CBN/AFC Investment Scandal: Unclear Agenda Of Probe Panel?

Zubby Alazua

When the Federal Government set up a five-man probe panel on April 16, 2008 to investigate how Nigeria invested the sum of $462 million in the African Finance Corporation (AFC), it meant to ascertain the source (s) of authority for the withdrawal of the sum by Prof Chukwuma Soludo, Governor of the Central Bank of Nigeria (CBN) in respect of the purchase of equity in AFC.

It was also meant to ascertain the past and present details of the Bank Account (s) from where the funds were withdrawn; Obtain details of withdrawals made from the Federal Government of Nigeria Account maintained with the Bank of England and ascertain by whom such withdrawals were made.

In addition, the committee was expected to obtain necessary evidence of remittance of the equity contribution by the CBN to the receiving Bank for the AFC initiative, ascertain the source of authority for the said remittance and determine the signatories to the account in the receiving institution.

Finally, the committee was expected to unravel the ownership structure of the AFC, determine the percentage equity holding of such investors, and determine the representation of Nigerians on the Board of the Corporation amongst other issues.

The funny aspect was that the AFC investment controversy started only when US authorities in January raised alarm that they have detected a suspicious transaction in the New York branch of United Bank of Africa (UBA). It was reported that the money was assessed to be close to $300 million. The money was used in short term investments in New York for businesses that were unrelated with that of the stated mission of AFC and the proceeds might have gone into private bank accounts. This was the reported allegation of the US Authorities.

Also, in March another alarm was raised by the same US Authorities that they have detected another suspicious transaction of $200 million into the UBA New York branch account; the monies were traced to the CBN /AFC account in Nigeria.

As alleged, further inquiries by the investigating US authorities showed that the transaction came directly from the Central Bank account of the Africa Finance Corporation (AFC) where the CBN Governor is also Chairman.

The directors of the AFC include major bank chief executive officers and Nigeria’s so-called “economic prime movers” that benefited largely from financial scams packaged as “economic reforms” by the Obasanjo regime.

As part of its investigations, the probe panel wrote to the United States Office of the Comptroller of the Currency (OCC) and the Financial Crime Enforcement Network (FinCEN) requesting details on why the New York branch of the United Bank for Africa (UBA) was fined $15 million for money laundering.

Though UBA had earlier explained that the contravention predated its merger as well as its current management and board, it is being alleged that the sanction against UBA was connected with the investment the CBN made in the AFC.

Commendably, the Probe Panel has ordered Prof Soludo to immediately withdraw the money already invested in AFC and keep it in an escrow account pending the conclusion of the investigation.

According to the Panel, “The money, which the CBN invested in AFC in November 2007, is an exhibit. We don’t want the money to be tampered with by officials of the AFC or the CBN. It has to be preserved and that was why the CBN governor was told to withdraw it and keep in an escrow account.”

Soludo reportedly confirmed to the panel that the $462 million was sourced from the Autonomous Foreign Exchange Market (AFEM) Account, which was introduced by the CBN in 1995 following the liberalisation of the Foreign Exchange Market (FEM). The AFEM is for the sale of foreign exchange to end-users by the CBN through selected authorised dealers at market determined rates.

There are so many unclear issues in the entire scandal revolving around Prof Soludo and UBA’s Tony Elumelu deeds or misdeeds in the alleged investments in AFC.

First, the Secretary to the Federal Government (SGF), Ambassador Baba Gana Kingibe, constituted the committee following allegations that the CBN Governor, Prof Soludo, did not get presidential or any appropriate approval before investing the money in AFC.

Does the CBN Act empower the board to make such investment and under whose authourity- the National Assembly and/or the President?

It is true that the CBN Board got approval of the Federal Executive Council (FEC) on August 2, 2006 to invest up to $500 million in the AFC?

It is true that Prof Soludo wrote to President Obasanjo on March 24, 2007 to inform him that all was on the ground for the take off of the AFC? Is it true that two months later, precisely on May 24, President Obasanjo approved the immediate execution and implementation of the AFC?

Is it true that the former federal Attorney General and Justice Minister, Bayo Ojo, came to the CBN on May 28, 2007 to perform the official ceremony of signing all the agreements on behalf of the Federal Government of Nigeria?

If the probe panel can seek clarifications of the above issues it would help them establish whether the CBN Governor fulfilled the requirements of the law before the controversial investment. It would also help the probe panel properly direct its searchlight to the appropriate person (s).