The Financial Reporting Council report that cost Sanusi His Job

President Jonathan's decision to suspend CBN Governor, Sanusi Lamido Sanusi yesterday Feb. 20th was based on a report of the Financial Reporting Council of Nigeria, FRCR dated June 7, 2013. In the report, FRCR ripped apart the 2012 audited financial statement of CBN and exposed what it termed as 'fraud', 'clear display of incompetence',and  'excesses and wastefulness of Sanusi and the CBN.'

The 13-page report claimed a whooping N1.257 billion was spent for 'lunch for policemen'. There were also bogus payments to airlines to distribute currency nationwide. The FRCR also claimed CBN has held an account with a balance of N1.423b for an unknown customer since 2008. The report had recommended the sack of Sanusi and his deputy.

You can read the full report here or continue to read a breakdown of the report..

Culled from Punch

The report read: The particulars of the infractions against Sanusi are:

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 comply to ‘all procurement of goods, works and services carried out by the Federal Government of Nigeria and all procurement entities.’ This definition clearly includes the Central Bank of Nigeria.

(B) It is however regrettable that the Central Bank of Nigeria, under his leadership, has refused and/or neglected to comply with the provisions of the Public Procurement Act (PPA). You will recall that one of the primary reasons for the enactment of the PPA was the need to promote transparency, competitiveness, cost of effectiveness and professionalism in the public sector procurement system.

(C) Available information indicates that the Central Bank has over the years engaged in procurement of goods, works and services worth 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 has also persisted in promoting a governance regime characterised by financial recklessness, waste and impunity, as demonstrated by the contents of its 2012 Financial Statements.

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 such projects across the country and has committed over N163billion on them.

(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 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.

Financial infractions and acts of financial recklessness committed by the Central Bank as reflected in its audited financial statements of 2012

(A) pursuant to Section 50 of the CBN Act 2007, a copy of the audited financial statements of the CBN for the year ended 31st December 2012 was sent to Mr. President. Based on the issues raised in the financial statement, a reaction was requested from you to enable a proper appreciation of the nation’s economic outlook.

(B) the response to this query was further referred to the Financial Reporting Council of Nigeria. The review by the council, rather than allay the fears of government, further confirmed concern bout the untidy manner in which you have generally conducted the operations of the CBN.

Some of the salient observations arising from the review are;

(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 (IFFS) 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 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 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 of company, unless an entity set up by the approval or authority of the Federal Government,m CBN in 2010, acquired 7% 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.

(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 N16.031bn 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:

1. The bank spent N3.086bn on “promotional activities” in  2012 (up from N1.084bn in 2011). The bank spent this sum even when it is not in competition with any other institution in Nigeria;

2. The CBN claimed to have expended N20.202bn on ‘Legal and Professional Fees’ in 2011 beyond all reasonable standards of prudence and accountability;

3. Between expenses on ‘Private Guards’ and ‘Lunch for Policemen’, the CBN claimed to have spent N1.257 billion in 2012;

4. 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.

5. 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 N38.233bn 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 N29.370bn for all its transactions with all clients (including the CBN).

6. 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.

Questionable write-off of N40bn loans of a bank

The above issues are only a 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.

However, the  CBN also claimed that it paid Air Charter, such as payments to Emirate Airline (N0.511bn), Wing Airline (N0.425bn) and Associated Airline (N1.025bn) to distribute currency by air nationwide. Emirate Airline does not fly local charter in Nigeria, Wing Airline is not registered with Nigeria Civil Aviation Authority and Associated Airline does not have a billion turnover for 2011 because upon enquiry, the management claimed that they have no financial statements and have not had any significant operations for the past two years that will warrant preparation of financial statements.

The breakdown also include “Currency Issue Expenses” of N1.158bn and Sundry Currency charges of N1.678bn under “Currency Issue Expenses.” As they are in 2011 so are similar expenses in 2012. These are difficult to understand.

Other areas of fraudulent activities include

1. Facility Management N7.034bn in 2012 (N5.751bn in 2011.

2. Foreign Bank accounts that have been closed offshore were still operational in the General Ledger for over six months after they have been confirmed as closed accounts by the offshore banks.

3. The “Know Your Customer” policy is not properly followed by the CBN to the extent that the CBN has unknown customer with account balance of N1.423bn since 2008. The CBN claim that it is taking steps to obtain the required details regarding the address of the customer.

Wastefulness

1. Training and travel expenses N9.24bn in 2012 up from N7.65bn in 2011.

2. Expenses on “ATM offsite policy change” came to N1.045bn.

3. Expenses on “Non Interest Banking” N1.359bn in 2012 up from N0.977bn in 2011.

The CBN is still very heavy on expenses on “Project Eagles” spending N0.606bn in 2012 up from N63m in 2011.

Expense on newspapers, books and periodicals (excluding CBN’s publications) is N1.678 billion in 2012 up from N1.670bn in 2011,

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"Sacking of Sanusi against the law" - Abike Dabiri-Erewa

House of Reps member and chairman of the House Committee on Diaspora Affairs, Abike Dabiri Erewa, has reacted to Sanusi's sack on Twitter. She says it's irrational and against the law. Is it really against the law?

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Sanusi reacts to his suspension, says he will challenge it in court

In an interview with CNBC Africa this morning, Sansui Lamido Sanusi, who currently in Niger Republic attending an official ECOWAS event, says he will challenge his suspension.

Sanusi tells CNBC Africa

"I have been told by my office that a letter was received. As you know, I flew in this morning to Niamey along with other Governors of West African Central Banks to meet with the President of Niger and President of Ghana. Fortunately, I came in with my VP Sarah Alade whom I have been asked to hand over to. I have left the meeting to hand over to her. I have just met the Nigerian Ambassador to Niger who confirmed to me that the President asked him to inform me of the decision.

About financial misconduct and recklessness he's being accused of...

"I don’t know what they are talking about. When I come back, I will see what those allegations are. I don’t think there is any issue raised that has not been raised before. We all know what this is about. This is about consequences for decisions I have taken. This is something that is long overdue. I am surprised it took them so long.

When asked whether his suspension is politically motivated, he said

I think the answer to that is obvious. There is a legal question of whether the president has the authority to suspend the Governor and whether suspension is not removal. It will be helpful to establish the principles by court.

Even if I challenge it, I will not go back to the job. Even if I challenge it successfully, I will not go back to it. I think it will be in the interest of the institution for the courts to establish once and for all if the president has the powers to do this. If it is not challenged, the next Central Bank Governor cannot be independent with fear of being suspended by a politician. I do plan to have the courts confirm if indeed that authority exists and I will challenge it.

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Jonathan Forwards Name Of Godwin Emefiele To Senate For Confirmation As CBN Governor

By Saharareporters, New York

Senate Spokesperson Enyinnaya Abaribe has confirmed that President Jonathan forwarded the name of Godwin Emefiele, Managing Director of Zenith Bank Plc, to the Senate for confirmation as CBN Governor.
Emefiele is to replace Mallam Sanusi Lamido Sanusi, whose tenure expires in June but was suspended earlier today by the president, on allegations of financial reckless and misconduct.
Sanusi was directed to hand over to Dr. Sarah Alade, the most senior deputy governor in the bank, who will serve as Acting Governor “until the conclusion of ongoing investigations into breaches of enabling laws, due process and mandate of the bank”.
The President also nominated Adelabu Adekoya as Deputy Governor. The Presidency conveyed Emefiele’s nomination in a letter to Senate President, David Mark, which was read on the floor of the Senate.​
Ousted CBN governor Lamido Sanusi is still airborne returning from a trip to the Niger Republic where heard about his suspension by President Jonathan.

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Boko Haram Leader, Shekau Threatens More Attacks in Nigeria

Boko Haram leader, Abubakar Shekau

The fugitive claimed responsibility for the killing of a Kaduna-based Islamic cleric, Sheikh Albani

The leader of the extremist Boko Haram sect, Abubakar Shekau, has, in a video released to journalists, threatened more attacks against Nigeria, saying his members would target Nigeria’s sources of revenue, and her refineries.

Mr. Shekau, a fugitive, who is wanted for terrorism by both Nigeria and the U.S., also vowed to kill major Islamic clerics and people that support democracy, western education, and Christianity.

He said the state of emergency currently in place in Adamawa. Borno, and Yobe, could not deter his group, and called on his members in other states, particularly Kano, to attack civilians and government institutions.

The Boko Haram sect is responsible for killing thousands of people, largely civilians, since their insurrection began in Northern Nigeria in 2009. Over 200 Borno villagers have been killed in the last two weeks by the outlawed sect. The group is, however, yet to carry out any attack in the 17 Southern States.

The Nigerian military had said Mr. Shekau could have been killed in a military raid last year. He has released at least two videos since then.

The full text of his 28-minute video, delivered in Hausa, reads;

“My brethren…you should hold on to your weapons and continue fighting. Let them understand that our work is not confined to Yobe, Borno and Adamawa (states). Make them understand that we are not restricted by emergency rule. They should understand we are under the canopy of Allah.
“This is the beginning. Yes, this is the beginning.
“We Jama’atu Ahlissunnah Lidda’awati Wal Jihad are fighting Christians wherever we meet them and those who believe in democracy, those who pursue Western education wherever we meet them. By Allah, we will kill whoever practices Democracy.
“And you the infidels of Rivers state, Niger (Delta), the town of Jonathan, Shekau is talking to you (sounds of gunshots). Shekau is talking to you, that small boy that has become the nightmare of infidels is talking to you.
“Oh you the leader of the Niger Delta, you will soon see your refinery destroyed. You will in the incoming days see your refinery you are boasting about bombed. Our refinery is Allah.
“Niger-Delta you are in trouble. Jonathan you are in trouble…Banki Moon you are in trouble, Bejamin Natanyahu you are in trouble, Queen Elizabeth, you are in trouble, Babangida, Kwankwaso, Shekarau, Kashim, Buhari, you are in trouble.
“Yahaya Jingir…the cleric of Jos, the advocate of ‘Boko Halal’, right? We are Boko Haram, you are Boko Halal. You will see, bastard.
“We killed Albani of Zaria. We killed Albani of Zaria. Shekau killed Albani of Zaria.Tomorrow he will kill Jingir, the day after tomorrow he will kill Dapchia, the next day he will kill Wapchama, next he will kill Shehu of Borno, Ado Bayero. We rebel against you, between us and you is enmity and rancour until you believe only in Allah.
“The reason why I will kill you is you are infidels, you follow Democracy…Whoever follows Democracy is an infidel. This is Shekau, this is why I’m in enmity with you.
“Buhari is an infidel, Babangida is an infidel, Atiku is an infidel, late Yar’adua was an infidel, Shehu of Borno is an infidel. You are all infidels. What makes you infidels is Democracy and constitution and western education…I therefore call on brethren in Kano to rise up and replicate the Baga attack.
“All these infidels we are the ones killing them. We enjoy shedding their blood.
“The Koran must be supreme, we must establish Islam in this country; Not only in Borno, we will henceforth destroy any schools wherever we see them”.

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Facebook buys WhatsApp for N3.1 trillion ‬

WhatsApp Co-founder becomes a member of Facebook’s board.
‪Social networking giant, Facebook, has bought messaging app, WhatsApp, in a deal worth a total of N3.1 trillion in cash and shares.
It is Facebook’s biggest acquisition to date and will see WhatsApp’s Co-founder, Jan Koum, become a member of Facebook’s board of directors.
The deal includes N656 billion in cash and approximately N1.9 trillion worth of Facebook shares, plus an additional N492 billion in stock to WhatsApp’s founders and employees at a later date.
“We’re excited and honoured to partner with Mark and Facebook as we continue to bring our product to more people around the world,” Mr. Koum said in a statement.
Mr. Koum said he plans to operate the firm “independently and autonomously”.
In a statement announcing the deal, Facebook founder, Mark Zuckerberg, described WhatsApp’s services as “incredibly valuable”,  but insisted he had no plans to place advertising on WhatsApp’s interface, saying he did not think ads were the best way to make money from instant messaging systems.
Mr. Zuckerberg said the quest to buy WhatsApp was started only 11 days ago.
WhatsApp offers alternative to BlackBerry chat and text messaging. It allows users to send messages over internet connections, avoiding text messaging fees.  WhatsApp claims it is currently registering one million new users a day and  has over 450 million monthly active users. Facebook believes WhatsApp will hit a billion users in no time.
It makes money by charging users a subscription fee of N160 or the equivalent of $1 per year, after offering the first year for free.
Once the deal is finalised, Mr. Koum and co-founder Brian Acton will become Silicon Valley’s newest billionaires.
WhatsApp started five years ago and has 55 employees in total.

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Ukraine President sacks army chief as 26 die in violent protest

At least 26 people have died in two days of escalation of violence.
Ukrainian president, Viktor Yanukovych, has sacked the country’s chief of armed forces after 26 people were killed in two days of violent protests.
Colonel General Volodymyr Zamana’s sack was announced on President Yanukovych’s website on Wednesday.
Col Gen Zamana has been replaced by the commander of Ukraine’s navy, Admiral Yuriy Ilyin, by presidential decree.
The move came after at least 26 people were killed in the country’s most violent demonstrations in decades, which has seen protesters fighting security police.
More than 250 people, including police and journalists, have been hospitalized.
As violence continued Wednesday, the country’s armed forces signalled it may take over the effort to restore order.
Many Ukrainians are angry at the government’s decision to agree to closer ties with Russia in favour of the European Union.
The protest began November 2013 with protesters demanding the resignation of the president. The prime minister resigned in January.
Mr. Yanukovych’s government refers to the protesters as “terrorists and criminals”.
The latest violence began Tuesday when protesters attacked police lines and set fires outside the parliament.

Armed with water cannons, stun grenades and rubber bullets, police responded by attacking the protest camp, and dismantling some barricades.

But the protesters held their ground through the night, encircling the protest camp with new burning barricades of tires, furniture and debris, the Associated Press reported.
The state security agency accused protesters Wednesday of seizing firearms from its offices and announced a nationwide anti-terrorist operation to restore order. The Defense Ministry said the army could take part in the operation.

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