USA Africa Dialogue Series - POINT-COUNTER-POINT:: Falana and Soludo - About CBN and Reserves - Request for (and Denial of) the investigation of allegations of criminal diversion of public funds and illegal withholding of funds from the Federation Account

FIG. 1: Nigeria's Foreign Exchange Reserves 1999 - 2016

FIG. 2 - Nigeria's Crude Oil Production - 1999 - 2016

FIG. 3 - Crude Oil Prices 2000 - 2016

FIGURE 4: Nigeria's Debt Profile 2008 - 2015

---------- Forwarded message ----------

From: Femi Falana  
Subject: Request for the investigation of allegations of criminal diversion of public funds and illegal withholding of funds from the Federation Account


September 23, 2016
 
The Acting Chairman,
Economic and Financial Crimes Commission,
15A Awolowo Road,
Ikoyi, Lagos.
 
REQUEST TO INVESTIGATE ALLEGATION OF CRIMINAL DIVERSION OF PUBLIC FUNDS AND ILLEGAL WITHHOLDING OF FUNDS FROM THE FEDERATION ACCOUNT 
 
In our letter dated 8th April, 2016 we prayed the Minister of Finance to take urgent steps to recover billions of dollars either criminally diverted or illegally withheld from the Federation Account. Apart from informing us that the letter was receiving attention no step has been taken to accede to our request. Since then the peripheral capitalist economy of the country has slumped into recession. 

However, since the actions of the few corporate bodies and individuals who engaged in the criminal diversion of the nation's wealth border on serious economic and financial crimes we are compelled to request the  the Economic and Financial Crimes Commission  to embark on the investigation of the following allegations:
 
1. By a letter dated January 27, 2016 the National Extractive Industries Transparency Initiative (NEITI) disclosed to us that from five cycles of independent audit reports covering 1999-2012 it had confirmed that the Nigerian National Petroleum Corporation, some oil companies and certain agencies of the Federal Government had withheld $20.2 billion from the Federation  Account. Despite repeated requests of  some civil society organizations  the Federal Government has refused to recover the said sum of  $20.2 billion.
 
2. Sometime in 2006, former Central Bank Governor, Profesor Chukwuma Soludo removed  $7 billion  from  the nation's external reserves and doled it out  to 14 Nigerian banks. Two years later, the Central Bank Governor, Mallam Sanusi Lamido Sanusi (the current Emir of Kano) also gave a bailout of N600 billion  to the same  banks. The request of some civil society organisations for the recovery  of the huge  loan of $7 billion and N600 billion from the commercial banks  has been ignored by the  management of the Central Bank.
 
3. On September 6, 2016,  the Nigerian National Petroleum Corporation (NNPC) announced that arrangements had been concluded to recover the sum of $9.6 billion in over-deducted tax benefits from joint venture partners on major capital projects and oil swap contracts. Although  the NNPC has  recovered the said sum of $9.6 billion, it has failed to remit same to the Federation Account without any legal justification. 
 
4. In 2009, Mobil Oil Producing Nigeria Unlimited applied to the Federal Government for the renewal of three oil blocks. Upon granting the application, the NNPC asked Mobil to pay the sum of $2.5 billion for the renewal of the licenses. While Mobil made a part payment of  $600 million it  undertook to invest the outstanding sum of $1.9 billion in the energy sector. But as Mobil did not invest the said sum in the energy sector  the Civil Society Network Against Corruption has requested the EFCC to investigate the fraudulent transaction.
 
5. From 1998-2014, the Federal Government successfully recovered over $4 billion from the Abacha loot. Howeved, based on the refusal of the office of the Accountant-General of the Federation  to account for the recovered loot the Socio Economic Rights  and Accountability Project (SERAP) applied to  the Federal High Court for an order of mandamus. Even though the Court granted the order  the Federal Government has failed to account for the recovered loot. In the circumstances, we have submitted a petition to the EFCC to investigate the alleged criminal diversion of the recovered loot.
 
6. In the Appropriation Act, 2011, the sum of N245 billion was earmarked for fuel subsidy. In violation of the Act, the Central Bank of Nigeria headed by Mallam Sanusi Lamido Sanusi paid the sum of N2.5 trillion to a cabal of fuel importers. Following our petition the EFCC conducted an investigation into the  fraud but the exercise was compromised due to pressure from the former  Jonathan administration. Even though  the EFCC has charged some of the suspects to court the investigation ought to be reopened with a view to getting to the root of the monumental fraud. 
 
In view of the foregoing we are compelled to request you to use your good offices to recover the aforesaid sums of money and proceed to prosecute the corporate bodies and individuals involved in the economic  sabotage which has contributed to the nation's economic recession. Be rest assured that we are prepared to provide all relevant documents to facilitate your  investigation of the serious economic and financial crimes disclosed in this petition. 

It is hoped that you will not hesitate to accede to our request in view of the increasing  pressures being mounted on the Federal Government by the parasitic faction of the ruling class to auction  the remaining assets  of the nation. 

Yours Sincerely,
 
 
FEMI FALANA, SAN.

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Femi Falana's Lies: Demand For Retraction And Apology By Chukwuma Charles Soludo

BY CHARLES SOLUDO

SEP 24, 2016

My attention has just been drawn to an article published in online news media, Premium Times and Sahara Reporters entitled "Falana wants EFCC to probe 'diversion' of state funds by Sanusi, Soludo, others." Part of the said publication as it pertains to me reads:

"Sometime in 2006, former Central Bank Governor, Profesor Chukwuma Soludo removed $7 billion from the nation's external reserves and doled it out to 14 Nigerian banks. Two years later, the Central Bank Governor, Mallam Sanusi Lamido Sanusi (the current Emir of Kano) also gave a bailout of N600 billion to the same banks. The request of some civil society organisations for the recovery of the huge loan of $7 billion and N600 billion from the commercial banks has been ignored by the management of the Central Bank|".

I have come to terms with the fact that part of the burden one bears for having held public office in Nigeria is that one has to endure all kinds of uninformed and sometimes mischievous attempts to malign one's character. I largely ignore such ignorant commentaries. However, Femi Falana is one of the Nigerians I deeply respect, and I am sure many Nigerians also hold him in very high esteem. I was therefore shocked beyond belief that someone like him could fabricate and peddle blatant lies. From the above quotation, Falana alleged that I "removed" $7 billion from Nigeria's external reserves and gave same as a "loan" to 14 Nigerian banks in 2006, and apparently such a "loan" has not been recovered. This is a blatant lie, and I challenge Falana to publish the details of such a "loan" which remains unpaid or as a person with honour, publish a retraction and unreserved apology immediately. For the avoidance of doubt, I wish to state as follows:

One of the legacies of my tenure as CBN Governor was the highest rate of reserve accumulation in Nigeria's history as well as its effective and efficient management. On the assumption of office, I met exactly $10 billion in foreign reserves. With an average monthly oil price of $59 during my tenure, we accumulated reserves to all-time high of over $62 billion. Even after paying off Nigeria's external debt with $12 billion and facing unprecedented global financial and economic crisis, I still left $45 billion upon leaving office in 2009.

Throughout my tenure, Nigeria never lost one penny of the reserves. It is particularly important to note that even during the global financial crisis of 2008/2009 when major international banks collapsed and some countries lost some of their reserves, our prudent management ensured that Nigeria never lost a penny but earned returns on the reserves. Given the powerful interests that I fought during the consolidation of banks and even since I left office, one can only imagine the international headlines that would have been made if just one penny of the reserves was unaccounted for.

That under the provisions of the CBN Act as well as the guidelines for the management of foreign reserves, it is impossible for anyone to "remove" any sum of money from the reserves and give out as "loan" to commercial banks in Nigeria. To qualify as "foreign reserves" such reserves are held in foreign currency abroad as deposits with banks or in sovereign instruments such as the US treasury bills.

Finally, let me state that my records at the CBN are there for anyone to see, and I am ready at any time any day to respond to any questions regarding my stewardship. If the allegation had been made by certain people, I would have dismissed such persons as ignorant but certainly not Chief Falana.

-Chukwuma C. Soludo

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