Thieves in the treasury
However, despite commendable progress in the adoption of E-transactions, cash handling still remains very popular regardless of the quality of the notes and the attendant health hazard.
Curiously, however, new currency notes have become easier to obtain at social parties and event centres where they are brazenly hawked with up to 20 per cent discount, even when commercial banks continue to plead non-supply from the Central Bank of Nigeria (CBN). Nevertheless, the popular suspicion of ‘under table dealings’ in currency supply was probably validated last week by media reports, such as “EFCC nabs six CBN officials and 16 other bankers over N8bn fraud”, (pg 9 in Vanguard edition of 1/ 6/15).
Apparently, the Economic and Financial Crimes Commission (EFCC) picked up the suspects for “stealing and putting back into circulation about N8bn stock of defaced and mutilated Nigerian currency notes which were meant for destruction”; investigations also revealed that in September 2014, “a box that was supposed to contain N5bn in N500 note denominations was discovered to be filled instead with old newspapers” at the same Ibadan branch of the CBN.
Clearly, the sum of N8bn indicated, may actually be an understatement, since the EFCC also claims that such escapades had enjoyed considerable mileage over several years. Besides, the N134m credit balance in one of several bank accounts and the value of other listed properties allegedly acquired by a Standard Six certificate cash assistant, who is, incidentally, a junior member of the Ibadan syndicate, may already exceed N1bn!
Nevertheless, the EFCC also recognized that “this currency fraud is partly to blame for the failure of CBN’s monetary policy, as the surplus cash mop up exercises by the apex bank inevitably failed to check the inflationary pressure on the economy”.
The above EFCC’s statement seeks to explain that in order to reduce the inflationary threat from perceived surplus Naira in the system, the CBN commits the hari-kari of adopting high monetary policy rates which are antagonistic to economic growth and job creation.
Worse still, as counter measure against rising prices, the CBN becomes forced to reduce the extant surplus money supply by borrowing hundreds of billions of Naira that would simply be kept as idle funds, despite the attendant oppressive interest rates of up to 15 per cent, in order to restrain commercial banks from promoting spending by lending to other customers and fueling inflation.
Curiously, the modus operandi of the Ibadan currency theft is awkwardly similar to the process CBN also formally adopts for its excess liquidity mop up operations. For example, while CBN on one hand pretends to be socially responsible in attempting to stop inflation by reducing Naira surplus and liberal spending, the same Reserve bank also deliberately promotes the disenabling liquidity surplus syndrome when it substitutes humongous Naira allocations for the distributable portion of dollar-denominated revenue every month!
Indeed, with the prevailing culture of impunity in governance, it would be a hard sell to convince Nigerians that the Ibadan currency scam is an isolated case; thus, it would be presumptions to approve a clean bill to the other 36 stations where such CBN cash operations are executed nationwide. Expectedly, the arrests in Ibadan would obviously trigger cover-up strategies in other CBN cash centres nationwide before the investigators arrived.
Incidentally, currency scams involving CBN staff are not unusual; for example, in December 2012, the House of Representatives expressed shock to “hear that N2.1bn of newly printed N1000 notes was missing at the Nigerian Security Printing and Minting Company”, a corporation over which CBN has supervisory role. Media reports suggested then, that in order to facilitate investigations, the Managing Director of the NSPMC who reportedly enjoyed extravagant lifestyle, and the subsisting Head of Security of the Mint Company were sent on compulsory leave.
In another related development, the cover report of the Sun Newspaper edition of 16th April 2013 also carried a story titled “EFCC detains ex Mint MD over N750m polymer scandal!” The story was sequel to allegations that an Australian Newspaper had reported that, SECURENCY (a note printing subsidiary of the Reserve Bank of Australia) paid N750m in bribes to some officials of CBN between 2006 and 2008 to secure the contract to make polymer notes in Nigeria.
According to the report, apart from a former CBN Governor, senior officials of the Finance Ministry and a former President were named as beneficiaries of the bribes.
While no official of the Central Bank has so far been indicted, the EFCC is presently in court with the ex-MD over a request to extradite him to the UK to face prosecution over bribery allegations on the contract for the N20 polymer note.
However, in a curious twist of events, the same CBN which had, earlier zealously promoted attributes of the polymer notes at great public expense, has lately turned around to condemn the adoption of such currency as ill-advised because polymer notes were found to rapidly deteriorate.
Surely, the autonomy of the CBN should not provide a cover for the perpetuation of financial crimes, especially when the success or failure of the Nigerian economy rests squarely on its performance. The source of billions of Naira unilaterally expended as interventions in various sectors of the economy by former governors is yet to be determined.
Furthermore, the source of billions of dollars liberally auctioned to Bureau de Change, even when the real sector is deprived is also yet to be ascertained; why for example, should the CBN sit on tens of billions of dollars as idle deposits, while our government goes cap in hand to borrow at atrocious interest rates from external creditors.
Moreso, CBN’s unhealthy collusion with commercial banks has openly promoted the scam of margin trading, round tripping and the provision of free funds, which are subsequently mopped with atrocious interest rates which inordinately bloat the profitability of banks despite their zero added value, while the real sector totters and unemployment spirals. A forensic audit of the uses and sources of funds by the CBN is certainly and urgently required.
•Boyo is a public finance analyst.