Reference:
Mallam Sanusi Lamido Sanusi Governor,
Central Bank of Nigeria, Abuja.
SUSPENSION FROM OFFICE
1. Following the Report of the Financial Reporting Council
of Nigeria on the Audited Financial Statements of the Central
Bank of Nigeria (CBN) for the year ended 31st December
2012, and other related issues, I write to convey to you His
Excellency, Mr. President's decision that you be suspended
from office as Governor of the Central Bank of Nigeria with
effect from Thursday 20th February 2014.
2. The decision is predicated on the loss of confidence in
your ability to lead the Apex Bank towards the achievement
of its statutory mandate. Of particular concern is the fact
that, under your watch, the bank has carried out its functions
in a manner characterised by disregard for due process and
accountability.
3. This is exemplified by various acts of financial
recklessness and unprofessional conduct 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.
4. The particulars of the infractions are highlighted below:
5. 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 apply to all
'procurement of goods, works and services carried out by the
Federal Government of Nigeria and all procurement entities.'
The definition clearly includes the Central Bank of Nigeria.
(b) It is however regrettable the Central Bank of Nigeria
under your leadership, has refused and/or neglected to
comply with the provisions of the Public Procurement (PPA).
You will recall that one of the primary reasons for the
enactment of the PPA was the need to promote transparency,
competitiveness, cost effectiveness and professionalism in
the public sector procurement system.
(c) Available information indicates the Central Bank has over
the years engaged in procurement of goods, works and
services with 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 also persisted in promoting a governance regime
characterised by financial recklessness, waste and impunity,
as demonstrated by the contents of the 2012 Financial
Statements.
6. No responsible government will tolerate this blatant
disregard for its laws and procedures by any person or
institution. The Central Bank, by its unique position, ought
to show good example and be the leading light in the
promotion of the culture of observance of due process.
7. 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 (sixty-three) such
projects across the country. Please find attached hereto as
Annexure I, a letter dated January 7th, 2014 from the CBN
confirming the list of projects across the country to which
the CBN has committed N163 Billion (One Hundred and
Sixty Billion Naira).
(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 the
CBN's statutory mandate. It is trite that the expenditure of
public funds by any arm of government must be based on
clear legal mandates, prudent costing and overriding national
interest.
(c) Cognisant of the attendant negative consequence of the
CBN's action, a review of the Central Bank (Establishment)
Act 2007 does not disclose any legal basis for the huge
expenditure on intervention projects in default of
appropriation.
8. Financial Infractions and Acts of Financial Recklessness
Committed by the Central Bank as reflected in its Audited
Financial Statements for 2012.
(a) Pursuant to Section 50 of the CBN Act 2007, a copy of
the Audited Financial Statement of the Central Bank for the
year ended 31st December 2012 was sent to Mr. President
(Please, find a copy attached hereto as Annexure II). Based
on the issues raised in the financial statement, a response was
requested from Sanusi to enable a proper appreciation of the
nation's economic outlook. (Please, find attached a copy of
the letter dated 4th May, 2013 as Annexure III).
(b) Your response to this query (Annexure IV) was further
referred to the Financial Reporting Council by a letter of
12th April, 2013, for review (Annexure V).
The review of the Financial Reporting Council of Nigeria,
rather than allay the fears of Government, further confirmed
concern about the untidy manner in which you have
conducted the operations of the CBN (Annexure VI).
9. Some of the salient observations arising from the review
are highlighted below:
(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
(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.
(b) The provisions of the Memorandum of Understanding
(MoU) signed by the CBN and other Deposit Money Banks
(DMBs) 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
the 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 or company, unless an entity set up by the
approval of the authority of the Federal Government, CBN in
2010, acquired 7% shares of International Islamic Liquidity
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 N16.031 Billion in 2012 but proceeded on a
voyage of indefensible expenses in 2012 characterised by
inexplicable increases in some heads of expenditure during
the year. Examples include:
(i) The bank spent N3.086 Billion '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;
(ii) The CBN claimed to have expended N20.202 Billion on
'Legal and Professional Fees' in 2011, beyond all reasonable
standards of prudence and accountability;(iii) Between
expenses on 'Private Guards' and 'Lunch for Policemen', the
CBN claimed to have spent N1.257 Billion in 2012;
(iv) 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 the breach
and even went to the extent of changing one of its Joint
External Auditors without notifying the office of the
President.
(f) 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 a total of 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 transaction with all clients
(including the CBN)
(g) 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.
10. Questionable write-off of N40 billion naira loans of bank
You may wish to specifically not Annexure VII which
highlights a number of transactions and breaches, which
include the write-off of loans totalling N40 billion
11. The above issues are only 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.
12. In light of the foregoing, and pursuant to the provisions
of Section 7 (2) (a), Section 8 (1) (k), Section 62 (1) (c) and
62 (3) of Financial Reporting council of Nigeria Act, a copy
of this letter is being forwarded to the Executive Secretary of
the Council for his notification and further necessary action
with a view to addressing the urgent need to reposition the
bank for the effective discharge of its statutory mandate.
13. You are, by this letter, directed to hand over to most
senior Deputy Governor, Dr. Sarah Alade who will act as
Governor till the conclusion of the investigation into these
far reaching breaches.
Please accept, as always, the assurances of my highest
regards and esteem.
Anyim Pius Anyim, GCON
Secretary to the Government of the Federation
Source: Thisdaylive
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