One Central Bank, Four Governors

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Thursday, March 27, 2014 12:24 PM/ By OLUSEGUN ADENIYI /thisdaylive

Question: Who is the Governor of the Central Bank of Nigeria? Options: (A) Sarah Alade; (B) Sanusi Lamido Sanusi; (C) Godwin Emefiele (D) Jim Osayande Obazee; (E) None of the above. Please shade the correct answer.

The above is an examination question recently encountered by a friend but please don’t ask me for his name. He said he could not pick “A” because Mrs Alade, the acting CBN Governor in a period of transition, wields little or no authority. He said he could not pick “B” either because, even though President Goodluck Jonathan recently affirmed that Sanusi remains the CBN Governor, he is still on suspension. My friend said he also could not pick “C” because even though Emefiele’s appointment was confirmed by the Senate yesterday, he would still have to wait for Sanusi’s tenure to expire before assuming office. For some minutes, according to my friend, he toyed with the idea of picking “D” because, as he explained, the Executive Secretary of the Financial Reporting Council of Nigeria (FRCN) is the man who has been calling all the shots at the CBN in recent weeks. But then he demurred because he could not lay his hands on where Obazee derives his powers from. So at the end, he settled for “E” which means that today, for all practical purposes, Nigeria’s apex bank is without a substantive Governor!  

Given the foregoing, it came as no surprise that Standard and Poor's (S&P), one of those international financial agencies whose ratings the managers of our economy like to flaunt, has put a question mark on Nigeria’s “stable outlook” rating, citing dearth of new information on the country and the uncertainty surrounding monetary policies. While stating that the suspension of the CBN Governor amounted to government interference with monetary policies, S&P said it was placing the country on a credit watch for a period of one week as a result of the appeal by the federal government. “As a result, we are placing our long-term sovereign credit ratings on Nigeria on Credit Watch with negative implications,” S&P stated rather ominously.

Before I proceed, it bears repeating that I have made my position very clear about Sanusi’s gross act of insubordination to President Jonathan, especially considering the reckless manner in which he went about touting some CBN laws which he believes make him untouchable (
Sarki Goma, Zamani Goma…). As a student of power politics, I am aware, as British philosopher, John Locke, argued in “The Second Treatise of Government: And, A Letter Concerning Toleration”, that the people sometimes allow “their rulers to do several things of their own free choice, where the law is silent...and their acquiescing in it when so done." Whatever the law cannot provide for, according to Locke, “must necessarily be left to the discretion of him that has the executive power in his hands, to be ordered by him as the public good and advantage shall require...”

Even though I am not a lawyer, to the extent that the CBN Act is silent on suspension, I believe that Sanusi was not well advised to have taken on the presidency in the manner he did. But that is just the opinion of the layman that I am. Notwithstanding my position, I am also worried that some people may unwittingly be destroying a critical institution like the CBN in the attempt to get back at one man who, whatever may be the misgivings about his style, did very well in office.

Against the background that Sanusi became CBN Governor in the middle of a global financial crisis in 2009, his intervention (by removing some bank chief executives who were dancing “Skelewu” with depositors’ funds) helped to restore sanity in the system. It is also on record that under Sanusi’s watch, inflation has been kept below 10 per cent while until recently, there was a measure of stability in the foreign exchange market. The CBN also implemented policies aimed at reducing the excessive use of cash in the system to ensure safety, improve efficiency and curb money laundering.

So, all factors considered, Sanusi has been a good CBN Governor and I refuse to be taken in by the noise emanating from those who fiddled with depositors’ money for which they were entrusted and paid dearly for it. In any case, it is not lost on fair-minded Nigerians that in this obsession to nail Sanusi, the “witnesses” being lined up are some former bank chiefs who abused their trust and were punished by the CBN. Yet it is a serious indictment on our country that the same fat cats who are being tried by the state for economic and financial crimes are also being aided by the same state, in the bid to settle score with the suspended CBN Governor. It is not right.
While I am aware that politics trumps everything in Nigeria today, those who are circumspect should be worried that the head of a small government parastatal under the Ministry of Trade and Investment should have the powers to be conducting a public investigation into the operations of the CBN with all the attendant publicity. Aside the professional breach (audit investigation is never conducted on the pages of newspapers), there is also the issue of a not-so-subtle executive interference into what are clearly operational issues at the apex bank. For those of us who can see beyond the person of Sanusi, that is very troubling and such details are also not lost on S&P and other international credit rating agencies.

Because most Nigerians still wonder how this little-known FRCN crept into our consciousness, a brief story may be necessary here. It started with the Nigerian Accounting Standards Board (NASB), a private sector initiative established in 1982 in collaboration with the Institute of Chartered Accountants of Nigeria (ICAN). Ten years later in 1992, the General Ibrahim Babangida administration by military fiat converted the NASB into a government parastatal under the Federal Ministry of Commerce. In 2003, the NASB Act was passed with the primary functions to “develop, publish and update Statements of Accounting Standards to be followed by companies when they prepare their financial statement, and to promote and enforce compliance with the standards”.

Following a critical appraisal of the NASB by the International Monetary Fund (IMF) in 2010, the then Executive Secretary, Mr Godson Nnadi began a process for the establishment of a new body that would set accounting and auditing standards in the country and would be independent of both ICAN and ANAN. At about that same time, Nnadi was appointed Finance and Economic Development commissioner in Enugu State where he hails from. But his protégé and successor, Obazee (who joined the organisation after graduation in the early nineties) saw to the drafting and eventual passage of the Financial Reporting Council of Nigeria (FRCN) Bill on May 18, 2011.

The law was gazetted on June 7, 2011 as “an Act to repeal the Nigerian Accounting Standards Board Act, No. 22 of 2003 and enact the Financial Reporting Council of Nigeria charged with the responsibility for, among other things, developing and publishing accounting and financial reporting standards to be observed in the preparation of the financial statement of public entities in Nigeria; and for related matters.” Both the chairman and the executive secretary are to be appointed by the president.

Ironically, while Obazee was trying to get the bill passed in the National Assembly, he got support and encouragement from Sanusi who argued that such a law would help to attract foreign direct investment into Nigeria and perhaps for that reason mobilised through the CBN and the Bankers' Committee a whopping sum of N500 million for the construction of its International Financial Reporting Standards (IFRS) Academy. I still wonder how Sanusi came about his theory considering that many countries, including the United States have refused to subscribe to the IFRS, preferring instead the Generally Accepted Accounting Principles (GAAP).

When the bill was finally signed into law by President Jonathan, Trade and Investment Minister, Mr Olusegun Aganga, under whose purview the new parastatal was domiciled said: "More meaningful and decision-enhancing information can now be arrived at from financial statements issued in Nigeria because accounting, actuarial, valuation and auditing standards, used in the preparation of these statements, shall be issued and regulated by this Financial Reporting Council. The FRC is a unified independent regulatory body for accounting, auditing, actuarial, valuation and corporate governance. As such, compliance monitoring in these areas will hence be addressed from the platform of professionalism and legislation.”

What the foregoing suggests is that the FRCN is not another Economic and Financial Crimes Commission (EFCC) or Independent Corrupt Practices Commission (ICPC), its main function is to standardize accounting practice in Nigeria. To therefore read reports of Obazee “grilling” Sanusi, Alade as well as the immediate past Deputy Governor, Operations of the CBN, Mr. Tunde Lemo; Managing Director of the Bank of Industry (BoI), Ms Evelyn Oputu; Deputy Governor, Operations, CBN, Dr. Kingsley Moghalu and Deputy Governor, Corporate Services, CBN, Alhaji Suleiman Barau is beyond ridiculous. Because the FRCN Executive Secretary is arrogating to himself some powers that he does not have and even if he has the authority of the president for his assignment, I don’t think he is approaching it the right way.

Now, I have read all the provisions of the FRCN Act 2011 and its power of investigation is derived from Section 62 which stipulates that “(1) The Council may investigate or cause to be investigated

(a)   Any complaint or dishonest practice, negligence, professional misconduct, malpractice made against any professional; (b) any breach of the Code of Conduct and Ethics by any registered professional; or (c) any material irregularity notified to it”. 

However, it is noteworthy that the section itself falls under Part V11 of the Act which is on “Review and Monitoring of Standards”, which then implies that it is targeted at compliance with standards for accounting practitioners. Even if we concede that the FRCN can investigate statutory institutions, such powers reside in the Council and not the Executive Secretary. And the Council, currently headed by Hajiya Ladi Ibrahim, (now at the National Conference representing Kogi State) has a long list of membership: Two representatives each of both ICAN and ANAN as well as one representative of each of the following: Office of the Accountant General of the Federation, Office of the Auditor General of the Federation; CBN; Chartered Institute of Brokers; Chartered Institute of Taxation; Corporate Affairs Commission; Federal Inland Revenue Service; Federal Ministry of Commerce; Federal Ministry of Finance; NACCIMA; NDIC; SEC; NAICOM; NSE; PENCOM and the National Institute of Estate Surveyors and Valuers. The Executive Secretary who has become the judge and the jury in the so-called CBN investigation is just one member in this big Council!

Now, I must make my position very clear. I am for transparency and accountability so to that extent, I do not subscribe to the position that Sanusi or the CBN which he heads should be above the law. No, both should be held to account. But such should be done within the ambit of the law and with due regard to process. What worries me is that right before our very eyes, we are watching a systematic destruction of perhaps our strongest institution, the Central Bank of Nigeria, that has been built over time, by a Johnny-just-come Federal Reporting Council of Nigeria that has no track record. Audit investigation is not the same thing as criminal investigation, and even at that, only a court of law can pronounce anybody a criminal as Obazee’s FRCN seems to have done with its report.

I have my issues with Sanusi who was disrespectful of the president and attracted to himself too much needless media attention. Indeed, in a moment of introspection in his recent interview with METROPOLE magazine (, Sanusi admitted this much: “There was only one thing that I had hoped at the beginning I would achieve which I believed I have not achieved. And this saddens me a bit even though it is also the circumstances. A central bank should, as much as possible, be out of the front pages of newspapers. Apart from on monetary policy days when you announce your rates, you should just work behind the scene.”

That should be a big lesson from which his successor must learn. In the United States, a Fed Chairman (CBN Governor in Nigeria) once spent hours in Congress fielding questions at the end of which one frustrated lawmaker offered a sarcastic compliment: "You would make a very excellent prisoner of war... you wouldn't tell the enemy a thing." Sanusi as a prisoner of war would bring down the whole roof with his mouth! However, that should not diminish his achievements in office.

I am not one of those people who subscribe to the conspiracy theory that Sanusi was suspended because of his allegation that the Nigeria National Petroleum Corporation (NNPC) failed to remit some billions of Dollars into the Federation Account. However, it is also an open secret that because of the mutual distrust between him and the president, the FRCN report became rather handy. But the report itself reads more like the judgment of a court against a criminal than an audit review of CBN accounting process. That is why it lacks any modicum of credibility.

The elevation of the hitherto unknown FRCN into an inquisition whose first outing is to hang Sanusi clearly reduces what ought to be a serious concern for probity in high public places into a petty political witch-hunt. Nigerians know about the EFCC and its awesome powers in such matters. They also know the ICPC for what it was established to do. But for the Federal Government to stage a kangaroo accounting inquisition into Sanusi's alleged malfeasance, as it is doing, is to further expose the nation's financial system to international ridicule.

The nature of witnesses being called and the status of CBN officials being summoned in this laughable inquisition by perhaps the smallest of the agencies under the Ministry of Trade and Investment make the matter more injurious to the financial system. I believe that the Jonathan administration needs to handle the Sanusi matter with a measure of dexterity. Here is an administration that has repeatedly cited among its 'transformation' miracles some of the fiscal and monetary reforms that Sanusi instituted in the nation's banking and financial system. It is also on record that Sanusi put himself on the firing line of public disaffection when the administration tried, without success, to remove subsidy on PMS early in 2012. Now, because the CBN Governor mismanaged the politics of his high office, the same administration is staging a public hanging of its once favourite man.

In all these, what is forgotten is that Sanusi is no ordinary public officer. He 'is' Governor of the Central Bank of Nigeria, the custodian of some of our most hallowed financial secrets and the government's accountant of last resort. What that means in effect is that unless the Jonathan administration handles the Sanusi saga with extreme care, it may find out that suspending the CBN Governor is the easier part of this charade as the ever widening international financial and domestic economic disquiet on the matter could hurt the nation very badly.

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