The suspended Governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi has responded to allegations of recklessness levelled against him by the Presidency, insisting that all he did during his stay at the apex bank were with due approval from President Goodluck Jonathan.
Reacting to Financial Reporting Council of Nigeria’s (FRCN) claims that the CBN engaged in unlawful expenditure on intervention projects, Sanusi noted that President Goodluck Jonathan instructed him to pay “N19.7 billion to the Ministry of Police Affairs for the purchase of armoured helicopters and other security equipment like armoured helicopters; armoured patrol vans; anti-riot equipment; and hand held communication equipment.”
Sanusi added that “upon the application of the Secretary to the Government of the Federation, the CBN paid N2.1 billion for the automation and renovation of the Federal Executive Council Chamber”. The President approved the “construction of the International Conference Centre for Nigeria.”
Jonathan, Sanusi disclosed, “also requested that the CBN pay N3.2 billion for the construction of a new counter terrorism centre for the office of the National Security Adviser and that the FRCN itself was a beneficiary of the CBN’s intervention policy as the CBN paid N220 million to the FRCN and also organised the banking sector, through the Banker’s Committee, to pay N280 Million, totalling a sum of N500 Million, for the construction of the IFRS Academy.”
All of these requests Sanusi said were duly submitted to the CBN Board of Directors and were duly approved and the grants under the Intervention Program were duly budgeted for, and made on a limited and selected basis.
On the claims that the CBN’s expenses on private guards and lunch for policemen went up from N0.919 billion in 2011 to N1.257 billion in 2012, Sanusi responded that “the CBN retained the services of about thirteen (13) private security companies to provide access control and security check services. In 2012, the CBN budgeted N600 million for security services but spent N582.2 million on private guards.”
To complement the efforts of private guards, the CBN Sanusi added “also requested the services of security agencies, in light of the increased security challenges, especially the activities of the Boko Haram terrorist group. These security personnel were engaged on a daily basis; and were attached to senior CBN officials; special assignments such as security coverage for currency movements; static guard duties at the bank’s premises nationwide, and other sundry engagements.
“About 2,406 policemen are currently deployed on a daily basis to various branches and other locations of the CBN. These security personnel were paid a daily lunch and transport allowances totalling N675.02 million in the year under review.”
On the claims that the CBN’s breakdown of “Currency Issue Expenses” for 2011 and 2012 indicated that it paid the Nigerian Security Printing and Minting Plc (NSPMP) N38.233 billion in 2011 for printing of banknotes, whereas the entire turnover of NSPMP was N29.370 billion, Sanusi responded that the “expense item of N38.233 billion to NSPMP was made up as follows: N28.738 billion payment to NSPMP in 2011; N6.587 billion accrued liability in 2011 but paid in 2012 when deliveries were received; and N2.829 billion audit adjustment journal entry into the account at the end of 2011 in respect of prepayments to NSPMP.
The difference between the numbers in the financial statements of CBN and NSPMP he said “is a simple reflection of timing differences between recognition of expenses by the CBN and income recognition by the NSPMP, with both entities applying conservative accounting policies.”
That the CBN made fictitious payments to Emirate Airlines: N0.511 billion which allegedly does not fly local charter in Nigeria; Wing Airline: N0.425 billion which allegedly is not registered with the Nigerian Civil Aviation Authority (NCAA); and Associated Airline: N1.025 billion which allegedly did not have a turnover of up to a billion naira in 2011, the suspended CBN governor answered that the “CBN neither engaged, paid nor claimed to have paid Emirates Airlines.
“Rather, the CBN engaged and entered into an Air Charter Services Agreement with Emirate Touch Aviation Services Limited, which is a local Nigerian charter service company. A simple enquiry by FRCN would have clarified and avoided this misrepresentation.
ii. With respect to Wings Aviation Limited, the CBN contracted Wings Aviation Limited, which changed its name to Jedidiah Air Limited on 21 August 2009 but only notified the CBN of the change on 28 February 2012. Please, see Annexure C for the letter from Jedidiah Air Limited notifying the CBN of the change of name.
“Here also, a simple enquiry by FRCN would have made this clear. iii. With respect to Associated Air Limited, the CBN did in fact pay a total of N1.025 billion to Associated Airline Limited. See Annexure D for the schedule of payments made to Associated Airline Limited. It is worth stating that the CBN is not responsible for how the company reports its turnover.”
To the allegation that the expenses made by the CBN on account of currency issues and sundry currency charges for the years 2011 and 2012 were identical and therefore difficult to understand, Sanusi stated that “it is incorrect to say that the expenses in 2011 and 2012 were identical.
“The sundry currency charges amounted to N1.68 billion in 2011 and N1.87 billion in 2012. This expense related to amounts paid to Travelex under an agreement to import foreign exchange for licensed BDCs. On the other hand, Currency Issue Expenses totalled N1.15 billion in 2011 and N1.28 billion in 2012, relating to expenses borne by the different branches and currency centres of the CBN in the movement and handling of cash” he explained.
With regards to the Fixed Assets Clearing Account comprise properties acquired by the CBN without any expectation to derive future economic benefits and are written off by the CBN on a yearly basis, Sanusi responded that, “Fixed Assets Clearing Account is used by the CBN to record the procurement of fixed assets, physical items and projects-related expenditure for the CBN, using the IT application Oracle ERP. However, some items, which do not qualify as fixed assets under the capitalisation policy of the CBN, he said are sometimes posted into this account.”
The transactions he said “are periodically reviewed for the purpose of capitalizing those which qualify under the Capitalization Policy and posting such to the respective Fixed Asset Account and Fixed Asset Register with tag numbers. All other assets which do not qualify are expensed through income and expenditure accounts at the end of the year.”
The allegation that the CBN’s leadership uses this head of expense (Facilities Management) to capture what ordinarily should have been accounted for as their benefits-in-kind for tax purposes, and that this head of expense is used for ‘fraudulent activities’ based on the inclusion of items such as “Profit from sale of Diesel”, Sanusi said “the CBN outsources the management and maintenance of its landed properties across the 36 States of the Federation and the FCT. This involves three service areas: engineering services, building services and environmental services. These are operational costs relating principally to head offices, branches, currency centres and training institutes.”
On the specific allegation of ‘fraudulent activities’, based on profits from the sale of diesel, Sanusi noted that “the CBN’s Facilities Management Agreements clearly include the supply of diesel for the operation of generators to power CBN offices in 51 locations across the 36 States and the FCT. The Diesel is paid for at pump price, while overhead and profit at 10 per cent is paid to the service providers. This overhead and profit is presumably what the FRCN erroneously regarded as “profits from the sale of diesel”. These profits do not go to the CBN but to the service providers, which is why they are an “expense item”. The CBN does not operate in any sector of the petroleum industry.”
Also responding to accusations that the external audit revealed debit/credit balances of sundry foreign currencies without the physical stock of foreign currencies at the CBN Head Office, Sanusi said “losses or gains may arise out of the account balances, which in turn, may be occasioned by exchange rate differentials. In either event, once crystalized, the net position is then posted to the Foreign Assets Revaluation Account. As such, as at 20 February 2014, there was no physical stock of currency missing at the CBN.”
On the issue of wasteful expenditure in 2012, Sanusi stated that “this allegation is clearly at variance with the reality of the financial performance of the CBN under my leadership. For example, in the year 2008, just before I took over office at the CBN, the contribution of the CBN to the Federation Account was N8 billion. Based on the 2012 annual accounts, our contribution rose tenfold to N80 billion, while in 2013, our contribution, based on the audited accounts, was N159 billion.”
Sanusi noted that in the five years of his tenure as CBN Governor (2009 – 2013), “the CBN has contributed N376 billion to the Federal Budget as IGR (Internally-Generated Revenue). Indeed in 2012, the House of Representatives Committee on Finance publicly commended the CBN for being the highest contributor of revenues to the FGN among MDAs – accounting for 75 per cent of the total IGR contributed by MDAs between 2009 and 2012. The CBN has been able to achieve this through prudent management of costs, including currency expenses and overheads. For example, we brought down currency expenses from N50.8 billion in 2009 to N29.08 Billion in 2012.”
He also said that “the Ministry of Finance has already received its IGR from the CBN in full, based on our 2013 accounts and the Ministry even requested and received an advance of N70 billion in anticipation of surplus that is yet to be earned for 2014. With this level of prudent financial performance, it is puzzling to imagine the basis for the levied allegation of “Wastefulness”.
Reacting to the allegation that the CBN paid excessive legal and professional fees of N20.202 billion in 2011, Sanusi said “the CBN, like any other public entity, is not immune from liabilities that arise from judgments and orders of the Nigerian courts. The referenced N20.202Billion spent under this head covered the CBN’s judgment debt liabilities in the year under review.”