• Obazee’s team expanded, thrusts dragnet into financial space
• FG earns N52.5 billion from CBN’s 2022 surplus
• CBN’s consultants grilled, some released on bail terms
• Financial statements may have contravened CBN Act
• National Assembly, President not in possession of copies of released financial states
• We transmit copy of each audited account every February, says CBN’s spokesperson
• Bank’s operating expenses grow by 179 per cent under Emefiele to N1.2 trillion
• Net operating income also grows by over 170 per cent to N1.27 trillion
Tensions are escalating faster than the public can guess in the financial circle as the determination of the current administration to bring to book, those found wanting in the past nine years under the leadership of Godwin Emefiele at the Central Bank of Nigeria (CBN), is sending shockwaves through the system.
At the heart of the panic is Jim Obazee, who was on July 28, appointed “Special Investigator” of the CBN and related entities by President Bola Tinubu.
Whereas the terms of engagement of the ex-Chief Executive of the Financial Reporting Council of Nigeria (FRC) are subjects of speculation, The Guardian understands that the team has been expanded significantly with members drawn from diverse fields of expertise in the financial sector with Obazee now serving as the anchor.
Independent sources privy to the activities of the team told our correspondent at the weekend that many officials of the Central Bank have been interrogated in the past few days even as the team is spreading its tentacles across the financial system.
Besides CBN, the team is also shining its searchlight on other institutions where CBN has substantial interests, particularly Nigerian Security Printing and Minting Company Limited and Nigeria Inter-Bank Settlement Systems Plc.
The Presidency, through the Obazee-led team, is said to have started combing all relevant agencies for “co-conspirators” of the suspended CBN chief who had enriched themselves at the expense of the common good.
“In the coming weeks, heads will roll across the board. The level of rot seen in the system could not have been perpetrated by one man. If that is the case, those who work with him could not have been angels. I don’t know the scale of sanction that will follow but I can tell you that a lot of people will not go unpunished,” a source told The Guardian at the weekend.
The source also disclosed that some individuals who consult for the monetary authority had been detained in the past week and released on bail.
The newspaper could not independently confirm the claim. But most stakeholders who spoke on the issue said it was not unlikely considering the determination of the President to go the whole block on the subject.
As at 2015, PwC and Ernst & Young (E&Y) served as external auditors to the bank. PwC was replaced by KPMG in 2016. In the past seven years, the duo of E&Y and KPMG have provided the service for the regulator, certifying the financials that are now being reviewed by Obazee and his team.
According to the letter of appointment of Obazee, the Special Investigator reports directly to the Office of the President. But beyond workings of the appointment, a source who is privy to the engagement said the appointee has “reasonably easy” access to the President for regular briefing and that his team is now touted as the arrowhead of the Tinubu’s “commitment to fighting financial fraud”.
An insider source said the President is leaving nothing to chance in bringing those believed to have been involved in the financial system manipulation in recent years to justice and that he has charged the Obazee-led team to go all out against concerned individuals and institutions in its assignment.
Whereas the team does not have persecutory powers, the Economic and Financial Crimes Commission (EFCC) is said to have been properly briefed on the “importance and urgency” of the team and directed to work with it where necessary.
The Presidency has been reasonably quiet on the ordeal of the suspended CBN governor, Godwin Emefiele. The only time the President spoke on the issue, he described the financial system he supervised as “rotten”.
“The financial system was rotten. Few people were making away with our money… That is gone now; the man (Emefiele) is in the hands of the authorities,” Tinubu said at his engagement with Nigerians living in France.
The past week, The Guardian learnt, has been particularly gruelling for officials of the apex bank and service providers who had to explain their roles in what is believed to be “cooked financial records”.
Recall the Bank, on Thursday, published financial statements of its operations since 2016 on its website. The Guardian reported that sources linked the hurried publication to the intervention of Obazee. The statements were apparently released to assuage the rising demand for accountability but they have even fueled the concerns and calls for probity.
The audited reports are revealing of the depth of the country’s fiscal position. But a source, who had queried the financials before they were released, dismissed the documents, saying: “Those are not what anybody should call financial statements of the Central Bank”.
The source, who does not want to be seen to have made a public comment on the books, asked how the documents could be described as CBN’s financial statements when neither the National Assembly nor the President has their copies before publication.
According to the CBN Act, a copy of the financial statement for each year shall be transmitted to the National Assembly and the President within two months after each financial year.
“The Bank shall, within two months after the close of each financial year, transmit to the National Assembly and the President a copy of its annual accounts certified by the Auditor
“A report required to be submitted to the National Assembly and the President shall be published by the Bank in such a manner as the Governor may direct. The Board shall ensure that accounts submitted pursuant to this section shall as soon as possible be published in the Gazette,” Section 50 of the Acts states.
A former lawmaker and member of the House Committee on Finance in the ninth Assembly said he was not aware that such documents were filed in his term. Officials of the Public Account Committee who were reached on the phone said they would need to search to confirm if copies have been filed while the Clerks of the National Assembly could not be reached for comments as their phones rang out.
Asked whether the financial statements uploaded on the website had been transmitted to the President and National Assembly and when that was done, the Director of Communications of the CBN, Dr Isa Abdulmumin, said: “Statutorily, CBN audited accounts are transmitted to both the President and NASS every February”.
The last audited account to have been filed by the Central Bank at Presidency would have been received by ex-President Muhammadu Buhari, who, at different occasions, defended some of the controversial policies Emefiele was vilified for, especially by the international community.
In his famous interview with Bloomberg, Buhari told the World Bank and International Monetary Fund (IMF) that Emefiele was administering an economic model that served the peculiarities of Nigeria.
When the former Minister of Finance, Zainab Ahmed, cried out that the failed naira redesign, which was alleged to have been targeted at weakening Tinubu’s chances at the poll, did not receive her input and that it could trigger an economic crisis, the ex-president came in defence of Emefiele, saying the latter secured his approval, which was all that was statutorily required.
If the financial statements are anything to believe, the country’s fiscal crisis may be deeper than envisaged. The huge indebtedness of the Bank to foreign institutions brings to question the true net value of the country’s external reserves.
CBN, according to the report, is liable to JP Morgan and Goldman Sachs to the tune of $7.5 billion, which experts said has hampered the Bank’s ability to intervene in the foreign exchange market.
“It has brought an accurate picture of the country’s external reserves being managed by the CBN. Little wonder the CBN’s ability to intervene in the foreign exchange market has been hampered,” Prof. Uche Uwaleke, an economist, has said.
Last year, the cost of currency issuance rose by 33 per cent to N96.46 billion compared to N72.58 spent in 2021 even though currency printing was not happening for much of the fourth quarter owing to a currency redesign that was announced in October.
Personnel cost of the bank also shot up by about 34 per cent, from N192.75 billion to N257.87 billion. These pushed the total operating expenses of the bank to N1.2 trillion, from N1.12 trillion recorded in 2021.
In 2014, when Emefiele assumed leadership at the Bank, the CBN’s total operating expenses were N430.6 billion. Under his tenure, the operating expenses grew 179 per cent. However, the rise in operating expenses was matched with fast growth in net operating income, which rose from N466.04 billion to N1.27 trillion or 172 per cent surge.
The Bank’s net asset value, at the close of last year, was N1.076 trillion. The total assets totaled N57.515 trillion as against total liabilities of N56.44 trillion.
David Adonri, an economist, said the net worth of the CBN does not reflect the size of the economy and the population of the country. According to him, CBN should be looking at growing its net assets significantly if the country truly aspires to compete in the global market.
In 2022, the Bank posted a surplus of N65.63 billion. The Federal Government receives 80 per cent of the profit, according to the Fiscal Responsibility Act (FRA) while 20 per cent is kept as retained earnings. The CBN Group’s operation posted a surplus of N105 billion for the year.
THEGUARDIAN
