The pledge by President Muhammadu Buhari to recover funds stolen by government officials who abused their offices in the recent past is sending jitters through the banking industry, the New Telegraph has learnt. According to industry sources, there is growing concern among top bankers about how much of the stolen monies would be traced to financial institutions and the impact of the likely seizure of such funds on the operations of the affected lenders. A top official of an old generation bank, who declined to be named, said: “There is a great deal of apprehension among industry players about what form the planned recovery of the funds would take and the sanctions that would meted out to the banks that would be found culpable.
If such funds are seized by government, the banks concerned could be in big trouble.” Noting that banks were already facing serious challenges contending with regulatory headwinds, he said that some lenders stand the risk of becoming distressed in the event that they are discovered to have either kept or assisted corrupt government officials to launder stolen public funds. Already, a probe, it was reported, may also shift to the CBN. Indeed, at a recent forum in Lagos, respected economist and Managing Director, Financial Derivatives Company Limited (FDC), Mr. Bismarck Rewane, predicted that some banks would be in trouble if they are found to have collaborated with Politically Exposed Persons (PEPs) in siphoning the looted funds.
He said: “Buhari’s pledge to recover stolen funds also poses a risk to the banking system. For instance, if the funds of Politically Exposed Persons (PEPs), their wives’, children’s or girlfriends’ funds are traced to banks, those banks could be in trouble.” The Central Bank of Nigeria (CBN) defines PEPs and Financially Exposed Persons (FEPs) as persons who have been entrusted with a prominent function by an international or local organisation, including members of senior management such as directors, deputy directors and members of boards or equivalent functions other than middle ranking or more junior individuals. Similarly, Senior Financial Analyst at Berta Investments Limited, Mr. Joe Halim, predicted that many banks were going to be indicted in the probe to recover stolen funds.
He said: “Over 70 per cent of the proceeds of fraud, corruption and other economic and financial crime usually pass through financial institutions. In fact, a few Nigerian banks had been fined in the past, both here and abroad, for not fully complying with Anti-Money Laundering/ Combating the Financing of Terrorism (AMT/CFT) regulations. So, I can confidently tell you that since President Buhari announced that he was going to recover stolen funds, many bank executives have been having sleepless nights and praying that their deals with corrupt government officials would not be exposed.” Interestingly, shortly after he was suspended from office last year for alleging that the Nigerian National Petroleum Corporation (NNPC) had failed to remit $20 billion to the Federation account, former CBN Governor, Sanusi Lamido Sanusi, claimed in an interview published in the New York Times, that he had begun a process to trace the missing oil money to some banks before he was suspended.
He revealed that he had a semi-monthly meeting with bank chiefs where he “threatened to open the books of the bankers, to trace the money.” Sanusi said that he suspected some lenders were laundering stolen oil money. “Some of them were not giving information about their accounts; I told them I would order a special examination,” the newspaper quoted Sanusi as saying. The former CBN governor stated that many of the bankers went straight to government, adding that two of the bankers whom he would not name, “went and reported to the Petroleum Minister (Mrs. Diezani Alison- Madueke).” He alleged that the then President, Goodluck Jonathan, suspended him because he did not want him to bring out any more information that would get the bankers into trouble. President Buhari had vowed in his first meeting with state governors after he was sworn in on May 29, that the days of impunity, lack of accountability and fiscal recklessness in the management of national resources were over in Nigeria. He had said: “The next three months may be hard, but billions of dollars can be recovered and we will do our best.” The report of the Thabo Mbeki High Level Panel on Illicit Financial Flows from Africa adopted last February by African Union Heads of State and Government at their summit in Addis Ababa, Ethiopia, noted that Nigeria accounts for about 68.1 per cent of the total revenue Africa lost in a decade as a result of illegal transfer of revenue abroad.
The study said that about $40.9 billion (N6.87 trillion) of an estimated $60 billion (about N10.08 trillion) lost through such transfers from Africa in a decade (2001-2010) are traced to Nigeria. The funds are stolen through corruption, tax evasion and illegal transfer of profits by multinationals, the AU said. The report also identified Egypt and Morocco as the other countries with the largest estimates of illicit financial flows statistics of $28.2 billion and $20.3 billion respectively. Cumulatively, Nigeria and Egypt topped the list of ten African countries with illicit financial transfers between 1970 and 2008, with $217.7 billion (about N36.57 trillion), or 30.5 per cent, and $105.2 billion (about N17.67 trillion), or 14.7 per cent respectively, while South Africa had $81.8 billion (about N13.74 trillion), or 11.4 per cent.
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