. For example, while the Bayero University Kano, BUK, was said to have collected N4billion, the school authorities claimed it got only N1billion.
Although Sanusi was given 48 hours to reply to the query, he did not submit his reply until May 21. And it is also an irony the an institution in the habit of railroading banks into complying with its regulations and guidelines in a hurry asked for seven long years to comply with the new reporting guidelines of the Financial Reporting Standards Board.
A few months later however, specifically in September 25, 2013, Sanusi went on the offensive by writing a comprehensive missive to Jonathan detailing alleged diversion of funds meant for the Federation Account to the tune of $48.9 billion between 2012 and 2013 which represented 76% of the value of crude oil lifting during the period. CBN said in the letter, “Our analysis of the value of crude oil export proceeds based on the documentation received from pre-shipment inspectors shows that between January 2012 and July 2013, NNPC lifted 594,024,107 barrels of crude valued at $65,332,350,514.57. Out of this amount, NNPC repatriated only $15,528,410,098.77 representing 24% of the value. This means the NNPC is yet to account for, and repatriate to the Federation Account, an amount in excess of $49.804 billion of the value of oil lifted in the same period.” The governor illustrated his facts with inferences from an attached table of analysis of the crude oil lifting and repatriations as prepared by the CBN. He noted that failure to repatriate the amounts constitutes not only a violation of constitutional provisions but also of both Nigeria’s foreign exchange and pre-shipment inspection of exports laws.
Citing his previous warnings, about shortfalls in remittances to the Federation Account in spite of the strong recovery in the price of oil, Sanusi said a point of departure ought to be to insist that the NNPC account fully for all proceeds that were diverted from its accounts with the CBN and the Federation Account. “As an indicator of how bad this situation has become, please note that in 2012 alone, the Federation Account received $28.51 billion in Petroleum Profits and related taxes but only $1013 from crude oil proceeds. In the period January-July 2013, the corresponding figures are $16.65 billion and $5.39 billion, respectively. This means, Your Excellency, that in the first seven months of the year, taxes accounted for 76% of the total inflow from this sector, while NNPC crude oil proceeds accounted for only 24%”, he observed. Incidentally, the letter remained a secret until ex-President Olusegun Obasanjo wrote an open letter to Jonathan titled “Before It is Too Late” on December 2, 2013 but which appeared got to the media around December 10. Part of the letter reads “The serious and strong allegation of non-remittance of about $7bn from the NNPC to central bank occurring from export of some 300,000 barrels per day, amounting to $900 million a month, to be refined and with refined products of only $400m returned and Atlantic Oil loading about 130,000 barrels sold by Shell and managed on behalf of NPDC with no sale proceeds paid into NPDC account is incredible. The allegation was buttressed by the letter of the Governor of Central Bank of Nigeria to you on non-remittance to the central bank. This allegation will not fly away by non-action, cover-up, denial or bribing possible investigators. Please deal with this allegation transparently and let the truth be known.”
Sanusi was therefore accused of leaking contents of his letter to the President to Obasanjo. Speculations followed that Jonathan was planning to sack Sanusi but the Governor swiftly moved to pre-empt the move by announcing that the President lacks power to sack him. He insisted that only two third of Senators can effect his removal and that he did not even plan to go on pre-retirement leave from March 1. During a heated telephone exchange early in January 2014 where Jonathan asked Sanusi to put in his letter of resignation, the Governor reportedly insisted that he did not harbour any such intentions.
However, following a reconciliation of accounts sponsored by Federal Ministry of Finance, Lamido recanted his earlier position on $49.8 billion oil revenue, saying rather the sum of only about $12 billion was what is yet to be accounted for. But at the meeting where Sanusi made the adjustment, Minister of Finance Dr. Ngozi Okonjo-Iweala interjected saying reconciled records showed that it was $10.8bn that had not been fully accounted for.
During their conversation, the President accused him of leaking the letter to Obasanjo, which enabled the latter to use it as one of many allegations he levelled against Jonathan in his letter. Sanusi denied leaking his letter to Obasanjo. He also told the president that the letter was available in the presidential villa, available in the finance ministry and available in the central bank and wondered how he (Sanusi) could have leaked the letter, which was so widely available, to a former two-term president of Nigeria who has his people all over the place. Sanusi also expressed surprise that he was the one being asked to resign instead of those responsible for the non-remittance of the funds.
His response, which threw the president aback, degenerated into a heated exchange during which Sanusi told the president that as the federal government’s Chief Economic Adviser, mandatorily required to bring issues of critical economic importance to the attention of the President, he had done a patriotic duty to his country. He equally told Jonathan that it is necessary to deal with the issues and not the letter that had been leaked since it has since been established that it was not $49.8 billion that had not been remitted to the Federation Account, but $10.8 billion, which was still in dispute and by any stretch of imagination was still a large sum. Sanusi then held a meeting in his office and briefed his close aides about the conversation.
Yet on February 4, 2014, the CBN Governor raise another allegation against the NNPC of a $20 billion crude revenue not remitted to the Federation Account. Sanusi told members of the Senate Committee on Finance at the National Assembly “it is established that of the $67 billion crude shipped by the Nigeria National Petroleum Corporation (NNPC) between January 2012 and July 2013, $47 billion was remitted to the Federation Account. It is now up to NNPC, given all the issues raised, to produce the proof that the $20billion unremitted either did not belong to the Federation or was legally and constitutionally spent,” the CBN boss said. And concluded “there is no dispute that $20 billion out of $67 billion has not been paid into any account with the CBN.” The Committee was still sitting when very early on February 20, 2014, President Jonathan suspended Sanusi from his position and asked him to hand over to Deputy Governor, Economic Policy, Dr. Sarah Alade.
The statement signed by Reuben Abati, Special Adviser to the President (Media & Publicity) reads “Having taken special notice of reports of the Financial Reporting Council of Nigeria and other investigating bodies, which indicate clearly that Mallam Sanusi Lamido Sanusi’s tenure has been characterized by various acts of financial recklessness and misconduct which are inconsistent with the administration’s vision of a Central Bank propelled by the core values of focused economic management, prudence,…transparency and financial discipline; Being also deeply concerned about far-reaching irregularities under Mallam Sanusi’s watch which have distracted the Central Bank away from the pursuit and achievement of its statutory mandate; and
“Being determined to urgently re-position the Central Bank of Nigeria for greater efficiency, respect for due process and accountability, President Goodluck Ebele Jonathan has ordered the immediate suspension of Mallam Sanusi Lamido Sanusi from the Office of Governor of the Central Bank of Nigeria. President Jonathan has further ordered that Mallam Sanusi should hand over to the most senior Deputy Governor of the CBN, Dr Sarah Alade who will serve as Acting Governor until the conclusion of on-going investigations into breaches of enabling laws, due process and mandate of the CBN. The President expects that as Acting Governor of the Central Bank, Dr. Alade will focus on the core mandate of the Bank and conduct its affairs with greater professionalism, prudence and propriety to restore domestic and international confidence in the country’s apex bank. The Federal Government of Nigeria reassures all stakeholders in Nigeria’s financial and monetary system that this decision has been taken in absolute good faith, in the overall interest of the Nigerian economy and in accordance with our laws and due process.”
The move immediately attracted varying reaction from the populace but with many saying that the President ought to have allowed Sanusi to serve out the remaining three months of his five year tenure. Sanusi who was attending an official ECOWAS function in Niger Republic along Alade took the next flight home to Lagos where he was briefly detained by men of the Department of State Security and his passport confiscated.