The fraud at CBN

IN an unprecedented and most shocking development in the Nigerian banking sector, some top officials of the Central Bank of Nigeria (CBN), including a deputy Governor and four Directors, were recently suspended for alleged complicity in a fraud at the apex bank. This is very disturbing news that should not be coming out from the highest financial regulatory authority in the country.
The bank’s Acting Director, Corporate Communications, Mr. Isaac Okoroafor, confirmed the development in a state­ment issued by the institution, but did not give full details. According to the CBN spokesman “a highly sophisticated plot to defraud the Central Bank of Nige­ria (CBN) by some criminal-minded ele­ments has been uncovered and aborted by the bank”. He added that “although preliminary investigations so far have not revealed any accomplices within the CBN, management has decided to place all key personnel involved in the transac­tion on suspension. This is to ensure full and unfettered investigation”.
The bank said it had reported the inci­dent to the relevant authorities and as­sured the public that its security remains intact. The suspension of the top offi­cials of the bank was said to have been endorsed by the Governor of CBN, God­win Emefiele.
We are scandalized by this most trou­bling incident at the CBN. The reported fraud at the institution cannot but have many unpleasant implications for Nigeria and its financial regulatory authorities. The sad situation calls for a thorough cleansing of the top echelon of the bank to bring all those who were involved in this plot to justice.
If this fraud could be plotted at CBN and partially succeeded in spite of the stringent regulations and payment pro­cesses guiding the authorisation and release of funds, we wonder what could be happening in the commercial banks which have less stringent financial regu­lations.
Even though the fraud was reportedly uncovered before the scammers could carry out other frauds, the signals that this development has sent to the banking community within and outside the coun­try are ominous.
According to reports, the CBN initially lost $441,000 to the fraudsters. The sum of $251,000 was blocked and reportedly recovered, leaving a balance of $191,000, which had already been cashed by the scammers through a Dubai-based bank.
If it is true that the suspended officials responded to some spam emails without first cross-checking their authenticity and following the clearly laid down CBN payment process before authorising pay­ment, they should be prosecuted and made to face the maximum punishment stipulated for the offence.
It is also disheartening that the fraud was perfected and carried out while the CBN Governor and other senior officials of the bank were in China last month. This makes the fraud look like a well orchestrated insider dealing that could lead to the erosion of trust in the regula­tory institution. Many financial institu­tions began their journeys to extinction in such fraudulent fashion, with insid­ers sowing the seed of their demise.
We demand a thorough investigation of this matter. CBN is the nation’s apex financial regulatory bank. It is an in­stitution run on trust and confidence that requires its managers to be above board. If this scandal is not handled with the thoroughness that it deserves, it could put the funds warehoused in the CBN under the Treasury Single Ac­count (TSA) in jeopardy. Nigeria can­not afford this loss of confidence in its Central Bank.
We are concerned that the CBN has been associated with questionable fi­nancial transactions. We cannot find any precedent to justify the scam rock­ing the institution.
Beyond the suspension of the offi­cials, and their possible prosecution, it has become necessary to sanitise the CBN and strengthen its various depart­ments. Its internal control mechanism that was so easily subverted by the fraudsters should be tightened. That this fraud happened at a time many Ni­gerians thought that the crime of ob­taining money under false pretences, otherwise known as ‘419’, has ebbed in the country, is troubling.
It will, indeed, be difficult to assuage the huge embarrassment that this fraud has visited on the corporate image of the country and that of the CBN as the chief regulator of financial institutions in the country.
This fraud should be an eye opener to the incidence of cyber crime in the banking system and other corporate organisations. More surveillance is re­quired at every level in the CBN and all corporate organisations. Every mea­sure should be put in place to stop cy­bercrime. Few years ago, the treasury of the Central Bank of Brazil was hacked into with billions of dollars stolen. Only recently too, hackers attempted to break into the website of Sony Corpo­ration in Japan.
They were also able to breach the United States government websites. All these attempts at high level fraud call for greater alertness of financial au­thorities all over the world.
Altogether, we urge the authorities at CBN to undertake a comprehensive appraisal of its financial processes and payment systems to tighten all loose ends to avoid a recurrence of this inci­dent.