Real reason CBN barred 9 banks from forex trading

CBN

The nine commercial banks suspended from inter-bank foreign exchange market operations on Monday failed to remit crude oil sales revenues from oil blocks operated by the Nigerian Petroleum Development Company (NPDC) and its joint venture (JV) partners, PREMIUM TIMES investigations revealed.

The NPDC is the upstream oil industry subsidiary of the Nigerian National Petroleum Corporation, NNPC.

Further findings showed some of the banks were indicted for refusing to transfer funds in some in domiciliary accounts belonging to some government ministries, departments and agencies, including the Nigeria Liquefied Natural Gas (NLNG), despite government’s directives.

Some of the oil blocks include those previously vacated by Shell Petroleum Development Company. They also include eight whose ownership were irregularly approved by the immediate past Minister of Petroleum Resources, Diezani Alison-Madueke.

They are OMLs 4, 38 and 41 allocated to Atlantic Energy and Septa Energy; OML 42 to Neconde Energy and Kulcyzk Oil; OML 40 to Elcrest E&P Nigeria Limited and Band Oil and Gas; OML 34 to Niger Delta Western and Petrolin; OML 30 to Shoreline and Heritage Oil, and OML 26 to First Hydrocarbon Nigeria and Afren.

Payments for the leases are still subjects of controversies years after they were awarded, with the Nigerian Extractive Industries Transparency Initiative (NEITI) asking for the review and probe of their allocations.

The NEITI noted in its recent annual audit report although total valuation for the eight oil acreages by the Department of Petroleum Resources was about $3.4 billion, NNPC paid only $100 million, out of about $1.85 billion it offered.

Investigations revealed that NPDC in August 2013 opened domiciliary accounts in various commercial banks for JV oil revenues from the sale of crude oil produced from the oil fields.

For instance, the NPDC-ND Western (OML 34) Joint Venture Crude Oil Transportation Revenue Account No.1006074884, and NPDC-OML 40 Crude Oil Sales Revenue Account No. 3610059553 were opened in Keystone Bank in August 2013 and March 2014 respectively.

Similar accounts were opened with Zenith Bank, Diamond Bank, Fidelity Bank, Stanbic IBTC Bank, Access Bank, First Bank of Nigeria (FBN), United Bank for Africa (UBA), First City Monument Bank (FCMB), Heritage Bank, Skye Bank, Sterling Bank and Fidelity Bank for the various JV operations.

In September 2015, President Muhammadu Buhari directed all government MDAs to close all public sector accounts in commercial banks and transfer, through the treasury single account (TSA), their balances to the Consolidated Revenue Fund (CRF) at the Central Bank of Nigeria (CBN).

The balance in OML 40 Crude Oil Sales Revenue Account in Keystone bank as at 2015 was about $30.12 million, the least of the balances in the banks.

On Monday, FBN was sanctioned for withholding about $469 million; UBA $530 million; FCMB $125 million; Heritage $85 million; Keystone $139 million; Skye $221 million, Diamond $287 million; Sterling $269 million and Fidelity $209 million.

Director, Banking Supervision, CBN, Tokunbo Martins, however said on Wednesday, the suspension on UBA had been lifted following the return of all outstanding unremitted NNPC/NLNG) foreign currency in its possession.

PREMIUM TIMES investigations showed NPDC management and the various banks ignored the presidential directives last year to remit revenues in its JV revenue accounts to the TSA account.

A source close to NPDC in Benin City, where the company has its operational base, said the affected commercial banks refused to heed the presidential directives, because some NPDC top officials struck a deal with them.

The source, who asked for his identity not to be revealed as he was not allowed to speak officially on the issue, said the deal was for the banks to do business with the foreign exchange balances in those accounts and make about one per cent interest returns every month to the officials.

But, NNPC Spokesperson, Garbadeen Mohammed, denied the allegation, saying no official of any arm of corporation was complicit in any deal with any of the affected banks.

“The directive for banks to release public sector funds in their possession to TSA account has been on for a long time. It was after all efforts to get the banks to comply failed that NNPC management decided to write officially to the Presidency to complain against their refusal to remit the monies as directed.

“It was after the letter the CBN was directed to intervene and ensure the banks’ full compliance.That is how the CBN came to the equation. That is why the issue now has been between CBN and the banks. NNPC’s role in the matter could be seen simply as that of a whistleblower,” Mr. Mohammed said.

But, some of the banks in public statements after the CBN sanction denied deliberately engaging in any illegal act of concealment, saying the accounts were operated in line with regulatory requirements.

“The banks had tripartite documented discussions with CBN and NNPC on the need for domestic retention of those balances,” said FBN in a statement on Wednesday.

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  • emmanuel kalu

    just crazy.

  • Cincinnatus

    These banks are the cancer of this country. The corrupt politicians used to be by simply carrying Ghana-must-go everywhere. The banks helped them sophisticate their plundering abilities by building these stealing and cheating systems. Threaten these people’s operational license if you have to. They work for Canary Wharf and Wall street by aiding corruption in Nigeria and believe they have the backing of those governments to do this to Nigeria under their protection. Show them they are dreaming.

  • Olarotimi Ajani

    It’s unfortunate, but note that banking system is just an extension of the entire country. Whether we like it or not, corruption has eaten up the entire fabrics of this country.
    Unfortunately, it is so endemic that some are still not ready to change.
    The banking system feeds on the large scale corruptions ongoing in the public sector to the extent that they neglect the real business of banking. No wonder industries are not thriving. No wonder factories and businesses are closing down. The present leadership of CBN, being led by Emefuele (or whatever his name), shares the blame and very culpable. It is just quite unfortunate. According to Global Financial Integrity, Over $ 170 billion illicit funds took flight from this system between 2003 and 2014( an average of $17 billion per year). Take note, what make up this figure are Financial frauds in public sector, Private sector and illegal waivers of taxes and tariffs. These funds are illegally kept in USA and European Countries. For us to get out of these mess, a holistic cleansing of the entire financial system must be done, right from the top to the bottom, while PMB administration maintains the tempo of cleansing in the public sector. Other arms of private sector must also not be left out in the cleansing exercise. God bless Nigeria

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