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Sanusi’s CBN spent N20.26b on legal fees in 2011 – FG

By BusinessNews Staff on February 22, 2014

Hours after announcing the suspension of Lamido Sanusi as Governor of the Central Bank of Nigeria (CBN), the Federal Government, on evening released what may be “the many sins” of the governor, whose tenure ends in May.

The Presidency, while announcing the suspension in a statement signed by Reuben Abati, President Goodluck Jonathan’s spokesman accused Sanusi of “financial recklessness.

As part of the sins committed by the CBN with Sanusi as helmsman, the government said in the later statement accused the apex bank of expending “N20.202 billion on ‘Legal and Professional Fees’ in 2011 beyond all reasonable standards of prudence and accountability.”

According to the Presidency, the CBN of spending N163 billion on executing 63 ‘intervention projects’ nationwide, stressing that “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.”

Government also said the CBN spent N3.086 billion on “promotional activities” in 2012, an increase of N2.002 billion or 184.68 per cent over the N1.084 billion spent in 2011, and that the money was spent “even when it is not in competition with any other institution in Nigeria.”

Part of the recklessness of Sanusi was that “between expenses on ‘Private Guards’ and ‘Lunch for Policemen’, the CBN claimed to have spent N1.257 billion in 2012.”

The Federal Government also noted with interest claims by the CBN that it paid N38.233 billion to the Nigerian Security Printing and Minting Company Limited (NSPMC) in 2011 for ‘Printing of Banknotes,’ when “in the same 2011, NSPMC reported a total turnover of N29.370 billion for all its transactions with all clients (including the CBN).”

The government also finds it odd that “the CBN is not able to prepare its financial statements using applicable International Financial Reporting Standards (IFRS), 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 presidency added.

Abuja also queried “the provisions of the Memorandum of Understanding (MOU) signed by the CBN and other Deposit Money Banks on Banking Resolution Sinking Fund (which) 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, CBN in 2010, acquired 7 per cent 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 was also accused of failing or refusing to implement the provisions of the Personal Income Tax (Amendment) Act 2007, particularly as “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: 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.

There was even a questionable write-off of N40 billion loans of an unnamed bank, government added, among “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.”

[Daily Independent]

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