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CBN’s top officials on tightrope as special investigation peaks


CBN’s top officials on tightrope as special investigation peaks %Post Title








• Investigators embark on lifestyle audit of top executives
• Emefiele resigns ahead of Cardoso’s nomination, says report
• Deputy govs, other top executives expected to tender resignation letters soon
• Acting governor invited for questioning four times
• Cardoso faces tough job to transform CBN to efficient banking regulator, say experts
• Why Obazee uses DSS’ resources, not EFCC
• Ex-banker: Regulatory body needs unbundling to enhance performance

For deputy governors of the Central Bank of Nigeria (CBN), including the Acting Governor, Folashodun Shonubi, as well as the majority of the directors, the odds against them keep increasing by the day as the confidence crisis reaches a watershed moment this week.

While the nominees for replacement of the embattled suspended governor, Godwin Emefiele, and his four deputies, will face the crucial and statutory Senate screening, the old guards will be further grilled at the Department of State Security (DSS), from where the team of investigators operates, to determine their extent of connivance in the financial abuse estimated at several trillions of naira, The Guardian has been informed.

The investigative team, multiple sources have revealed, has subjected all the deputy governors and the majority of the directors to lifestyle audits to determine the extent to which they have enriched themselves in the course of their assignments.

While the audit is not proof of their culpability in the alleged frauds, a source said it has, alongside documented evidence, served as an important tool in determining where to focus attention for quick wins.

From early August till date, almost all the deputy governors and several directors have honoured invitations to the DSS facility multiple times. The Guardian was informed that the Acting Governor has been interrogated four times in recent weeks, a reason President Bola Tinubu resolved to replace the entire leadership team.

The President was said to have been advised that “incessant invitations of regulators for a probe have negative consequences for confidence building”, hence last week’s nomination of Olayemi Micheal Cardoso to replace Emefiele.

For the positions of deputy governors, the President also nominated Emem Nnana Usoro, Muhammad Sani Abdullahi Dattijo, Philip Ikeazor and Dr Bala Bello.

The nominees are said to have been briefed on the urgent need to stabilise the financial system with a clear mandate to fix the foreign exchange crisis and inflation rate to achieve price stability.

This week, the President is expected to conclude a plan to ease the deputy governors, whose tenures are still running, out of the Central Bank to make way for a new era in the financial system, which he described as “rotten” during an engagement with Nigerians in the diaspora in Paris, France.

But findings suggest the deputy governors, who have been fully briefed on the executive’s direction, are putting the finishing touches to their plans to tender their resignations. A source knowledgeable about the matter said resignation is considered their best option but that it was not clear if the President would not prefer outright sack, which would not require legislative approval.

According to the CBN Act, the President needs a two-third majority of the Senate to sack the CBN governor. The provision of the law is meant to shield the chief regulator against undue external interference and secure the autonomy of the office.

The Governor can also be removed if he “is guilty of serious misconduct about his duties under this Act; disqualified or suspended from practising his profession in Nigeria by order of a competent authority made in respect of him personally; becomes bankrupt. The CBN governor can be removed by the President, provided that the removal of the governor shall be supported by a two-thirds majority of the Senate praying that he be removed,” the CBN Act states.

The embattled four deputy governors under Emefiele are Folashodun Adebisi Shonubi (who has been in charge of the apex bank on an interim basis since June), Aishah Ahmad (in charge of the Financial System Stability Directorate) Edward Adamu (Corporate Services Directorate) and Kingsley Obiora (Economic Policy Directorate).

The tenures of Ahmad and Adamu were renewed by ex-President Muhammadu Buhari for another five years each last year while Obiora’s first tenure extends to 2025.

At CBN, the fate and plan of the deputies, as they are often referred to is hush-hush. Speculations, which could not be independently verified by The Guardian, said some of the deputy governors, who have been grumbling that they are unfairly being punished for the perceived sins of Emefiele, plan to tender their resignations this week.

But the coming tsunami may not stop with the deputies. The Guardian had reported that some directors were already struggling to wriggle out of heavyweight conspiracy with the suspended governor. Sources said the affected directors could take the option of voluntary retirement to save their careers and names if they are not arrested for prosecution immediately.

Last week, a retired Director of Finance of the bank, Benjamin Fakunle, was reportedly arrested at a retirement party organised in his honour by his colleagues for the role he played in doctoring the financials of the bank from 2016 to 2022.

The Obazee-led Special Investigation panel also interrogated three officials of the Financial Reporting Council (FRC) who were accused of compromising their positions in the audit of the bank under Emefiele.

The officials reportedly collected N401.7 million to tweak the accounting guidelines used by the CBN to prepare the financials.

Discrepancies and irregularities were said to have been discovered in the audited accounts, which came on the heels of the interrogation of the Executive Secretary of the Financial Reporting Council of Nigeria (FRC), Shuaib Ahmed, and his deputy, Iheanyi Anyahara, last week.

The fraudulent guidelines, about six in all, according to reports, were issued and sold to the CBN by the late former executive secretary of FRC, Daniel Asapokhai; his deputy, Anyahara and Ahmed, the current executive secretary at a total cost of N401.75 million.

The current FRC Act is the brainwork of Obazee as chief executive of the defunct Nigerian Accounting Standards Board (NASB), the legacy institution of FRC.

Yesterday, a source, who disclosed that some directors maintained lifestyles that are at variance with the legal earnings, said more would be quizzed in the coming days as the investigators streamline the investigators.

The Guardian was also informed that Obazee was directed to work with DSS, using its staffers and facilities, as the President could not vouch for the integrity of the current Economic and Financial Crime Commission (EFCC), which is the leading agency for probing financial infractions.

It was also learnt at the weekend that the Special Investigation panel has been operating from the headquarters of the DSS, a reason most of the arrests done since the probe started were done by DSS officials. The Guardian was told that the President sees the EFCC as a corrupt body.

Recall that its Commission’s Chairman, Abdulrasheed Bawa, has been in the custody of DSS for various allegations relating to financial fraud.

Besides the confidence issue, a close source to the Obazee team also argued yesterday that the level of the allegation against the CBN has serious consequences for national security.

“It is like when you talk about drug offences. Beyond the monetary gain motives, drug offences are not considered as mere offences because the cartel can constitute themselves against constituted authority,” the sources said.

With several visits by the deputy governors and directors, the Obazee team is said to be unable to reconcile several inconsistencies in the books of the bank.

Despite the allegations and public support Tinubu has enjoyed on the CBN clean-up, there are concerns about the legal groundswell that could welcome the nomination of Cardoso. A former President/Chairman of the Council of the Chartered Institute of Bankers of Nigeria (CIBN), Mazi Okechukwu Unegbu, wondered why the President had not sought the support of the Senate on Emefiele’s removal.

At the weekend, an unconfirmed report by Reuters said the suspended governor had resigned in August to pave the way for the appointment of a substantive governor, leading to the nomination of Cardoso. The report could not be confirmed as at press time from both CBN and Presidency official communication teams.

An unofficial source at the Presidency explained that the resignation of deputy governors is unnecessary, but that “the resignation of the governor is what is needed in this case” for the President to change the leadership of the apex bank.

“The deputy governors do not enjoy special privileges as enunciated by the constitution. The constitution does not say the President needs to approach the National Assembly before the deputy governors can be fired. The only name mentioned in the constitution is the governor of the CBN. Now that the governor has resigned from his position, the President is cleared to replace the team,” the source said.

Undoubtedly, the incoming executive management has much to do to fix the rundown monetary system and price crisis. When Emefiele assumed leadership, a dollar was trading around N150/$. In the past nine years, it has lost about 80 per cent of its value against the greenback.

Market arbitrage has also been a major pain point. Last year, at the peak of the crisis, the gap widened to about 100 per cent, the worst any currency has suffered in modern history.

The ex-CBN also met the inflation rate at a double-digit rate. Today, headline inflation has reached a multi-decade high of 25 per cent, with economists predicting more downside. Those close to Cardoso said he would summon the needed courage to embark on tough policies to stabilise the market.

Commenting on banking supervision, the Chief Executive Officer of Dairy Hills Limited, Kelvin Emmanuel, said Cardoso must reverse the holding structure for banks to focus on their core businesses.

Emmanuel, who expressed his desire for a non-banker to take over the reign of leadership at the apex bank, insisted that Cardoso must take immediate steps to amend the Banks and Other Financial Institutions Act (BOFIA), especially section 3(3).

“The new CBN boss must amend the BOFIA sections 3(3) to change the authority to award banking licence, unilaterally from the office of the CBN Governor and the Chairman of the Board (that happens to be one) to a council that comprises of the CBN Governor, deputies, members of the non-executive board, the Finance Minister and the Accountant General of the Federation.”

He also charged Cardoso and his team to wind down the Asset Management Corporation of Nigeria (AMCOM), which has outlived its usefulness while its functions should be fused into that of the Nigeria Deposit Insurance Corporation (NDIC).

“The National Assembly should codify sections nine and 11 of the CBN Act to ensure the governor and his deputies cannot hold or contest for elective positions for the period of their tenure, and at least 24 months after they finish their tenure or leave office,” he said.

Emmanuel stressed that the law-making body must also amend section 24 of the CBN Act to provide for the apex bank to diversify the external reserve currency basket of the nation’s external reserves in line with the bifurcation of the global financial architecture and order.

“The Senate should amend section 38 of the CBN to cap the limit for Central Bank advances to the FG or ‘’ways and means’’ at not more than 15 per cent of the previous year’s real revenues. Codify section 38 to ensure that all advances taken must be paid within the same financial year to avoid the statutes described in expected credit losses (ECL-12) by the IFRS 9, to avoid securitisation into long-dated government bonds. It should also amend sections 50(1)(3) to ensure that the Central Bank adopts IFRS 9 and moves away from IPSAS, as a tool for accounting and external audit, to ensure that credit losses impaired from direct intervention programs are not carried forward unnecessarily, and that Accounts are published to the National Assembly and Gazette to the public in line with the law,” he said.

A retired banker, Ande Mohammed, said considering that the incumbent Chairman of the Senate Committee on Banking, Insurance and Financial Services, Adetokunbo Abiru, was once a managing director of a deposit money bank, the expected reforms at the apex bank are not going to be strange to the National Assembly.

“Indeed, the Central Bank must move swiftly to regain market confidence by quickly amending its regulatory model in such a way that separates the prudential regulator from the Consumer Financial Protection Bureau – a twin regulatory model.

“It must also adopt a less expansionary monetary policy and focus on inflation targeting as a tool to ensure that monetary tightening is more effective,” he said. (Guardian)

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