Sanusi Lamido Sanusi-The metamorphosis of “crooks hunter” into a “crook”

Sanusi Lamido Sanusi, the suspended governor of Nigeria’s Central Bank, made his name from pursuing alleged crooks in the Nigerian banking industry. Five years ago, he went after top management of some Nigerian banks. After a controversial audit of the accounts of all existing banks, he found eight of the banks wanting, accusing them of cooking their books. The banks’ managing directors were all sacked and are all being prosecuted in Nigerian courts except one, the only woman among the sacked managing directors, Mrs Cecelia Ibru, who entered into a plea bargain in exchange for a lenient sentence.
Sanusi’s move against the once powerful managing directors was considered bold and courageous even when critics argued that they were rash and counterproductive as it destroyed the institutions along with individuals. It was like throwing the baby and the bath water away.
Ironically, five years after Sanusi made his move against the banks’ managing directors, and just about three months to his exit as the governor of the Central Bank of Nigeria, after chasing crooks, Sanusi is now the alleged crook. Basically, Sanusi is not only being accused of financial recklessness but also of cooking the books of the Central Bank of Nigeria. In a lengthy indictment memo by the Financial Reporting Council (FRC) of Nigeria, seen by this writer, Sanusi is accused of weighty financial misdemeanors.
For those who may not know, the FRC is responsible majorly for developing and publishing accounting and financial reporting standards to be observed in the preparation of financial statements of public entities in Nigeria; and for related matters. All public entities must submit their annual reports to the FRC which is empowered to ensure that these reports have been prepared based on the approved accounting standards, which in the case of Nigeria are the International Financial Reporting Standards (IFRS). In a memo dated 7th June 2013, and addressed to President Goodluck Ebele Jonathan, on the subject “CBN’s Audited Financial Statements for year ended 31st December 2012,” the Financial Reporting Council raised several exceptions to the CBN’s audited accounts. The FRC report was in reply to a memo raised by the President on April 12, 2013 on the CBN accounts to which the CBN seemed to have sent a reply on May, 20th 2013.
The FRC described the CBN’s response to the President on the CBN’s account as “a clear display of incompetence, nonchalance, fraud, wastefulness, abuse of due process, and deliberate efforts to misrepresent facts on the part of the leadership of the CBN.”
The FRC also accused the auditors of the CBN accounts of fraud noting that their opinion on the CBN accounts “was carefully crafted, capable of deceiving the uninformed, and not in accordance of the International Standards on Auditing and the Financial Reporting Council Act No 6, of 2011.”
The FRC also notes that the CBN audited accounts is highly abridged, with poor disclosures of transactions, noting that “The breakdown provided to some items seems to be allocation of figures to arrive at predetermined numbers”.
The FRC also noted that “a number of transactions and events of a financial nature were carried out without board approvals, as no board approvals were provided when requested.”
The FRC report goes on to cite specific instances of clear fraud perpetrated at the CBN. In one instance, the report notes that the CBN claims to have currency issue expenses of N38 billion for printing of bank notes with the Nigerian Security Printing and Minting Company (NSPMC). The only problem is that the NSPMC total revenues for the same year stood at N29.370 billion. This seem to imply either NSPMC understated its accounts for that year or CBN lied about how much it actually paid and someone has siphoned close to N10 billion on this cost head.
There are also cases where exact expenses incurred in 2011 are repeated in 2012. For example, the FRC claims that the CBN was reported to have incurred as currency issue expenses a total of N1.158 billion and Sundry Currency Issue Charges of N1.678 billion in 2011 and incurred the exact amount in 2012. In accounting, this is impossible, especially for sundry currency issue charges, to mirror each other in two different years unless the figures are cooked.
Also interesting in the FRC report is N7.034 billion, the CBN claims to have incurred as Facility Management charge. Under the heading of this cost item is included a strange “profit from sale of diesel” which makes you wonder if you are looking at the accounts of the CBN or that of retail fuel outlet. In fact, the FRC described this expense head in the CBN books as “an expense head that is used for fraudulent activities”.
The FRC also accuses the CBN of writing off N3.855 billion loan to staff, writing off N4.076 billion spent on fixed assets bought but which the bank does not expect to derive any future benefits from, the CBN keeping money (N1.423 billion) since 2008 for a customer it does not know. The CBN also had balances in foreign currency accounts for which it could not present the physical currencies when they were asked for. The FRC notes that “at no point should one expect to have fictitious Naira balances without the foreign currencies to back them up” asking that “It is important to know who has or was with the foreign currencies at the time.”
The FRC also queries the CBN spending of N3.086 billion on promotional activities in 2012, training and travel expenses of N9.24 billion, expenses on private guards and lunch for policemen of N1.257 billion all in 2012. The CBN also incurred a cost of N1.678 billion buying Newspapers, books and periodicals in 2012.
Other weighty allegations include incurring a hefty N20.2 billion as legal expenses in 2011 and reduced unexplainable (sundry expenses) from N1.197 billion in 2011 to N690 million in 2012, which means that in two years, the CBN just did not know how it spent almost N2 billion.
CBN auditors also benefitted from the largesse of the apex bank as apart from their audit fee of N300 million in 2012, the CBN was magnanimous to give them an extra N140 million without explaining what the auditors did to earn the extra money.
The obvious conclusion from the FRC 13 page report on the CBN is that the apex bank’s accounting system is in a mess. Figures have been allocated randomly, it has not been prepared based on any known accounting standards locally or internationally and contained significant evidence of deliberate misstatements of figures with the aim to commit fraud.
The FRC actually recommended that the governor and all the deputy governors be suspended in order for the FRC to carry out a comprehensive investigation of the CBN accounts. The President may have considered that option too drastic and decided to suspend just Sanusi alone since the buck stops at his table. Besides, Sanusi is not only head of the bank’s management but also head of the bank’s board, so it would have been impossible to investigate him without asking him to step aside.
There have been insinuations that Sanusi is being punished for raising alarm about missing money in NNPC. However, this memo clearly shows this investigation of the CBN accounts predates Sanusi’s alarm. It was due to this investigation, that the CBN 2012 annual accounts remained unsigned till date. On the CBN website, the 2012 annual report of the bank is still a draft copy, which is an anomaly for an institution that is meant to enforce early and prompt preparation of bank’s annual reports. If a commercial bank had been in that position, that bank’s license would have been at risk by now from the no nonsense Sanusi.
It is interesting that after five years, the crook hunter is now the crook. And like the “crooks” he chased out of banking, he may soon find himself using every legal trick to keep himself from going to prison.
For the avoidance of doubt, this is a link to the controversial CBN 2012 annual report –
http://www.cenbank.org/Out/2013/RSD/2012%20Annual%20Report.pdf. Note that the CBN annual report itself is from page 228 which has the bank’s balance sheet. Below it is the signature corner for the governor and other board members which are all empty. In the 2011 annual report of the CBN, which is also available on the CBN website, you will notice the same spaces have signatures, further confirmation that the 2012 accounts have unresolved issues and directors are trying to avoid taking responsibility.
Also on page 258 under director responsibility which attest to the accuracy of the annual report, the provision for signature for Sanusi Lamido Sanusi and Stephen Oronsaye are also unsigned.
The report has “DRAFT” stamped all through, indicating it is yet to be approved more than a year after it should have been approved. The auditors (Page 259) abstain to say the annual report is a true and fair representation of the operations of the CBN and do not give their name.

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