Nigeria’s Central Bank may be asked to withdraw six-year audited accounts starting from 2016 to 2021 from circulation and re-issue them to correct the alleged manipulations discovered in the apex bank’s financial statements.
The CBN audited accounts for the period were allegedly riddled with wrong figures that were allegedly used to deceive the National Assembly, the president, multilateral institutions, the international community, and the entire Nigerians.
The apex bank, according to findings by the Department of State Security (DSS), used fraudulently contrived guidelines prepared by the Financial Reporting Council of Nigeria (FRC) with the alleged connivance of top CBN officials to prepare the defective audited accounts for the period under review.
This is one of the discoveries at the ongoing investigation of the apex bank by the (DSS) after the scrutiny of the CBN books, documentation, and oral pieces of evidence from the FRC, the Auditor-General of the Federation, and the CBN auditors – KPMG, and Ernst & Young.
“These discoveries have rendered 2016 to 2021 audited accounts of the CBN null and void and may cause them to be withdrawn and reissued’, stated the DSS source who lamented that all those that were involved in the fraudulent activities caved in because of graft.
This indication came as the embattled governor of Nigeria’s Central Bank, Godwin Emefiele last Saturday held a virtual meeting with the managing directors of banks, rallying their support against the DSS which has unearthed several alleged fraudulent practices at the apex bank following a probe that started in 2022 but climaxed January 2023.
Saturday’s mid-day meeting, sources said, was Emefiele’s second since his running battle with the DSS, having held a similar one before his resumption in office last week. The CBN governor resumed back in the office last week after his holiday outside the country.
The meeting came after a group under the name, Incorporated Trustees of Forum For Accountability and Good Leadership, had approached Justice S.B Belgore of High Court 10 of the Federal Capital Territory in the Abuja Judicial division, seeking an injunction against the DSS, the 27 banks, and also the officials of the CBN in a bid to stop the ongoing probe of the apex bank.
The restraining order was sought on 17th January and secured on 18th January, a day before last Thursday’s submission of the preliminary report of the DSS findings to President Muhammadu Buhari. January 18th was also the deadline given by the DSS on its request to the banks to submit the details of forex allocations gotten from the CBN from 2017 to date.
The secret police had on 16th January demanded from the banks, details of the forex allocation to them by the CBN between 2017 and the present date. The information that is to be submitted to the DSS by 18th January comprises a summary of the top 50 customers who received the most forex allocation in order of magnitude in the schedule of the I &E window allocated to individual banks from 2017 to date, and under the Q allocation, the amount allocated to each bank, the name of the individual customer and/or beneficiary/beneficiaries, the basis/criteria for the allocation, and the name of the person that authorised and carried out the allocation (whether it is the CBN or the DMB or both)
However, in the motion ex-parte FCT/HC/GAR/CV/73/2023 M/150/2023 filed by and moved by Grace Udeagha Agbai, the Trustees sought an order to restrain the 27 banks from complying with the DSS request that demanded information on foreign exchange allocation to the banks in the period under review.
Justice Belgore in the ruling signed on 18th January 2023 by Musa Garba, the Principal Registrar 1, granted the request and ordered “an order of interim injunction restraining the 27 banks’ managing directors, and also the officials of the CBN or any other financial institution from complying with or satisfying the request or demands of the DSS or releasing any information or details of the foreign exchange allocation from 2017 to date or any other information relating to the request of the DSS contained in a letter dated 17th day of January 2023 or in any other manner whatsoever give effect to the said request or demand pending the hearing and determination of the motion on notice’.
Justice Belgore also adjourned the hearing on the notice of the motion M/151/2023 to Wednesday, 25th January 2023.
At the Saturday zoom meeting which was attended by all the banks’ managing directors following the alleged insistence of the CBN governor that they all must participate in person, Emefiele, according to sources at the meeting, sought their support against the DSS, informing them that the root of his problem with Nigeria’s secret police was the Naira redesign policy which the apex bank is currently implementing.
“Basically, the meeting was about getting us to support him against the DSS because he said the problem he has with the agency was because of the Naira redesign policy which is currently in implementation. He also told us that the policy emanated from the presidency and there is nothing he could do except the presidency decides”, one of the participants at the meeting told InsideBusinessNG.
“He also said he cannot grant an extension of the January deadline on the expiration of the old notes from circulation except president Muhammadu Buhari approves”.
InsideBusinessNG findings, however, show that pieces of evidence pooled by the DSS from other institutions and parties involved in the operations of the CBN landed the CBN governor in a problem.
It would be recalled that the 2015 audited account of the CBN that was submitted to the FRC was queried over some infractions that caused the Council to order the apex bank to restate some portions of the financial statement. One of those infractions was a N117 billion expenditure which the CBN auditors alleged that the apex bank could not explain. The infraction, sources at the DSS alleged, is still unattended to.
The non-closure of the 2015 audited account up till its publication may have been one of the reasons, why the 2016 to 2021 audited accounts have not been sent to the Government Press at Abuja and Lagos for printing and sale to interested users. A check at the Government Press shows the last audited account of the CBN in stock was the 2015 edition that was printed in 2018.
The manipulations and other issues led to the December invitation from the DSS to the two auditors of the CBN, Ernst & Young, and the KPMG, to appear before the agency with all those involved in the preparation of the CBN’s audited account from 2016 to 2021.
The two auditors who sought more time to appear with all the documentation relating to the audited accounts eventually appeared on January 9th in a meeting that drew on to the following day. The discoveries from the oral and documentation from the two auditors triggered their detention by the agency after which they were granted bail having signed an undertaking that they would cooperate with the investigation by the agency.
”The two auditors, E n Y and the KPMG were found culpable in the alleged manipulations of the CBN audited accounts from 2016 to date”, a development which the DSS source said, “led to wrong figures in the audited accounts, which have been used to deceive the government and every user of the financial statements.
If the CBN eventually withdraws and reissues its audited accounts, this will be the second institution that has been forced to withdraw misleading financial statements from the public space. The first was StanbicIBTC Plc in 2015.
The alleged manipulation of the CBN audited accounts has again put KPMG on the spot, having been sanctioned by the FRC in 2015 for signing off on the 2013 and 2014 audited accounts of StanbicIBTC which were misleading. The infractions in StanbicIBTC’s two-year audited accounts led the FRC to order their withdrawal from circulation and their re-issuance.
Interestingly also, Ayo Othinwa, a managing partner at KPMG who was indicted in the StanbicIBTC saga is also involved in the current alleged cover-ups in the CBN audited account. It would be recalled then that the FRC seized the FRC numbers assigned to him, barring him from signing financial statements of companies. The number was released to him during the tenure of the late Daniel Asapokhai, the former executive secretary of the FRC who died in 2021.
The state of the CBN audited accounts has also brought to light, the rots in the FRC, the nation’s financial statement regulator, which is expected to check abuses in private and public institutions.
Huge blame for the mess in the CBN audited account goes to the FRC, the apex regulator in the country, which was said to have issued fraudulent guidelines upon which the CBN audited accounts for six years were prepared in exchange for graft. The guidelines, five in all, issued by the trio of late Asapokhai, the deputy executive secretary, Iheanyi Anyahara, and also by the current executive secretary, Shuaibu Ahmed are allegedly, hugely responsible for the mess at the apex bank, although in alleged connivance with the CBN officials and the audit firms.
What turns the FRC into a laughing stock was the discovery by the DSS panel that the current executive secretary of the FRC allegedly approved and signed the fifth guideline for the CBN without the knowledge of his deputy and other directors.
“During the investigation, we discovered that CBN officials came with five of the guidelines while the deputy Executive secretary of the FRC, Iheanyi Anyahara had four of the guidelines with him. It was at the hearing that Anyahara and others from the FRC discovered that their boss, Shuaibu had issued another guideline to the CBN without the knowledge of the other directors” stated a source at the FRC.
The FRC had tumbled from its plum position since the exit of Jim Obazee, its former executive secretary who was removed in controversial circumstances on January 9, 2017, by the former minister of industry, trade, and investments, Okey Enelamah.
The FRC tried to regain public reverence in 2022 with the plan to issue a guideline on the registration of audit firms and charges thereto, but the criticisms from the accounting and audit industry forced the Council to make a retreat.