Buhari’s Attorney General orders @Cenbank fines paid into suspicious acccount

AGF, Abubakar Malami

It appears the Attorney General of the federation, Abubakar Malami, has an ulterior motive over pursuing the actions that led to the N5.87 billion fines slammed on four Nigerian banks by the Central Bank of Nigeria (CBN). Sources yesterday said that Malami sent a letter instructing the banks to pay the fine into a so called ‘ASSET RECOVERY ACCOUNT’ different from CBN’s, despite this act being outside its regulatory purview. “There is a conflict between the Attorney General and the Central Bank as to where the fine imposed on the four banks by the latter will be paid,” one source with knowledge of the matter said.

Sources say that in the past when Banks paid fines imposed by the CBN it never went into any strange bank account. It would also be codified and explained clearly to the affected financial institution. “It appears that they are making this up as they go and it is very embarrassing for the nation, in addition to being quite dangerous for the stability of the financial system,” the source said. Sources tell BusinessDay that the letters sent out by the attorney general’s office to the banks had numerous errors and wrong details. Some had wrong figures, wrong bank addresses, confused the titles of those it was addressed to in some cases, and in one case mixed up Stanbic IBTC, with Standard Chartered Bank. BusinessDay has learnt this is all happening to protect the fees the lawyers used to ‘investigate’ the new MTN CCI allegations will ultimately earn.

“There is complete shock and consternation in the financial services industry,” the CEO of a major securities firm  says. The CBN yesterday debited the accounts of the banks for the sum of N5.87 billion as payment for the imposed fines. Stanbic IBTC said in a statement published on the Nigerian Stock Exchange (NSE) website that the CBN deducted the sum of N1.886 billion from the account of its bank subsidiary, stating “that the bank has done nothing illegal and accordingly the bank will continue to provide CBN with documents and details in support of contention that our actions in relation to these transactions were not illegal.” BusinessDay also confirmed that the CBN has debited Standard Chartered N2.4 billion ($7.86 million), and CitiBank N1.2 billion, after it fined the lenders for what it claims were illegal movement of a total of $8.1 billion abroad with improper certificates for telecoms giant MTN. Daniel Okezie, the Vice Chairman, Lagos Chamber of Commerce & Industry (LCCI SME group) said CBN is the regulatory agency for the banks and in this case it should not involve the AG of the federation as the problem arose due to lack of agreement (between the CBN and the Banks).

“The CBN regulates the deposit money banks and has nothing to do with the AG as the duty of the AG is to advice the executive arm of government on any legal issues if the CBN needs clarification on any legal matters, it will definitely send it to the office to interpret.  It is not the duty of the AG or the ministry of justice at the Federal levels to give such instructions to counter what the CBN has done,” Okezie said by phone. The Vice Chairman, Okezie concluded by saying “we are carrying on with our advocacy work to protect the interest of the organized private sector and Nigerians, and at our next council meeting, the committee that is in charge of this matter would have given us a report which we would look into and make recommendations to the presidency and all the stakeholders involved.” Responding to the banks’ being debited by the apex bank, Bismarck Rewane, MD of economics consulting firm Financial Derivatives said “it is just a sign by the CBN to show that they are serious, although penalties can always be refunded after the case has been resolved.”

He however said he has doubts that this is the proper way to go about such an issue. Meanwhile the total amount of N3.65 trillion ($10.1 billion; tax of $2billion and $8.1billion refund) CBN is asking MTN  to pay in refunds and tax is about 33 percent of Nigeria’s 2018 budget of N9.2 trillion, as calculated by BusinessDay. Rafiq Raji, the Chief economist at Macroafricaintel Investment, a research and investment consultancy firm, said CBN should be performing its regulatory function, not the attorney General. “This action by the apex bank suggests that indeed it is convinced that there was an infraction and this means that it is doubtful that MTN will have a substantial basis to argue against the fine it has been asked to pay,” Raji concluded. Meanwhile, the Nigerian government on Tuesday said a whistle blower prompted an investigation into alleged infractions committed by telecoms group, MTN.

An undisclosed official of the office of Nigeria’s attorney general is said to have made the disclosure. The nation’s government in July last year, passed the whistle blower bill into law. Otherwise known as “An Act to Protect Persons Making Disclosures for the Public Interest and Others from Reprisals, to Provide for the Matters Disclosed to be Properly Investigated and Dealt with and for other Purposes Related Therewith”, the law also ensures that persons who make disclosures and persons who may suffer reprisals in relation to such disclosures are protected under the law. According to the law, a whistle blower is entitled to 2.5 percent (minimum) and 5.0 percent (maximum) of the total amount recovered as a result of the whistle blowing.

In this case the calculation  of the expected fine from Standard Chartered of  N2.5 billion; Stanbic IBTC’s N1.9 billion, Citibank’s N1.3 billion and Diamond Bank’s N250 million added to MTN’s expected payment of N3.65 trillion will give the whistle blower about N91.35 billion to N182.75 billon as he or her reward. That may be the primary motive for Malami’s investigation sources tell BusinessDay. In the meantime risks from all these to the banking system have become elevated as investors begin to fear that contagion may spread quickly in the banking system, if not handled carefully. “Banks are beginning to get calls from correspondent banks. Investors are also calling and getting worried about where Nigeria’s financial system is headed,” another source said.

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