Sanusi, Replies Jonathan’s Query, Defends Bank’s Multibillion Naira Spending

The suspended Central Bank governor, Sanusi Lamido, has defended his bank against allegations of spending billions on extensive loans, staff emoluments, and maintenance of devices.

In suspending Mr. Sanusi last week, President Jonathan accused the CBN governor of “financial recklessness”. PREMIUM TIMES had reported exclusive details of the president’s second query to Mr. Sanusi early 2013, in which Mr. Jonathan demanded prompt clarification on key spending in excess of a trillion naira.

The president’s query followed the submission of the CBN’s audit report by Mr. Sanusi to the president on February 26, 2013. The president claimed in his letter that Mr. Sanusi’s swift response on the issues raised would be helpful in providing proper “appreciation of the nation’s economic outlook”. It was, however, Mr. Sanusi’s reply that the president forwarded to the Financial Reporting Council of Nigeria, on whose
recommendation the president said it relied to suspend the embattled governor.

In the 22-point query, the Mr. Jonathan demanded amongst other things, the domestic report on the CBN’s 2012 financial statements by external auditors and the financial reporting framework under which the financial statements were prepared.

He also directed the CBN governor to provide names of the trustees of the CBN’s self-insurance, including the board minutes approving the said self-insurance scheme and trustees and the entries of the annual appropriations indicating where it was posted in the financial statements.

Mr. Sanusi was also directed to explain the composition of CBN’s gratuity of N72.653 billion in 2012 and N64, 280 billion in 2011 and how it was determined as well as the board minutes and approval practice of making provisions for internal currency insurance based on the premium that would have been payable to external insurers had they been engaged. The president also wanted names of the insurance companies that were filed tested in the exercise and the modalities thereof.

The president also demanded the justification for the “Repairs and maintenance expenses” of N2.268 billion in 2012 and N2.070 billion in 2011 and the extent of repairs of printing machines and intervention activities of N19 billion in 2012 and N23.865 billion in 2011 as well as the administration of expenses of N42.596 billion and N48.340 billion in 2011.

This newspaper learnt that the query raised by the president contained basically the same questions that the Financial Reporting Council had asked CBN’s auditors who had sent a copy of the audit report to it. The auditors, Ernst and Young and Pricewaterhousecoopers had responded to the questions, attaching relevant documents to back their submissions.

Those familiar with the matter said it therefore came as a surprise to the CBN when the president wrote to Mr. Sanusi asking the same questions to which the auditors had provided “satisfactory answers”. Our sources said in responding to the president, the CBN governor simply reproduced and forwarded the same answers that the auditors provided to the Financial Reporting Council. In his response to the president, obtained exclusively by PREMIUM TIMES, Mr. Sanusi said the repairs and maintenance expenses relate to “general office equipment and ICT maintenance”.

The letter is dated May 20, 2013, two weeks after the president’s query. The CBN governor said about 92 percent of the maintenance expenses were for information and communication technology equipments.

The CBN does not have printing machines, he said. On why he granted N50.06 billion as loan to Wema Bank and another N500 billion to Asset Management Company of Nigeria, AMCON, the CBN governor said the loans were necessary because AMCON was sustaining “heavy losses” while WEMA was still having liquidity challenges. He said the bank was working to recover the loans.

On the composition of the CBN’s N72.65 billion gratuity in 2012 and N64.28 billion in 2011, Mr. Sanusi said employees of CBN are entitled to gratuity payments after completing five continuous full years of service with the bank. He said the gratuity is computed based on the number of years of service, gratuity rate, and gross emoluments for final year of service.

The CBN governor, defended his spending of N19 billion in 2012 and N23.865 billion in 2011 as “intervention activities” of the bank, saying the funds were channelled to critical sectors of the economy. “These activities were carried out as part of the bank’s developmental role,” he said.