• Friday, March 29, 2024
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Lack of financial disclosure by parastatals fuels suspicion of fraudulent activities

Why DSS is beaming its searchlight on allocation of FX by banks, CBN

The incessant failure by government agencies to publicly disclose their financial positions could be one of the obvious reasons why misinformation about them is believed when they arise.

Over the weekend, a leaked tape recording released by an online media platform on a conversation between the CBN governor, Godwin Emefiele and some senior executives of the apex bank around an alleged sum of N500 billion stolen from the bank’s coffers and discussions on how to get around disclosing it in the bank’s 2018 financials made news and getting enough traction from the public.

In a swift response to correctly inform the public, the apex bank in a statement released by its director, corporate communications, Isaac Okorafor, claimed the taped conversation was a mix and match of several conversations between the CBN governor and some of the bank’s officials.

According to the bank, the discussions in the tape bordered around a misunderstanding that affected the bank’s balance sheet rather than an attempt to cover a fraudulent transaction.

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The CBN noted that its auditors had erroneously classified N150 billion of the sum of N650 billion disbursed to state governments (to help them meet salary obligations following a slump in FAAC allocations as a result of a downturn in oil prices in 2015) as bad debt, and that the conversations were around ways to account for this. The CBN claimed such position was erroneous given that the states still “exist” and “receive FAAC allocations.”

The CBN also claimed in the statement that it had since clarified its position with the auditors in a meeting with the Ministry of Finance who had assured the auditors the loans would be repaid.

While the claim by the central bank might seems plausible and seen as sabotage since it was released a few days after the news of Emefiele’s reappointment as governor of the bank, but it casts some suspicious belief in the minds of Nigerians. Those who might in some ways take the news as indeed true due to a lack of public disclosure of the firm’s financial position to ascertain the veracity of the bank’s claim.

The last time the apex bank released a financial statement was in 2015, when its shareholders’ equity stood at N565 billion.
“It is because the central bank does not have an up-to-date financials, which is why a misinformed allegation about it could be made to the public,” one financial analyst who does not want to be named said.

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“If the financial position of the bank was made public, it would be possible for Nigerians to thoroughly check the veracity of its claims,” the person said.

It is not only the central bank that has defaulted in this regard as similar government agencies like the Securities and Exchange Commission (SEC), the Federal Inland Revenue Services (FIRS) do not have up-to-date record of their financials available to the public, yet they penalise companies that default in cooperate governance. For SEC, the commission attributed the reason to lack of a constituted board.

Besides the government agencies, many Nigerian states over time do not make known to the public their financial positions.
This is contrary to what the law provides in Section 125, subsection (2) of the 1999 Constitution of the Federal Republic of Nigeria, which stipulates that “the public accounts of a State and of all offices and courts of the State shall be audited by the Auditor-General for the State who shall submit his reports to the House of Assembly of the State.”

Analysts say the deliberate action by the states not to publish their financial statement questions the integrity of the state’s Auditor-General and casts doubt on the accountability that these governors swore to the people they govern to uphold.