CBN Splits $134m Bank Transfer To Avoid Violation – AuGF Report Shows
The latest report of the Auditor General of the Federation has shown that the Central Bank of Nigeria under the previous administration split the transfer of $134m to the United Kingdom branch of Nigerian bank to avoid violating its own guidelines regarding offshore deposit placement.
This was disclosed in the 2020 audit document of the Federal Government released last week. The audit report was published two years later than it was expected by law.
It was earlier reported that not less than 256 Ministries , Departments and Agencies of the Federal Government has spent over N284bn without approval according to the report.
Under its immediate past Governor, Godwin Emefiele, the CBN had been accused of several malpractices. However, Emefiele has since denied many of the allegations.
The report said, “CBN made a deposit of $134m to First Bank of Nigeria (UK) London (this deposits were split into $59m and $75m) to circumvent the provisions of the CBN guidelines on offshore deposits.”
According to the Paragraph 2(e) of the guidelines on deposit placement with Nigerian banks operating offshore of the CBN, it states that, “the exposure limit to any foreign branch/subsidiary of a Nigeria bank shall not exceed $100m or 30 per cent of the branch/subsidiary average monthly deposit (excluding CBN funds) over one year.”
The audit report further noted that the apex bank did not provide information as at the time of the audit to enable the auditor to verify the average monthly deposit of FBN UK LTD. London, over one year to establish if it is qualified for such exposure.
Currency exposure is the change in an asset’s return due to fluctuations in a foreign currency when the asset’s return is measured in the domestic currency.
The auditor general noted that the apex bank’s alleged misconduct is due to failure in the CBN’s internal control system.
The auditor general said, “The above anomalies could be attributed to weaknesses in the internal control system of the Central Bank of Nigeria, exposing CBN funds to avoidable risks and diversion of public funds.”
The CBN, in its management response, said, “the exposure to FBN was within the approved exposure limit, therefore, it has not breached it guidelines.”
While reacting to the fact that it split the deposits to circumvent the provisions of the guidelines, CBN noted that the splitting was done for liquidity planning purposes and not otherwise.
The CBN stressed that, the placement of deposits with FBN was never above the approved limit, saying, “30 per cent average monthly deposit of the FBN was above $100m as at December, 2020, it recorded about $136m.”
The auditor general has instructed that the CBN should be made to give justification to the Public Account Committee of the National Assembly for allegedly violating its guidelines for placement of deposits with FBN UK Ltd, London for the year ended, 31 December, 2020.
The AuGF, Shaakaa Chira, said, “Otherwise, sanctions relating to gross misconduct specified in paragraph 3129 of the financial regulation should apply."
Quoting Paragraph 3129 of the Financial Regulation, the report said, “any officer who violates any other-provision for which no sanction is specifically recommended shall be taken to have committed gross misconduct and shall be disciplined accordingly.”