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Was N500bn stolen at the CBN? What you need to know about Emefiele’s leaked audio

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Was N500bn stolen at the CBN? What you need to know about Emefiele’s leaked audio

A leaked recording of a conversation involving the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele and his management staff was released over the weekend. The report led by investigative newspaper, Sahara Reporters said Emefiele was trying to figure out ways to cover up about N500 billion ($1.3 billion) that was stolen from the Bank’s purse.

**You can read the first part of the transcript here***

However, the content and context of the leaked recording is bordered by much speculation around a controversial N150 billion deficit.

Those involved: The conversation allegedly features, CBN Governor, Godwin Emefiele; his deputy, Edward Adamu; the Director of Finance, Dayo Arowosegbe; and the Special Adviser to the CBN Governor, Emmanuel Ukeje.

CBN via official press release maintained that the controversial ‘stolen’ figure was as a result of an error made by external auditors who balanced the 2018 end-of-year statement. The Bank maintained that no amount of money was missing.

  • “The selective conversation being circulated was simply a discussion to ascertain why the auditors took that position and next steps to resolving it. Obviously, it soon became clear that a State Government loan cannot be classified as “bad” or “irrecoverable” when the State still exists and getting FAAC allocations. The Bank then reached out to the Federal Ministry of Finance and they jointly gave comfort to the auditors who accepted in writing that these monies would be repaid.
  • According to the CBN, it had loaned 650 billion to state governments at 9% interest rate but its auditors wrote off 150 billion as a bad debt.
  • “On this basis, the auditors reversed the negative entry and the certified that the CBN’s 2018 accounts were a true reflection of the State of Affairs. Reconciliation of Balance Sheet items are regular conversations amongst Senior Management of many agencies and should not be misconstrued as anything but that.
  • But this explanation does not suffice based on a line from the Governor’s remark: “How do we get out of this is the issue …because the auditors themselves will be very careful because they have people who redo their account.”

Seeing through the haze: The CBN’s response is not enough, even though the actual details are still sketchy at the moment. Among other things, the conversation revealed a process of bad decision making that has cost the bank substantial amount of money. It appears that the officials explored some covering up the books and diverting funds in a bid to figure a way out of the predicament. According to another release by Sahara Reporters, the CBN had set aside two billion Naira as “something to be done for the EFCC.” The newspaper reports that it was in order to “hush” the EFCC from investigating the alleged financial impropriety. While the Bank claims there was no fraud, the call exposed that the transaction itself involving the finance ministry might have been illegal, in the event that their claim was right.

Why this matters: CBN’s explanation does not provide enough answers or justification on this matter. The leaked audio exposes the institution’s opacity and the mismanagement of the country’s resources at its disposal which would ultimately have far reaching consequences. Emefiele’s exclamation and composure on the call shows that he is aware of this fact. The Bank’s claim that the monies were loaned to states is quite indicative of the lack of sustainability of most Nigerian sub-national governments, which are now dependent on federal bail-outs and interventions.

Per Financial Journalist, Seyi Fawehinmi: “That tape was a behind the scenes look at how terrible the public finances have been and how they’ve been juggling several balls to keep the show on the road. That is interesting on its own. Not everything needs to be ‘fraud’ or stealing.”

Furthermore, the CBN should face more scrutiny concerning its operations for two reasons we have outlined below:

One – While the CBN might have carried out a legitimate transaction in this case, its several interventions, (most badly thought out and executed) ends up bringing about loss to the institution. A case in point is the Anchor Borrowers Scheme which has caused substantial losses.

Two – The CBN might have undertaken some special foreign exchange transactions that could significantly affects its books. It is known among Abuja insiders that the bank offers several discretionary FOREX rates to powerful individuals in the country, an issue that has been allegedly abused and used to enrich relatives and political associates of President Buhari. At some point in the conversation, the Governor also seemed to suggest increasing FOREX exchange rate by up to two Naira in a bid to plug the hole.

Bottomline: There should be nothing short of an investigation into the issue by the National Assembly.

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