The governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso, has disclosed that the security agencies and the Economic and Financial Crimes Commission (EFCC) are currently investigating questionable foreign exchange allocations and forward contracts estimated at $2.4billion. The probe came on the heels of the forensic audit of $7billion debt reportedly inherited by the present leadership of the CBN from the previous one under Godwin Emefiele.
The Cardoso-led CBN had late last year engaged the services of Deloitte Management Consulting to unravel how the debts were incurred. Following the forensic audit report, CBN said it had provided the investigators with the relevant documents that will focus primarily on the details of the forex transactions that did not meet the standards of the regulatory agency.
Some banks Chief Executive Officers are expected to be invited for interrogation by the security agencies soon. It is not yet clear how long the probe will last. But the CBN said the Deloitte report revealed that a good number of the forex allocations did not meet the laid down criteria for payments, among other alleged infractions and discrepancies contained in the audit report. Let the probe of forex racketeering be transparent. It should not be used witch-hunting.
Clearly, public confidence in the CBN went to all-time low following the ouster of the immediate past governor of the apex bank as a result of sundry allegations of abuse of office. According to the CBN governor, as of recent, all valid forex backlog amounting to $1.5billion had been cleared. Others need to be diligently verified. Undoubtedly, the credibility of the banks is very much in doubt. This makes every effort towards restoring public confidence in the banking sector very crucial. The current probe is coming after the CBN and the anti-graft agency accused the banks of series of financial malfeasance.
For instance, last month, the Chairman of EFCC, Ola Olukayode, indicted banks as being “linked to 70 per cent of the financial crimes in Nigeria.” This is a weighty allegation that should be investigated. Speaking at the Annual Retreat and General Meeting of the Association of Chief Audit Executives of Banks, the EFCC boss, represented by the Director, Internal Audit of the commission, Mr Idowu Apajoye, claimed that the banking sector has “increasingly become a cesspool of fraudulent activities.” He said the development has raised considerable challenges and concerns to the agency. Therefore, he calls for concerted effort of audit executives to tackle the challenges in the banking sector.
The probe of the forex racketeering in the banks is appropriate and timely. It will strengthen the regulation of the banking industry and make them comply with the extant prudential guidelines. The banking sector is very vital in every plan to rescue the economy.
Unfortunately, the sector has witnessed fraudulent practices in recent times. Recent audit reports by the Nigeria Deposit Insurance Corporation (NDIC) have raised alarm over some infractions in the banking sector. Some of the insider abuses include outright selling of customers’ deposits or identity theft as well as unauthorized loan facility, forgery and several others.
However, those charged with the probe of forex racketeering must be patriotic in carrying out the assignment. Proper reconciliation of the banks’ accounts, with periodic checks, in accordance with accounting requirements, must be adhered to. The findings of the probe panel must be made public, and sanctions imposed on those found to have breached the relevant laws. There must be strict supervision of the banks by the apex bank. It is likely that inadequate supervision of the banks must have accounted for abuses in the sector, including the alleged forex racketeering.
While ensuring transparency in the financial services sector is part of the confidence-building process, there is need to formulate policies that will make Nigeria’s business environment attractive to foreign investors. We advise the CBN and the federal government to meet the forex demands of the organised private sector and small-scale industrialists.
Let the CBN ensure that valid documentation of all forex allocations are kept to curb infractions such as the allocation of millions of dollars to fictitious entities, and the provisions of forex allocations without the corresponding naira value. This is one of the best ways to avoid the frequent forex racketeering.