The Financial Reporting Council of Nigeria Report That Nailed Sanusi


The report read:
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

(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

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

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

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.

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

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,