‘Unremitted’ $49.8bn: Mischief, ignorance or distraction?

Posted by admin CBN (Central Bank of Nigeria), Latest Politics Sunday, December 22nd, 2013

A letter dated September 25, 2013 written by the Governor of Central Bank of Nigeria, Lamido Sanusi, to President Goodluck Jonathan was recently leaked to the media from undisclosed sources. In an apparent streak of patriotic fervour, Sanusi noted in his letter that, “I am constrained to formally write your Excellency, documenting serious concerns of the CBN on the continuous failure of the NNPC to repatriate significant proportion of the proceeds of the crude oil shipment it made ($49.8bn), in gross violation of the law”.

The impact of Sanusi’s “bombshell” was probably amplified by the coincidence of its leakage with the poisoned arrows unleashed on President Goodluck Jonathan in a caustic letter by former President Olusegun Obasanjo.

Nonetheless, Sanusi’s antecedent in exposing the horrid level of fraudulent practices in the banking sector, as well as his expose’ on the bloated expenditure of legislators, may have induced public belief in his allegations of fraud against the Nigerian National Petroleum Corporation.

The NNPC General Manager Public Affairs, Dr. Umar Farouk Ibrahim, however, quickly explained that the 24 per cent of the total crude oil receipts ($15.5bn), which the CBN acknowledged that the NNPC remitted to the treasury actually represents the proceeds from the equity lifting, which the latter directly paid as its legitimate contribution to the federation account.

Thus, the alleged unremitted balance of 76 per cent, according to Ibrahim, was received by those other agencies that are statutorily empowered to collect them for onward remittance to the treasury. Indeed, the Minister of Finance, Dr. Okonjo-Iweala, also last week corroborated this position to the Senate Committee on SURE-P, when she confirmed that the $49.8bn allegedly missing was “intact”. Surprisingly, however, Okonjo-Iweala was only to reverse her position a day later, when she reported to another Senate committee that about $10.8bn had yet to be accounted for!

Earlier, the Group Managing Director of the NNPC, Andrew Yakubu, cautioned government ministries and development agencies to “seek better understanding of issues, which are not clear to them, rather than go public with misleading information that is capable of creating public disaffection.”

Consequently, with such contradictory positions on a matter as basic as appropriate accounting process for public funds, one must wonder what other more serious issues these critical government agencies discuss at their regular inter-ministerial meetings. Alternatively, could these agencies, which also include the Accountant-General of the Federation’s office, the Federation Accounts Allocation Committee, etc, have colluded to defraud the federal treasury for so long, without the CBN’s knowledge of such fraud?

In addition to ongoing legislative investigation, it should be revealing to also publish the result of President Jonathan’s alleged presidential directive, upon receipt of Sanusi’s letter, that the huge revenue differences between the NNPC and the CBN records should be instantly resolved.

Nonetheless, a commonsense approach may serve our purpose in determining a clearer reality. Indeed, the CBN’s expectation that total sales value, i.e. average price of crude oil multiplied by the actual volume of oil sold should amount to $65bn is really hardly contestable! It is also true that the 1999 Constitution requires monies earned by all government agencies to be paid into the federation account. So, the CBN’s allegation may be technically right, if the NNPC paid only $15.5bn instead of $65bn into the treasury. However, the big question is whether it is realistic for a trading corporation to directly pay its gross sales revenue as dividends to its shareholders? Surely, it is only after the cost of all operations and several other contractual obligations, including taxes, have been met that any corporation can pay dividends to shareholders!

Consequently, it would be inapplicable therefore, for the NNPC to repatriate the gross sales revenue for all oil sales directly into the federation account. Surely, this could not be the intention of Section 162 of the 1999 Constitution on which Sanusi founded its allegation of fraud against the NNPC. Besides, the CBN Governor should know that other agencies apart from the NNPC are also partially accountable for crude revenue.

The above discussion is not a clean bill for NNPC’s operations, as it will clearly be a miracle, under current circumstances, to find any MDA with unblemished accounting records and uncompromised operational processes nationwide. Besides, NNPC is yet to satisfactorily account for its 400,000 barrels daily crude allocation for local refining!

Nonetheless, in his letter, Sanusi also recommended “investigation of those obvious avenues for money laundering, such as companies that sell private jets in Nigeria, and those Bureaux de Change, which have purchased hundreds of billions of dollars from the interbank market and are unable to account for these monies.” Sanusi assured President Jonathan of the apex bank’s “readiness to render full assistance and provide as much data as possible to support the prosecution of such errant companies.”

We may wonder whether this is the same Sanusi who clearly did not require presidential consent before his swashbuckling controversial banking sector reforms or is this not the same firebrand, who took on the otherwise intimidating National Assembly members on their bloated expenditures without batting an eyelid! Why couldn’t the same irrepressible CBN Governor simply pass on the substantial information dossier on suspects of money laundering transactions directly for further investigation instead of, unexpectedly, circuitously inviting Mr. President to authorise prosecution?

Thus, observers may see Sanusi’s fundamentally, clearly unfounded exposé as subterfuge to distract public attention from the CBN’s evident failure to achieve its core mandate of price stability, which should normally drive economic growth. Undoubtedly, no nation has successfully grown its economy and also stimulated employment opportunities with cost of funds to the real sector exceeding 20 per cent, neither can there be sustained social welfare when pensioners become paupers every decade or so, because of double-digit inflation rates as witnessed in Nigeria in recent years!

There is also nothing to be said in favour of the CBN’s “economically poisonous” monetary strategy, which constantly increases the cash base of banks with huge public sector naira allocations, only to return to mop up (i.e. borrow back) the resultant suffocating cash surfeit from the same banks with double-digit interest rates, which are inappropriately excessive for such risk-free sovereign debts! Indeed, we should not be reminded of the apex bank’s self-styled own reserves of about $40bn, which, despite government’s forced borrowings at “Shylock” interest rates to fund such contrived deficits, yet remain inexplicably idle but unavailable for public appropriation! Or, why should anyone wonder which income sources fund the CBN’s billions of naira unilateral serial interventions nationwide?

-Punchwp_posts