Sanusi Lamido Responds To Allegations Of Financial Recklessness

Suspended CBN governor, Sanusi Lamido Sanusi yesterday Sunday March 16th
responded to allegations of financial recklessness leveled against him
by the Financial Reporting Council of Nigeria (FRCN) and the Federal
Government. Find the full statement he released below…

I am compelled to make this public statement to address the various
allegations levied against the Central Bank of Nigeria (CBN) and cited
as the reasons for my suspension from office as the Governor of the CBN
on the 19th of February 2014.

As a matter of record, the allegations were made in the following documents: Continue..
i. Briefing Note of the Financial Reporting Council of Nigeria (FRCN)
dated 7th June 2013, Ref: PRES/188/T&I/89 to His Excellency,
President Goodluck Ebele Jonathan [the Briefing Note];

ii. The Letter of Suspension dated 19th February 2014, which I
received from the Office of the Secretary to the Government of the
Federation; and
iii. The petition dated 9th February 2014 by Mr Erastus Akingbola.

However, before I go into the above issues, let me reiterate for the
records, the achievements of the CBN during my tenure as the Governor: 

The Record

Firstly, let me state that I have been extremely fortunate to have
had a solid and supportive team led by the Deputy Governors and
supported by the Departmental Directors, as well as thousands of
hardworking and dedicated staff who must be given the credit for all
that the CBN has achieved. I would also like to acknowledge for the
record, the foundation laid by my predecessor, Professor Charles
Chukwuma Soludo, in a number of areas. The CBN Act, 2007, which he
championed, established the CBN as a truly autonomous entity of the
Federation, and made it possible for us to take the difficult decisions
necessary for restoring and maintaining macroeconomic stability. The FSS
2020 and PSV 2020 documents provided the principal strategic roadmaps
that led to many of the innovations in payment systems, non-interest
banking, financial inclusion, the Asset Management Corporation, IFRS,
Risk-based Supervision, and the like.

Indeed, it will be impossible for me to review almost five years of
revolutionary change made possible by the work of thousands of employees
in the CBN in collaboration with other Regulators, Banks and Other
Financial Institutions and Government Ministries in this press
statement. However, I will mention a few of the key highlights.

On monetary policy, the Bank has improved the institutional framework
for policy-making. A properly constituted Monetary Policy Committee
(MPC) with a clear mandate for maintaining stability has been
established. The MPC has been supported by improvements in research,
data and forecasting capacity, and we have also paid attention to clear
communication of our objectives to the market. As a result, headline
inflation has remained below 10 per cent since January 2013, from a peak
of 15.1 percent and 13.9 percent in 2008 and 2009 respectively. Core
inflation declined from 11.2 per cent in December 2009 to 7.9 percent in
December 2013, while food inflation maintained a downward trend from
15.5 percent in December 2009 to 9.3 percent in December 2013. In
addition to the conventional liquidity management products, the Bank
approved financial products to manage liquidity in non-interest
financial institutions. The CBN also promoted the formation of the
financial Markets Dealers Quotations Over–the-Counter (FQDM OTC) Plc as a
self-regulatory OTC operator.

In the area of safeguarding the value of the local currency and
maintaining stability in the foreign exchange market for the overall
sustenance of macroeconomic stability and growth, the CBN over the
period has successfully maintained a stable exchange rate regime and a
robust external reserve position conducive to sustainable growth and

On the Banking System, I was appointed Governor in the middle of a
global financial crisis when the Nigerian banking system was on the
verge of collapse. The Bank moved swiftly to remove the managing
directors and executive directors of the banks where major corporate
governance failures were discovered, provided liquidity support,
pioneered the setting up of the Asset Management Corporation of Nigeria
(AMCON) to purchase non-performing loans, recapitalize the banks and
pilot a process that led to mergers and acquisitions, as well as
recapitalization of all the weak and failing banks. As a result, all
financial soundness indicators – Capital Adequacy, Asset Quality,
Liquidity and Profitability ratios – were normalized. As a result of the
work by the Bank, not a single depositor or creditor lost money in any
Nigerian bank during or after the financial crisis.

In addition to the quantitative measures, we broke up universal banks
and encouraged the setting up of specialized banks (including the first
Non – interest Bank in the Country’s history), pushed for the adoption
of IFRS and Basel 3, enhanced risk-based supervision, issued Competency
Guidelines for the staff in the banking industry, established a Consumer
Protection Department and developed a Financial Inclusion Strategy and
Roadmap, among others for the CBN.

The Bank implemented policies aimed at reducing the excessive use of
cash in the system to ensure safety, improve efficiency and curb money
laundering. The transformation of NIBSS, the insistence on
interoperability of channels, encouragement of electronic banking, the
licensing of Mobile Money Operators, the Agent Banking and tiered-KYC
frameworks have all led to rapid growth in volume and value of non-cash
transaction and enhanced financial inclusion.

The Bank has played its leadership role in ensuring industry
compliance with environmental sustainability and governance standards,
including a strong focus on women and the handicapped.

The CBN in the last five years has taken a leading role in providing
long-term low-cost funding to priority sectors of the Nigerian economy
in a bid to help in bringing to reality the Transformation Agenda of the
government of your Excellency. We have provided these funds at
single-digit interest rates to micro, small and medium enterprises, as
well as to companies operating in the power, aviation, and agricultural
sectors of the economy, and also to large industrial enterprises with
potential for structural transformation.

The Bank has invested in human capital, improved staff welfare and
attracted and retained specialized skills in the areas of Banking
Supervision, Information Technology, Shared Services and Risk

On Financial Performance, the Bank has in the last five years kept a
lid on overheads and cost of currency management. As a result, the Bank
has continued to produce sterling results and contributed substantially
to the Federal Budget. In the five years, 2009 – 2013, the Bank
contributed N376 billion to the Federal Budget as Internally Generated
Revenue (IGR).Based on 2012 financials alone, we paid N80 billion to the
Ministry of Finance. On the basis of the 2013 results and at the
request of the Coordinating Minister of the Economy (CME), we paid N159
billion to the Ministry of Finance in February this year; the same month
the audited accounts of the CBN were approved by the Committee of
Governors (COG). Indeed, due to the precarious position of Government
finances, the CBN in February 2014, upon the request of the CME, gave
the Ministry a further ‘Advance IGR’ of N70 billion in anticipation of
2014 profits.

May I add that, in 2008, the year before my appointment, the CBN
contributed N8 billion to the Federation Account. Although the Bank is
not a profit-centre, in the first four years of my term, the Bank alone
contributed 75 percent of the total IGR paid by MDAs leading to
commendation by the House Committee on Finance at several Public

As a result of these achievements of my colleagues and staff, we
received numerous recognitions consistently throughout my tenure from
highly-regarded publications. These awards are based on a competitive
process where analysts and economists rank Central Bank Governors across
regions and the globe.

In 2010, The Banker Magazine, a publication of Financial Times in
London, named me Best Central Bank Governor in the World and Best in
Africa. At the Annual World Bank/IMF Meetings, Emerging Markets, a
publication of Euromoney Institutional Investor named me Best Central
Bank Governor in Sub-Saharan Africa for 2009, 2010 and 2012. The African
Banker Magazine named me Best Central Bank Governor in Africa, 2012.
This is in addition to being named Forbes Africa Person of the year 2011
and listed by TIME as one of the 100 most influential people in the
world, 2011.

I have always regarded these honours not as personal accolades, but
as a tribute to our nation and the committed and resourceful women and
men of CBN.

Response to the allegations in relation to my suspension

On Wednesday 10th March 2014, I submitted a Memorandumto His
Excellency, Mr President, with supporting documentation,effectively
addressing all the allegations contained in the FRCN Briefing Note, the
Letter of Suspension and the Akingbola Petition.

Having submitted my response to the President, I am further
compelled, following the recent press briefing and comments by the
Senior Special Adviserto the President on Media, as well as numerous
other references to the allegations in both local, international and
online media, to put to the public my responses, in the interest of
transparency, accountability and my responsibility to the Nigerian
people.Let me also state that I saw the FRCN “Briefing Note” for the
first time when it was attached to the suspension letter. At no time was
this report sent to the CBN either by the President or the FRCN for
comments or explanations. As for the Akingbola petition, it is a rehash
of baseless allegations he has been making since 2010 which apparently
he must have been asked to reproduce on February 9, ten days before the
suspension. It is indeed strange that the CBN Governor can be suspended
based on allegations written by a man who ran his bank into the ground
and against whom judgement has been obtained in a London court, and who
furthermore is facing criminal prosecution at home for offences
including criminal Theft.

A careful examination of the allegations contained in the FRCN
Briefing Note to Mr President, will show that each of the allegations
could easily have been resolved by a simple request for clarification or
more careful review. There is no doubt that if the CBN had received the
Briefing Note, which was prepared in June 2013, all the misconceptions,
misrepresentations and erroneous inferences contained therein would
have been cleared.

I am publishing these responses to enable the general public see that
each and every allegation levelled against the CBN under my leadership
is false and unfounded, and that many of the allegations were malicious
and fabricated, having been designed to mislead the President into
believing that the Management of the Central Bank was guilty of
misconduct and recklessness.

Having provided detailed explanations, backed by verifiable
documents, it is my sincere wish that His Excellency, Mr President, in
line with his adherence to fairness and justice, will apply the same
rationale and rigour to other agencies of the Federal Government that
have had serious allegations and queries levied against them, and
prevail upon them to provide responses and explanations with the same
level of clarity and transparency.

In closing, I would like to place on record the dogged
professionalism and patriotism of the staff of the CBN. They have, over
the years, conducted themselves very creditably, and discharged their
duties with the highest integrity.

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