Special investigator did not give us right of response – CBN board members

Some members of the Board of the Central Bank of Nigeria have told Daily Trust in confidence that the Special Investigator to the CBN, Jim Obazee neither interviewed nor contacted them for their input into the investigation before recommending them for prosecution.

President Bola Tinubu had, on July 28, appointed a former Chief Executive Officer of the Financial Reporting Council of Nigeria, Obazee, as Special Investigator to probe the activities of the apex bank under its former governor, Godwin Emefiele.

The special investigator indicted the board and management of the CBN on several fronts in the recommendations submitted to the president.

Responding to some of the allegations, the board members said: “On naira redesign, no quorum was formed to hold a board meeting because some members had completed their tenures and were waiting for President Buhari’s reappointment and Senate confirmation when the naira redesign issue was concluded.

“Therefore, you cannot hold the entire membership of the board responsible for what they did not know anything about and were never consulted.”

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Ways and Means

The board members noted that no government from 1999 to date had ever repaid Ways and Means from CBN within the fiscal year the W&M was secured.

They said the board had nothing to do with W&M, adding that not a single request for W&M was presented to the board for discussion or approval because it is not within the prerogative of the board.

According to the members, the board is merely notified for information only once the president approves the W&M. They were never shown the approval, at no time was a memo brought to the board.

They said: “Ways and Means is a federal government overdraft from CBN and is a lending operation by CBN governed by the relevant sections of CBN Act. Ways and Means have accumulated from 1999 to date and to the best of our knowledge, no government has repaid the overdraft taken from CBN within the fiscal year in which the overdraft was taken as stipulated by CBN Act.

“Besides, the lending operation of the CBN is not listed as one of the responsibilities of the CBN board under Section 6(a-f). Specifically, on the issue of Ways and Means, at no time was a memo brought to the board for discussion. Once Mr President approves a request for Ways and Means, the board is merely notified for information.”

On alleged diversion of W&M

The board members argued that no diversion could be done of what had not been credited to the TSA.  They said accruals into the TSA move straight to MDAs. CBN credits the TSA account of the Federal Ministry of Finance, from there it goes straight to the benefiting MDA for the purpose it was meant for.

Securitisation

They said a joint memo by the Ministry of Finance and the CBN for W&M was actually approved by former President Muhammadu Buhari. They said administrative delay from the National Assembly was responsible for the rise in W&M from N19tr to N22.7tr.

According to the board members, “It is equally noteworthy that the essence of the securitisation of Ways and Means which has accumulated over the years is to clean up the balance sheet of CBN which is being impaired by this liability and to make the balance sheet whole again.

“Therefore, the recommendation to Mr President to request the cancellation of the approval granted by NASS to securitise the Ways and Means in the amount of N22.719 trillion is bizarre and dangerous!

“The implication of this recommendation, if approved, is that the federal government must come up with this huge amount immediately to pay off CBN to resolve the balance sheet impairment problem. It is not clear where FGN will find this money. Since FG cannot come up with this fund at this time, the most viable option is to securitise the debt as already done by the Debt Management Office which issued the securitised bonds in favour of CBN.

“Subsequently, FG will commence repayments conveniently to the bondholder-CBN after the three-year moratorium in 2026. The repayments will be made over the life of the bond through annual budgetary appropriations. Accordingly, the recommendation to cancel the securitisation should not stand in the absence of a viable alternative.”

E-naira extra-budgetary spending

The board member said because of the exchange rate depreciation and inflation, the board approved additional spending after it was convinced that the management had genuine reason to demand for extra spending.

However, “The Board of CBN is never engaged in the implementation of projects and payments for same including deductions for taxes or otherwise. This is not one of the responsibilities of the board as stipulated under Section 6(3a-f), (4) & (5) of the CBN Act 2007. Doing otherwise would amount to micromanagement.

Review of compensation packages

The report of the SI also read in part, “The then CBN governor and his Committee of Governors held their 758th meeting on September 14, 2022, and approved for themselves upward review of salaries (referred to as annual pay parity in US dollars), sitting allowances, air tickets, and incidental expenses of the board and Monetary Policy Committee members.

“This was carried out without the approval of the president or in consultation with the Revenue Mobilisation Allocation and Fiscal Commission. The Secretary to the Board of the CBN kept mute over this development and the board members looked the other way.’’

In their response, the board members noted that it cannot approve its own remuneration and entitlements. “The governor meets and discusses with the president details of the board’s entitlement. At no time was the request for entitlement or remuneration brought before the board for approval,” they said.

They argued that the board’s remuneration has not changed throughout the duration of the board.

They further argued that because the CBN is independent, the remuneration of the board members is not subject to RMAFC review stressing that recommendation for remuneration review was ever brought to the board (on good authority).

“The board approved the original budget for 2023 referred to in the report. If there’s any cost escalation arising from inflation and exchange differentials which was brought back to the board for review and approval, it is squarely within the powers of the board to approve the supplemental spending and this cannot be referred to as ‘extra budgetary spending.

“Section 8(3) of CBN Act 2007 stipulates that the remuneration of the governor and the deputy governor is to be approved by the board subject to the approval of Mr President during the tenure of this board. No memo on review of compensation packages was ever brought for discussion and approval,” they added.