Clearly, the heavy dirt on Nigerian currency notes readily serves as a vector for the spread of germs and diseases, particularly in an environment where the culture of regular hand washing is not well grounded. However, despite commendable progress in the adoption of e-transactions, cash handling still remains very popular regardless of the quality of the notes and the attendant health hazard.
Curiously, however, new currency notes have become easier to obtain at parties and event centres where they are brazenly hawked with up to 20 per cent discount, even when commercial banks continue to plead non supply from the Central Bank of Nigeria. Nevertheless, the popular suspicion of “under table dealings” in currency supply was probably validated last week by media reports, such as “EFCC nabs six CBN officials and 16 other bankers over N8bn fraud”, (page 9 in Vanguard edition of June 1, 2015). Apparently, the Economic and Financial Crimes Commission picked up the suspects for “stealing and putting back into circulation about N8bn stock of defaced and mutilated Nigerian currency notes which were meant for destruction.” Investigations also revealed that in September 2014, “a box that was supposed to contain N5bn in N500 note denominations was discovered to be filled instead with old newspapers” at the same Ibadan branch of the CBN.
Clearly, the sum of N8bn indicated may actually be an understatement, since the EFCC also claimed that such escapades had enjoyed considerable mileage over several years. Besides, the N134m credit balance in one of several bank accounts and the value of other listed properties allegedly acquired by a standard six certificate cash assistant, who is, incidentally, a junior member of the Ibadan syndicate, may already exceed N1bn! The whistle blower who uncovered the heist also alleged that the Treasury Assistant and the Head of Security at the CBN, Ibadan branch were alerted, but surprisingly took no action. Be that as it may, this development probably explains why grimy, dirty notes still form a good proportion of currencies in circulation.
Nevertheless, the EFCC, also recognised that “this currency fraud is partly to blame for the failure of the CBN’s monetary policy, as the surplus cash mop up exercises by the apex bank inevitably failed to check the inflationary pressure on the economy.” The above statement by the EFCC seeks to explain that in order to reduce the inflationary threat from perceived surplus naira in the system, the CBN commits the hari kari of adopting high monetary policy rates which are antagonistic to economic growth and job creation. Worse still, as a counter measure against rising prices, the CBN becomes forced to reduce the extant surplus money supply by borrowing hundreds of billions of naira that would simply be kept as idle funds, despite the attendant oppressive interest rates of up to 15 per cent, in order to restrain commercial banks from promoting spending by lending to other customers and fuelling inflation. This unfortunate counterproductive and anti-people strategy to restrain inflation clearly becomes meaningless, if senior CBN staff, in collusion with other commercial bank employees continue to re-inject billions of already discarded/condemned currency notes back into the system, while the apex bank is conversely kept busy with the simultaneous mopping up of perceived systemic excess naira supply, despite the attendant oppressive national debt burden.
Curiously, the modus operandi of the Ibadan currency theft is awkwardly similar to the process the CBN also formally adopts for its excess liquidity mop up operations. For example, while the CBN on the one hand pretends to be socially responsible in attempting to stop inflation by reducing naira surplus and liberal spending, the same reserve bank also deliberately promotes the disenabling liquidity surplus syndrome when it substitutes humongous naira allocations for the distributable portion of dollar denominated revenue every month!
Indeed, with the prevailing culture of impunity in governance, it will be a hard sell to convince Nigerians that the Ibadan currency scam is an isolated case. Thus, it will be presumptuous to approve a clean bill to the other 36 stations where such CBN cash operations are executed nationwide. Expectedly, the arrests in Ibadan would obviously trigger cover-up strategies in other CBN cash centres nationwide before the investigators arrived.
Incidentally, currency scams involving the CBN staff are not unusual; for example, in December 2012, the House of Representatives expressed shock to “hear that N2.1bn of newly printed N1,000 notes was missing at the Nigerian Security Printing and Minting Company”, a corporation over which the CBN has supervisory role. Media reports suggested then that in order to facilitate investigations, the Managing Director of the NSPMC, one Ehi Okoyomon, who reportedly enjoyed extravagant lifestyle, and the subsisting Head of Security were sent on compulsory leave. Sadly, the initial intensity of public attention to this scam has since waned and prosecution may ultimately never be concluded.
In another related development, the cover report of The Sun newspaper edition of April 16, 2013, also carried a story titled “EFCC detains ex-Mint MD Okoyomon over N750m polymer scandal!” The story was sequel to allegations that an Australian newspaper had reported that SECURENCY (a note printing subsidiary of the Reserve Bank of Australia) paid N750m in bribes to some officials of the CBN between 2006 and 2008 to secure the contract to make polymer notes in Nigeria. According to the report, apart from a former CBN Governor, senior officials of the finance ministry and a former President were named as beneficiaries of the bribes.
While no official of the Central Bank has so far been indicted, the EFCC is presently in court with Okoyomon over a request to extradite him to the United Kingdom to face prosecution over bribery allegations on the contract for the N20 polymer note.
However, in a curious twist of events, the same CBN which had earlier zealously promoted attributes of the polymer notes at great public expense, has lately turned around to condemn the adoption of such currency as ill-advised because polymer notes were found to rapidly deteriorate. Nevertheless, it is also alleged that the polymer contract bribes may have encouraged Securency to breach the planned establishment of a polymer based mint in Nigeria as part of the principal objectives of transferring technology to developing nations!
Surely, the autonomy of the CBN should not provide a cover for the perpetuation of financial crimes especially when the success or failure of the Nigerian economy rests squarely on its performance. The source of billions of naira unilaterally expended as interventions in various sectors of the economy by former governors has yet to be determined. Furthermore, the source of billions of dollars liberally auctioned to the Bureaux de Change, even when the real sector is deprived has also yet to be ascertained. Why, for example, should the CBN sit on tens of billions of dollars as idle deposits while our government goes cap in hand to borrow at atrocious rates of interest from external creditors?
Furthermore, the CBN’s unhealthy collusion with commercial banks has openly promoted the scam of margin trading, round tripping and the provisions of free funds, which are subsequently mopped with atrocious interest rates which inordinately bloat the profitability of banks despite their zero added value, while the real sector totters and unemployment spirals. A forensic audit of the uses and sources of funds by the CBN is certainly urgently required.