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Sanusi's letter of suspension from CBN



19th February, 2014
Mallam Sanusi Lamido Sanusi Governor,
Central Bank of Nigeria, Abuja.
1. Following the Report of the Financial Reporting Council of
Nigeria on the Audited Financial Statements of the Central Bank
of Nigeria (CBN) for the year ended 31st December 2012, and
other related issues, I write to convey to you His Excellency, Mr.
President’s decision that you be suspended from office as Governor
of the Central Bank of Nigeria with effect from Thursday 20th
February 2014.
2. The decision is predicated on the loss of confidence in your ability
to lead the Apex Bank towards the achievement of its statutory
mandate. Of particular concern is the fact that, under your watch,
the bank has carried out its functions in a manner characterised by
disregard for due process and accountability.
3. This is exemplified by various acts of financial recklessness and
unprofessional conduct which are inconsistent with the
administration’s vision of a Central Bank propelled by the core
values of focused economic management, prudence, transparency and
financial discipline.
4. The particulars of the infractions are highlighted below:
5. Persistent Refusal and/or Negligence to comply with the Public
Procurement Act in the Procurement Practices of the Central
Bank of Nigeria
(a) By virtue of Section 15(1) (a) of the Public Procurement Act,
the provisions of the Act are expected to apply to all ‘procurement of
goods, works and services carried out by the Federal Government
of Nigeria and all procurement entities.’ The definition clearly
includes the Central Bank of Nigeria.
(b) It is however regrettable the Central Bank of Nigeria under
your leadership, has refused and/or neglected to comply with the
provisions of the Public Procurement (PPA). You will recall that
one of the primary reasons for the enactment of the PPA was the
need to promote transparency, competitiveness, cost effectiveness and
professionalism in the public sector procurement system.
(c) Available information indicates the Central Bank has over the
years engaged in procurement of goods, works and services with
billions of naira each year without complying with the express
provisions of the PPA.
(d) By deliberately refusing to be bound by the Provisions of the
Act, the CBN has not only decided to act in an unlawful manner,
but also persisted in promoting a governance regime characterised by
financial recklessness, waste and impunity, as demonstrated by the
contents of the 2012 Financial Statements.
6. No responsible government will tolerate this blatant disregard for
its laws and procedures by any person or institution. The Central
Bank, by its unique position, ought to show good example and be the
leading light in the promotion of the culture of observance of due
7. Unlawful Expenditure by the Central Bank of Nigeria on
‘Intervention Projects’ across the country
(a) The unacceptable level of financial recklessness displayed by the
leadership of the Central Bank of Nigeria is typified by the
execution of ‘Intervention Projects’ across the country. From
available information, the Bank has either executed or is currently
executing about 63 (sixty-three) such projects across the country.
Please find attached hereto as Annexure I, a letter dated January
7th, 2014 from the CBN confirming the list of projects across the
country to which the CBN has committed N163 Billion (One
Hundred and Sixty Billion Naira).
(b) It is inexcusable and patently unlawful for any agency of
Government to deploy huge sums of money as the CBN has done in
this case, without appropriation and outside the CBN’s statutory
mandate. It is trite that the expenditure of public funds by any arm
of government must be based on clear legal mandates, prudent costing
and overriding national interest.
(c) Cognisant of the attendant negative consequence of the CBN’s
action, a review of the Central Bank (Establishment) Act 2007
does not disclose any legal basis for the huge expenditure on
intervention projects in default of appropriation.
8. Financial Infractions and Acts of Financial Recklessness
Committed by the Central Bank as reflected in its Audited
Financial Statements for 2012.
(a) Pursuant to Section 50 of the CBN Act 2007, a copy of the
Audited Financial Statement of the Central Bank for the year
ended 31st December 2012 was sent to Mr. President (Please, find
a copy attached hereto as Annexure II). Based on the issues raised
in the financial statement, a response was requested from Sanusi to
enable a proper appreciation of the nation’s economic outlook.
(Please, find attached a copy of the letter dated 4th May, 2013 as
Annexure III).
(b) Your response to this query (Annexure IV) was further referred
to the Financial Reporting Council by a letter of 12th April, 2013,
for review (Annexure V).
The review of the Financial Reporting Council of Nigeria, rather
than allay the fears of Government, further confirmed concern about
the untidy manner in which you have conducted the operations of the
CBN (Annexure VI).
9. Some of the salient observations arising from the review are
highlighted below:
(a) In a most ironical manner, it has become obvious that the CBN
is not able to prepare its financial statements using applicable
International Financial Reporting Standards (IFRS) whereas
Deposit Money Banks that the CBN is supervising have complied
with this national requirement since 2012. Undoubtedly, this laxity
on the part of our apex bank, apart from calling to question its
capacity for proper corporate governance, is capable of sending
wrong signals to both domestic and international investors on the
state of the Nigerian economy.
(b) The provisions of the Memorandum of Understanding (MoU)
signed by the CBN and other Deposit Money Banks (DMBs) on
Banking Resolution Sinking Fund have been breached in a
material manner. For example, a Board of Trustees (BOT) to
manage the Fund has not been constituted since 2010 when it was
established. The CBN has however continued to utilise the Fund
for certain operations without the approval of the said BOT.
(c) Contrary to Section 34(b) of the CBN Act 2007 which provides
that the CBN shall not, except as provided in Section 31 of the Act,
inter alia, purchase the shares of any corporation or company, unless
an entity set up by the approval of the authority of the Federal
Government, CBN in 2010, acquired 7% shares of International
Islamic Liquidity Management Corporation of Malaysia to the
tune of N0.743 Billion. This transaction was neither brought to
Mr. President’s attention nor was a Board approval obtained
before it was entered into.
(d) The CBN has failed or refused to implement the provisions of
the Personal Income Tax (Amendment) Act 2007. Accordingly the
Pay-As-You-Earn (PAYE) deductions of its staff are still being
computed in accordance with the defunct Personal Income Tax Act
2004, thus effectively assisting its staff to evade tax, despite the
generous wage package in the CBN, relative to other sectors of the
(e) The CBN had an additional brought forward to General
Reserve Fund of N16.031 Billion in 2012 but proceeded on a
voyage of indefensible expenses in 2012 characterised by inexplicable
increases in some heads of expenditure during the year. Examples
(i) The bank spent N3.086 Billion ‘promotional activities’ in 2012
(up from N1.084 Billion in 2011). The bank spent this sum even when
it is not in competition with any other institution in Nigeria;
(ii) The CBN claimed to have expended N20.202 Billion on ‘Legal
and Professional Fees’ in 2011, beyond all reasonable standards of
prudence and accountability;(iii) Between expenses on ‘Private
Guards’ and ‘Lunch for Policemen’, the CBN claimed to have
spent N1.257 Billion in 2012;
(iv) While Section 6(3) (c) of the CBN Act 2007 provides that the
Board of the CBN is to make recommendations to Mr. President
on the rate of remuneration to Auditors, the Bank has consistently
observed this provision in the breach and even went to the extent of
changing one of its Joint External Auditors without notifying the
office of the President.
(f) In the explanations offered by the CBN pursuant to Presidential
directives, it offered a breakdown of ‘Currency Issue Expenses’ for
2011 and 2012. Interestingly, it claimed to have paid a total of
N38.233 Billion to the Nigerian Security Printing and Minting
Company Limited (NSPMC) in 2011 for Printing of Banknotes’.
Paradoxically however, in the same 2011, NSPMC reported a
total turnover of N29.370 Billion for all its transaction with all
clients (including the CBN)
(g) It is significant to note that the external audit revealed balances
of sundry foreign currencies without physical stock of foreign
currencies in the CBN Head Office.
10. Questionable write-off of N40 billion naira loans of bank
You may wish to specifically not Annexure VII which highlights a
number of transactions and breaches, which include the write-off of
loans totalling N40 billion
11. The above issues are only few of the infractions highlighted by
the review and which point to the gross incompetence and
recklessness which characterised the operations of the CBN in the
period under review.
12. In light of the foregoing, and pursuant to the provisions of
Section 7 (2) (a), Section 8 (1) (k), Section 62 (1) (c) and 62 (3) of
Financial Reporting council of Nigeria Act, a copy of this letter is
being forwarded to the Executive Secretary of the Council for his
notification and further necessary action with a view to addressing
the urgent need to reposition the bank for the effective discharge of
its statutory mandate.
13. You are, by this letter, directed to hand over to most senior
Deputy Governor, Dr. Sarah Alade who will act as Governor
till the conclusion of the investigation into these far reaching
Please accept, as always, the assurances of my highest regards and
Anyim Pius Anyim, GCON
Secretary to the Government of the Federation

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