The outgoing Finance Director of Nigeria’s Central Bank, Benjamin. A. Fakunle has been arrested and detained by the Department of State Service (DSS) over his role in the seven-year audited accounts of the apex bank alleged to have been fraudulently prepared.
Fakunle who retired from the apex bank about two days ago is the latest on the list of officials of the bank who have been arrested and interrogated in connection with the misconduct at the CBN which Jim Obazee, the Special Investigator appointed by President Bola Tinubu is investigating for cleansing.
Findings by InsideBusinessNG show that the outgoing Finance Director was arrested by the operatives of the DSS at the post-retirement party being held in his honour. He was quizzed on Wednesday and has since been in detention.
As the apex bank’s Finance Director, Fakunle is the Process Owner and is saddled with the responsibility of overseeing the finance department of the bank. Process Owner in accounting parlance means that he is also in charge of the audited accounts and their preparation. His position is to supervise the processes, following accounting best practices and in line with the enabling act of the institution. He also liaises with the auditors of the bank.
His interrogation and detention, according to findings, owing to the discovered discrepancies and irregularities in the audited accounts, came on the heel of the interrogation of Shuaib Ahmed, the Executive Secretary of the Financial Reporting Council of Nigeria (FRC) and his deputy, Iheanyi Anyahara on Tuesday by the team of the Special Investigator.
Ahmed and Anyahara were quizzed over the ‘Accounting Guideline for Financial Reporting by the CBN” prepared by the FRC and in use by the apex bank for the preparation of the audited accounts from 2017 to 2022.
The guidelines, about six in all, were issued and sold to the CBN by the trio of the late Daniel Asapokhai, the former executive secretary, his deputy, Anyahara, and Ahmed, the current executive secretary at a total cost of N401.75 million according to findings.
Those who are familiar with the issue also told InsideBusinessNG that the accounting guidelines by the trio of Asapokhai, Anyahara and Ahmed, in connivance with the CBN officials and the audit firms, allegedly allowed a cover-up of unwholesome practices in the apex bank operations, and are hugely responsible for the mess therein.
Sources at the FRC told InsideBusinessNG that, “The Council is not allowed to prepare operational guidelines for an external organisation”. However, its officials did so in violation of the Council’s rules.
The rules of the Council, according to another source, also demand that “any guideline to be issued must be discussed by the management, approved by the board, and must also feature in the minutes of the meetings of the board, and as well, be published on its website”.
The source said none of these happened at the FRC while the discussions on the guidelines were also missing in the minutes of the meeting of the board of the apex bank in the entire period.
This development was alleged to have helped the apex bank and its auditors to manipulate the audited accounts that are allegedly riddled with wrong figures and understated the Ways and Means that have stirred controversies. The 2022 audited accounts put the figure at N23.7 trillion. However, investigations by InsideBusinessNG show the total figure is close to N27 trillion.
“The FRC guidelines also allowed the apex bank to understate the exact amount sunk into the various intervention programmes like the Anchor Borrowers Programme (ABP) and other expenditures of the bank” according to another DSS source who stated, “With the wrong figures, the FRC aided the CBN in misleading the National Assembly, the president, multilateral institutions, the international community, and Nigerians”.
Some of the auditors of the bank from Deloitte, Pricewaterhouse, KPMG and EY who have handled the audited accounts of the apex bank at various times from 2015 to date were also found culpable after being quizzed. It would be recalled that both Ayo Othinwa from KPMG and Jamiu Olakisan of EY had earlier in an undertaking to the DSS in January, admitted that the audited accounts they issued were wrongly prepared and should not be relied upon for any economic decision.
Fakunle’s arrest and the interrogation of the FRC officials thereby confirmed InsideBusinessNG’s story of January 2023 that the apex bank’s audited accounts during the tenure of Godwin Emefiele, the suspended governor of the apex bank are fraught with manipulations and could cause the seven-year documents to be withdrawn from circulation and to be re-issued. The state of the CBN audited accounts has brought to light, the rots in the FRC, the nation’s financial statement regulator, which is expected to check abuses in private and public institutions.
Sources at the DSS confided in InsideBusinessNG that Fakunle will be expected to give insights into the basis for the use of the accounting guidelines which allegedly deviated from the provisions of the International Financial Reporting Standards (IFRS) and also, why N401 million was paid for the document which procurement is illegal and against the council’s rules.
He will also be expected to give reasons for the advance payment of N300 million fee to both KPMG and EY, the two auditors of the CBN when work for the 2022 audited accounts had not started.
Interestingly, CBN has a representative on the board of the FRC and could not have feigned ignorance of the illegality of the guidelines.
The CBN Act specifies the procedure for the preparation and publication of the audited accounts which were alleged to have been violated by publishing without the approval of President Tinubu. This violates section 50 (1) of the CBN Act 2007 which provides that the bank shall, within two months after the close of each financial year, transmit to the National Assembly and the President, a copy of its annual accounts certified by the auditor.
Section 50 (5) also provides that a copy of the audited account shall be forwarded to the President and shall be published in the Gazette.
The apex bank released its financial statements for the years 2016 to 2022 which have continued to stir controversies amid the ongoing probe of the financial services sector regulator by Obazee, the Special Investigator.
The first indication of the alleged flaws in the seven-year documents came from JP Morgan which reported that $3.7 billion is left in the country’s foreign reserves which the 2022 audited accounts claimed to have about $33 billion. Although the CBN had denied this, revelations from the work of Obazee are, however, moving to confirm the JP Morgan’s report.
President Tinubu, in a July 28, 2023 letter appointed Obazee, the founding Executive Secretary of the FRC to probe the activities of the apex bank and its related entities. He is also to look into the books of the Nigerian National Petroleum Corporation Ltd (NNPCL), the Federal Inland Revenue Service (FIRS) and other Government Business Entities, which the President, in the letter he personally signed, said was in continuation of government’s anti-corruption fight.
The letter reads, “In accordance with the fundamental objectives set forth in section 15(5) of the constitution of the Federal Republic of Nigeria 1999 (as amended), this administration is, today, continuing the fight against corruption by appointing you as a Special Investigator, to investigate the CBN and Related Entities. This appointment shall be with immediate effect and you are to report directly to my office”.
The engagement terms require Obazee to take steps to strengthen key Government Business Entities, block leakages in CBN and related GBEs and provide a comprehensive report on public wealth in the hands of corrupt individuals and establishments in the private or public sector.
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