Experts Berate CBN’s Refusal To Publish Seven-year Accounts

The Central Bank of Nigeria (CBN), has released the Consolidated Financial Statements for the last seven years, making it the first time since 2015 that the apex bank will be making its book available for public scrutiny.

The Consolidated Financial Statements released by the CBN are for 2016 to 2022 financial periods, which analysts say is suspicious and require further probing.

Analysts have said the failure of the CBN to publish the report could send wrong signals to investors and others interested in understanding the state of the economy.

President Bola Tinubu had appointed Jim Obazee as a Special Investigator to probe the activities of the CBN and other related entities.

In a letter dated July 28, Tinubu said the appointment of Obazee, relying on the fundamental objective set forth in Section 15(5) of the Nigerian constitution, was in furtherance of his administration’s anti-corruption fight.

The appointment is with immediate effect, and Obazee is to report directly to the President.

According to the letter signed by the President, the full terms of Obazee’s engagement as a special investigator would be communicated to him in due course.

The President had directed Obazee to investigate the CBN and related entities using a suitably experienced, competent and capable team and to work with relevant security and anti-corruption agencies to deliver on the assignment.

Reacting, the Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, said that in the past, the CBN was in breach of corporate governance principles and the CBN Act.

He called for more investigation of those involved in the governance system of the apex bank.

Yusuf said, “It is a major breach of corporate governance principles to have not disclosed the financial statement of the Central Bank for over so long. It is a breach of corporate governance principles, in addition to being a breach of the CBN Act itself. It is regrettable that this kind of thing could be allowed to happen in a country like Nigeria. That such a very strategic institution was allowed to keep away its financial statements. It was not as if their accounts were not ready but they were practically hiding it.

“It is very unfortunate, and it calls for even more interrogation of some critical people that were involved in the governance of that institution over so many years. It raises a lot of suspicions, which should draw the attention of the current investigator or forensic team looking at the book of the CBN.”

A professor of Economics and Public Policy at the University of Uyo, Prof Akpan Ekpo, noted that the investigation likely compelled the CBN to release its financial statements to the public.

It could be because of the investigation because for a long time, we have not seen their financial However, he added that the investigation should be done quietly so as not to drive investors away.

He said, “I think the investigation of the CBN should be done quietly because it is sending wrong signals to potential investors and other stakeholders interested in Nigeria. We can do it quietly without making noise about it.”

Reports said, the consolidated and separate financial statements of the Central Bank of Nigeria (‘the Group’) for the year ended December 31, 2022 were prepared based on accounting policies which were derived from the IFRS Standards, the recommended practices in the guidelines issued by the Financial Reporting Council of Nigeria titled ‘Accounting Guideline for Financial Reporting by Central Bank of Nigeria’ (‘the Guideline’) in February 2018, revised annually for reporting period up to December 31, 2022, the relevant provisions of the Central Bank of Nigeria Act No. 7, 2007 and the Financial Reporting Council of Nigeria Act No. 6, 2011.

The CBN declared a profit after tax of N103.8bn in 2022 as a group, up from N75.13bn reported a year earlier.

Also, the CBN owed JP Morgan and Goldman Sachs a combined sum of $7.5bn as of the financial year ended December 2022.

Included as part of its liabilities was another $6.3bn owned in foreign currency forwards.

The apex bank, however, stated it owed Goldman Sachs $500m and JP Morgan $7b in what it classified as securities lending.

The 2022 financial statement read, “The Group entered into a securities lending agreement with Goldman Sachs and J. P. Morgan and as part of the agreement, the Group pledged its holdings on foreign securities in return for cash. The cash received from Goldman Sachs is N0.23tn ($500m), 2021: N0.22tn ($500m), and JP Morgan N3.23tn ($7bn), 2021: N3.05tn ($7bn) is recognised in other foreign securities.”

Securities lending formed part of the CBN’s total external reserves of about N14.3tn or $29bn, using the official exchange rate of N494/$1 as of 2022.

However, the apex bank also owed another N3.15tn ($6.3bn) in foreign currency forward which was forex obligations it needed to make to foreign investors.

It was also disclosed that the CBN spent N155.5bn on the RT200 and Naira4Dollar schemes in 2022, in a bid to drive foreign exchange inflows.

According to the CBN, the expenses were classified as ‘rebate expenses’ which the apex bank explained was connected to RT 200 and Naira4Dollar, a policy under CBN that led Godwin Emefiele to attract forex inflows.

The 2022 financial statement read, “Rebate expenses represent expenses incurred by the CBN in connection with the RT200 and Naira 4 Dollar schemes which the bank introduced to enhance foreign currency inflow, diversify the sources of FX inflow, increase the level of non-oil exports, ensure stability and sustainability of FX inflows, and support export-oriented companies to expand their export operations and capabilities.”

The bank stated it incurred N137bn in 2022 on the RT200 scheme and in 2021 it incurred N4bn as an expense for the Naira 4 Dollar scheme. This policy had since been dropped since the unification of the naira was announced.

The financial statements uploaded on the CBN website was an indication that the apex bank, under the leadership of acting Governor Folashodun Shonubi, was ready to open its book to public scrutiny.

The suspended CBN Governor, Mr Godwin Emefiele, had come under attack for not releasing the financial statements to the public.

The action of Emefiele was in gross violation of the CBN Act.

Since 2005 when it started publishing details of its annual report on its website, the CBN never failed to publish the report until 2016, when it stopped the publication of the crucial documents.

According to the CBN Act 2007, the apex bank was expected to publish its report within two months after the end of each financial year.

“The bank shall, within two months after the close of each financial year, transmit to the National Assembly and the President a copy of its annual accounts certified by the auditor.

“A report required to be submitted to the National Assembly and the President shall be published by the bank in such a manner as the governor may direct.

“The board shall ensure that accounts submitted pursuant to this section shall as soon as possible be published in the gazette.

“The bank shall as soon as may be practicable after the last day of each month makeup end publish a return of its assets and liabilities as at the close of business on that day, or if that day is a holiday, as at the close of business on the last preceding business day,” the Act reads.

 

Punch/Olusola Akintonde