INTERVIEW: How CBN, SGF others frustrate efforts to retrieve N20 trillion stamp duty – Consultant

Central Bank of Nigeria (CBN)
Central Bank of Nigeria (CBN)

In this interview with leaks.ng, Tola Adekoya, of the School of Banking Honours, gives an account on how his school first brought the issue of the unremitted N20 trillion stamp duty to the fore and who are those with questions to answer.

How did your agency, the school of banking honours, come about the issue of unremitted stamp duties for the government?

The School of Banking Honours is the first innovation enterprise institution in banking sector. We are the first banking monotechnic listed by NBTE in Nigeria.

We figured out that there is a major problem with banking in Nigeria today which is retrenchment. The youth of this country are running away from banking going into other professions like accounting and so on. They believe banking is a closed market and with the retrenchment going on, they became scared and so the onus is on us as the first banking monotechnic to create alternative jobs that will engage them in large volumes as to make banking attractive. And what we are putting in place is what we described as shadow banking. All those expensed bankers that are being retrenched are going to be absorbed at a lower level than banking to be able to teach, impact their skills on the incoming younger generation for banking not to lose its relevance. That is the main focus.

To start up, we carried out research, we brought out about 12 products that will sustain shadow banking. The first of those 12 products is stamp duty, which is overlooked in banking for over 20 years until our research brought it out.

One of the evidences you need to see on the stamp duty is to look at any cheque leaf from any bank you will see “stamp duty paid” embossed on the cheque leaf. But these monies are not remitted to the government and that was where our research started.

What year was this?

We started in 2011 and then moved into 2012, cashless policy started in January 2012.

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What did your research reveal?

The research revealed that since 1993 when Nigeria Interbank Settlement System NIBSS took over cheque clearing from government, government has not been receiving stamp duty paid on cheques. We demanded CBN to ensure that these monies get into government coffers as provided by section 23 of the CBN Act of 1991. Section 23 exempts only naira currency issued by CBN from stamp duty, all other transactions are to be charged with stamp duty and the federal government financial regulations put this stamp duty at N50 while the threshold the level for which it should begin is actually N1000.

There is the issue of N20 trillion that the government supposed to earn. How did you arrive at this figure?

Very simple! Number one; cashless policy was an innovation of Central Bank and it is supposed to provide alternatives to cheque payment which will be faster and electronically delivered. But various laws are there, we approached CBN to partner.

When?

That was February 2012. They started cashless policy in January 2012 and we approached them in February to partner on shadow banking and they turned us down. So we got an agreement with NIPOST to represent government in collecting the money. After all, NIPOST can issue stamp. And so we got all the approvals. We did press conference with NIBSS on the 4th of January 2013. We were set. In fact three banks were supposed to be collecting money for stamp duty for us. These are First bank, Standard IBTC and Unity bank and we were set. But NIBSS that has the figure, the volume of transactions from 1000 upwards rose up in arms against us forgetting this approval for government.

What was their contention?

At the time we had the approval they had the approval to charge on transactions from N500,000 upward while the approval we got from government is from N1000 upwards and the managing director of NIBBS, Mr. Folashodun Adebisi Shonubi, challenged me to say that “look transactions below N500,000 to 1000 are so voluminous so huge that if you apply N50 on them we will be recording revenue that will push oil into a distance second.” These were his exact words on 7th January 2013 when we served NIBSS a letter of engagement to be sweeping stamp duty from the banking sector into government sector. We are just going to get our commission and probably share with them.

But they were not interested in that, they were interested in blocking government from realizing the full potentials of the law that has been in place for over 20 years before the cashless policy came into existence.

And so the fellow felt that I shouldn’t have gone to government to get that kind of approval without discussing with him and that was my grudge with him. To say that you were not the one that licensed us, you are not our regulator, you are not even our financier so who are you to be challenging me for doing what has to be done right in this country. So the tension became sharp and we told him that whatever your position is put it into writing and he put it into writing to say that the approval from CBN is against any additional charges to customers.

Some few weeks later, you won’t believe it, CBN issued a circular that banks should now be collecting what they (NIBSS) complained about. They would now be collecting from N500, 000 down to N1000 and then they shut out government, that is criminal.

How did they shut out government?

They issued the circular and then we said, where is the government’s share? And when they didn’t listen to us we served them a demand notice and then NIBBS said come and collect it, I have all the papers. He (the then NIBSS managing director) sent an email to me on the 5th of July 2015, come and collect it. But CBN is adamant, CBN that gave approval and then switch the approval of the government for private sector has been restricting it.

How are they restricting it?

It’s quite easy. They have a mandate you are supposed to accept only naira currency from stamp duty and so we expected them to issue a circular which they didn’t. The circular they issued only favoured the banks against government. It favoured banks against their pay master and that is what I object to, that’s how they tried to frustrate the collection of stamp duty based on NIBSS complains.

Same year you went to court with NIPOST and some other entities, tell us about it.

That was quite later in the year, I think we went to court only in 2017 this issue has been on since 2012. What led to court cases in the first instance was NIPOST. They became unnecessarily ambitious.

They signed the masters services agreement with us, we got approval from CBN, NIBBS ran to CBN to block it. CBN blocked it and then switched government approval to private sector to start collecting while shutting out government. When we noticed that we said okay the best thing we can do is to get the president of this country to…

But you said NIPOST was over ambitious?

You know we were the custodian of the mandate to roll in stamp duty from banking sector that was why we signed an agreement and it was based on our research. We needed the government representative, we are not government, we are just consultants, researchers trying to add value to this country.

So, the onus was on us to right all the wrongs that were being perpetrated by CBN and NIBSS, so we needed to get in touch with the President and Commander-in-chief of the Nigerian Armed Forces, who at that time was President Jonathan.

We were trying everything possible to reach him and along the way we met a woman, who we understand was the cousin to President Jonathan. She delayed us, deceived us for over six months we couldn’t get President Jonathan to report CBN. So we had to look for alternative that brought us to Kashamu. I am from Ogun State and the only coordinator for Jonathan in Ogun State was Buruji Kashamu. So when we met the traditional ruler of our area, he said it was Buruji that will get us Jonathan within 24 hours, but when they set up the meeting with Buruji, he had another plan entirely. He didn’t want to go to Jonathan. In fact he ran to NIPOST behind us to push us aside that he was going to get them judgement.

He moved ahead, got judgement and did everything, but before Buruji pushed NIPOST into that error, we wrote a letter to NIPOST on 5th August 2013 that it should seek commission on this transactions he cannot keep that money, that money is meant for the entire nation and so they should seek the approval of the Finance Ministry to collect commission like other agencies. FIRS collects commission, Nigeria Customs Service collects commission, Immigration collects commission. All these people collect commission so NIPOST too should also go and collect commission for putting your stamp. But the first value of the stamp is not your money, and they disagreed with me.

Did they claim it?

Yes they wanted to keep all the money, they said their bosses said their money is with them. I said you are wrong we only came to you to represent government not that you are going to sit down on this money, what is your total earnings, total revenue? You are earning something about N1 billion

So you mean to say that NIPOST went to court to…

Buruji Kashamu lured them to say he was going to get them judgement, and he did. But in the process of getting them judgement, NIPOST made an error. They never sought the advice of the Attorney General of the Federation in accordance with section 58 of his enabling act. It went behind the Attorney General of the Federation, went to Buruji Kashamu to initiate an ill-advised court case against banks on one hand and against CBN on the other hand. So we didn’t start any court case, we were just watching, we were helpless. From trying to see the president of this country to illegality of a case that didn’t follow due process. We were shocked.

Before they went to court, before the claim, when did they begin to collect the stamp duty?

It is irrelevant to us because they issued a circular in 2016, I mean that is outrageous. We got approval in 2012 and then you switched the approval of government to private sector because of the volume of funds involved. CBN tampered to the whims of NIBSS by switching approval of government for private sector, that is criminal and we have all the papers then you now came on January 2016 to say that okay you negotiated with NIPOST and KASMAL to now issue a circular in January 2016 against the law.

What was the circular about?

That bank should now start remitting stamp duty of N50 from transactions to government coffers. They opened NIPOST stamp duty account that the money should go there. But the banks were already in court they were fighting NIPOST and KASMAL back for initiating such a court case against them, and the banks won.

The appeal court threw away NIPOST claims and said NIPOST should not have anything to do with stamp duty.

So Kashamu and NIPOST got two judgements; first judgement was against banks and second was against CBN. But in their anxiety or in their ambition to cover the entire funds due to the entire government they committed perjury in three ways. The first perjury they committed was on contract dates, in the judgement that KASMAL got against banks he said he had contracts with NIPOST ending October 2018. In the judgement on the same contract he had against CBN, he said the same contract ends October 2015, which one should we take? And then when CBN asked NIPOST to say do you have a contract with KASMAL? NIPOST replied to say it doesn’t have a contract.

So, who has KASMAL?

It is Buruji Kashamu, now a senator. He was the PDP leader in our state and we went to him to take us to Jonathan and he did all these abracadabra and we couldn’t understand.

You later got federal government appointment, you say from the presidency. What happened afterwards?

Yes, well, we went through all the due process we even got the presidential order, the Attorney-General of the Federation has already said they have taken over the matter from NIPOST. NIPOST was shut out for engaging itself in perjury, that is a jail-able crime. You went to swear affidavit in court falsely. You even deposed to the fact that 5% commission on N50 stamp which should be N2.50k. You deposed that it is N7.50K that is three times the amount. These are horrendous acts by NIPOST and KASMAL.

The Attorney-General was aware of this. In fact the Attorney-General set up a committee to investigate NIPOST and KASMAL relationship. We have not heard the outcome of that investigation till date. We submitted memorandum as to the position and everything we have not got the thing. But they have been shut down and so everybody has now fallen back on the copyright certificate issued under Nigeria law to School of Banking Honours. We did the research to say this is the only way we can protect government revenue from manipulators. Of course CBN is happy, that is why it will flow with KASMAL today and NIPOST tomorrow and then turn against them the next day. In another court case and they were trying to mess themselves up. It has never happened in the history of Nigeria.

Now what happens to the money that NIPOST has collected?

NIPOST has not collected a kobo on their own. They accrued all these ones in CBN, they opened an account which is called NIPOST-STAMP DUTY ACCOUNT and they started putting some money from January 2016, even from the returns they sent to the Secretary to the Government of the Federation and the Senate there are gaps, but that is not our major concern. We are more interested in the totality of the liability of amount accruable to government

The N20 trillion, which is supposed to be accrued to the government, where can we say it is now?

The money is mostly with CBN and NIBBS, they were collecting all those transactions charges from transactions from N500,000 and below that’s the one that the NIBBS M.D said is huge and will push oil to a distant second.

The money is with CBN and NIBBS, the balance for the N500,000 and above are with banks that they have not remitted and we have our strategy to collect those without disrupting anybody’s activity that’s why we are consultants.

We got a presidential order and a contract was signed with us, there were conditions attached to it.

You started sending report to the SGF, how long have you been doing that?

We got our letter of engagement in October. We sent the first report from November, December, January, February. We were sending monthly report until we didn’t get a feedback. If you send a report and you don’t get a feedback then you hold on and appraise the situation, what is happening?

So there was no feedback on all those reports?

No feedback! because we got the letter of employment in October 2017, within that same month the Acting Secretary to Government of the Federation; a fearless, articulate and very hardworking woman took the case to the president to say this is what is happening and he was very shocked. The president approved that we should go and collect the money immediately. But immediately they put a politician there to replace her everything slowed down. We have not seen where our reports are, we have not seen any action the only thing the new SGF did was to arrange a meeting for us with CBN and all the issues CBN brought up. We trashed them out and we even wrote our report on that meeting and then we went to start our work on the 5th February 2018, but we were denied access by NIBBS.

What was the outcome of the meeting?

We told them we were going to start our work on the 5th of February. We are not going to wait endlessly. We’ve had approval since 12 October 2017 and CBN had their letter on 19th October so there is no point delaying presidential order so we have to give honour to our president and everything has been documented in a contract with the federal government on the basis of the copyright under the law. That copyright protects government revenue.

What exactly is the problem?

The major problem is, CBN is adamant to release the funds owned by the federal government. They invest in the banks and it pays them to keep the money in the bank and it is a better way of sharing government money. And we are against that. Once there is interest in private sector banks, then it shouldn’t be regulating them and should not have any business to represent government in the CBN. There are key persons in CBN that own investment in private sector banks, and so their interest is more in those banks than in supporting federal government employers.

Therefore, as researchers and consultants who are not involved in this dubious act, we have the right to make approach concerning the money (which is) supposed to be owned by the federal government supported by the law.

They have not been able to extricate themselves on the issue, we have a letter of invitation from NIBBS on the authority of the demand issues that we served to come for government collection which is stamp duty that was already with them. So why is CBN stopping us from collecting what is due to government from sweeping into government coffers as earlier approved?

How is CBN responsible for this?

CBN regulates NIBBS, therefore instructions have to be passed by CBN. Even though NIBBS has invited us to come with NIPOST but we couldn’t because NIPOST was involved in some judicial scams and we were not interested in that, which was why we invited Revenue Mobilization and Fiscal Allocation Commission (RMFAC)

RMFAC invited NIBBS and CBN asking them to bring their records but they ran away. CBN has been restricting NIBBS; the two are intertwined. CBN nominates the chairman of NIBBS, NIBBS is not owned by the federal government rather a private sector bank. And CBN is there to control NIBBS, but CBN has refused to control them. CBN has refused to meet up to its responsibility on stamp duty as provided by section 23 of the 1999 Act and so we are holding CBN accountable.

They made a mistake to think School of Banking Honours is a young school and cannot challenge this dubious act, forgetting that the man running the institution is an Auditor/Chartered accountant and have trained with the best institutions around the world. The auditor focuses on documentation, authorities and law and that is why we are effectively representing government to save this country. All these monies must come in to represent all the 36 states that have gone comatose.


Read our previous report here:

Controversy deepens over disbursement of ‘N20 trillion’ stamp duty revenue


 

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