FRAUDULENT ACTIVITIES: Gtbank, Others In Trouble Over N1.27tn Intervention Funds.

Miriam Olusanya.

The Chief Executive Officers and top management staff of some banks may be in serious trouble and faces probe during the ongoing investigation of the activities of the Central Bank of Nigeria, according to findings by The PUNCH.

It was learnt that some Bank CEOs would be invited in an effort to ascertain any discrepancies around the management of intervention funds by deposit money banks. 

According to a report done by The PUNCH earlier, the Central Bank of Nigeria, CBN may be asked to withdraw its audited annual financial reports, which were recently released as this came after a team investigating the apex bank discovered discrepancies and irregularities in the financial accounts.

Investigations reveal that in August, the CBN released its financial accounts for the years 2016 to 2022 amid an ongoing probe of the financial services sector regulator by a Special Investigator appointed by President Bola Tinubu.

Tinubu had on July 28 appointed a former Chief Executive Officer of the Financial Reporting Council of Nigeria, Jim Obazee, as Special Investigator to probe the activities of the apex bank under its suspended governor, Godwin Emefiele. 

Asides the CBN, the special investigator is also investigating the Nigerian National Petroleum Corporation Limited, FRC, and other Government Business Entities. 

The President, in the letter which he personally signed, said the move was in continuation of the government’s anti-corruption fight.

The letter, dated July 28, 2023, read, “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 full terms of your engagement as Special Investigator shall be communicated to you in due course but require that you immediately take steps to ensure the strengthening and probity of key Government Business Entities, further block leakages in CBN and related GBEs and provide a comprehensive report on public wealth currently in the hands of corrupt individuals and establishments (whether private or public).

“You are to investigate the CBN and related entities using a suitably experienced, competent and capable team and work with relevant security and anti-corruption agencies to deliver on this assignment. I shall expect a weekly briefing on the progress being made.”

The President also attached a copy of his directive suspending Godwin Emefiele as Governor of the CBN on June 9, 2023.

According to findings by The PUNCH, the CBN Special Investigator is working with a team of accountants, auditors, and forensic accountants to carry out the investigation. 

The Secretary to the Government of the Federation, George Akume, recently said the Federal Government will soon unveil the audit report of the probe of the CBN. 

The SGF said that the probe report of the CBN when made public, would reveal how poor governance brought the country to the present predicament.

According to him, the report will enable Nigerians to know what really went wrong and how the country got to its present situation. 

He said, “Most of these problems confronting us are due to bad governance. The present government has confronted and is confronting these challenges. When President Bola Tinubu came on board, he took a very sound decision at the CBN. That singular act led to a massive improvement in the capital market, as experts have told us, it is something that has never happened in the past 15 years.

“We have a new team at the CBN and a special investigator has been in the CBN for some time now and his result will soon be released and Nigerians will know what really went wrong and what brought us to where we are today.”

Also, findings by The PUNCH revealed that Obazee had submitted an interim report to the President’s office.

Multiple officials said the preliminary report was submitted for necessary action by the President.

“The CBN Special Investigator submitted a preliminary report to the President’s Office over a week ago. The investigation still continues but the preliminary report is meant to give the President an idea of what has been discovered so far,” a top official privy to the development told The PUNCH on condition of anonymity because he was not authorised to speak on the matter.

It was learnt that the interim report would enable the president to make some key decisions that would help the country move forward.

Officials said the interim report led to the change of leadership at the CBN.

The president and his team are said to be currently reviewing the report with a view to taking an appropriate decision on it soon.

N1.27tn intervention funds

According to a top official, who spoke with The PUNCH on the condition of anonymity, some top bank officials will be invited as the investigations proceed over undisbursed intervention funds.

Findings by The PUNCH showed that N1.27tn intervention funds sit in the accounts of five banks.

This was based on an analysis of the half-year financial statements of Access Bank, Fidelity Bank, Guarantee Trust Bank, United Bank for Africa, and Zenith Bank.

The intervention funds cover lending facilities provided by the CBN through local banks, and the facilities include Accelerated Agriculture Development Scheme, Anchor Borrowers’ Programme, Commercial Agriculture Credit Scheme, Healthcare Sector Intervention Facility, and Paddy Aggregation Scheme.

They also include Micro, Small, and Medium Enterprises Development Fund, Real Sector Support Facility, 100 for 100 Policy on Production and Productivity, Export Facilitation Initiative, and the Creative Industry Financing Initiative.

Findings by The PUNCH showed that there was at least N530.07bn worth of intervention funds in Access Bank.

This included about N3.56bn under the Commercial Agriculture Credit Scheme, N1.57bn to facilitate the rapid rollout of agent networks across Nigeria supporting the expansion of a shared Agent Network, N58.84bn under the salary bailout fund, N99.04bn outstanding balance on the excess crude account loans, N9.34bn for the Real Sector Support Facility, N1.14bn for the Accelerated Agricultural Development Scheme. 

It also included N955.61m for the Creative Industry Financing Initiative, N8.62bn for the Non-Oil Export Stimulation Facility, and N17.64bn for the Health Sector Intervention Facility, among others. 

The PUNCH also learnt that at least N310.52bn of the intervention funds sit in Fidelity Bank. 

It included N80.65bn state bailout fund, N190.06bn Real Sector Support Facility – Differentiated Cash Reserves Requirement, N7.28bn Commercial Agriculture Credit Scheme, N2.5bn Paddy Aggregation Scheme, and N6.36bn 100 for 100 PPP.

The PUNCH further observed that about N288.42bn of the intervention funds are in Zenith Bank. 

It included N23.54bn Commercial Agriculture Credit Scheme Loan, N1.86bn Power & Aviation Intervention Fund, N125.14bn salary bailout fund, N71.53bn Excess Crude Loan Facility, N28.73bn Real Sector Support Facility and N9.13bn Non-Oil Export Stimulation Facility. 

The PUNCH also observed that there was about N115.09bn in GT Bank and N25.16bn in UBA as of June 30, 2023. 

The new Governor of the Central Bank of Nigeria, Olayemi Cardoso, during his screening at the Senate, stated that there is a need to pull the apex bank from direct development finance interventions to refocus the priorities of the bank.

According to the new governor of the apex bank, the bank needs to move into a limited advisory role that supports economic growth rather than actively play a prominent role in the financing of these projects.

He emphasised the need to restore the apex bank’s independence and credibility by refocusing on its core mandate and ensuring a culture of compliance.

“Much has been made of past CBN forays into development financing such that the lines between monetary policy and fiscal intervention have become blurred.

“In refocusing the CBN to its core mandate, there is a need to pull the CBN back from direct development finance interventions into more limited advisory roles that support economic growth,” he said.

In 2015, the former governor of the CBN, Godwin Emefiele, stated that the bank had over the years been involved in the financing of growth-enhancing programmes and projects of the Federal Government. 

He stated that these involvements are incidental to the bank’s core mandates and part of its development and corporate social responsibilities, to accelerate growth and development of the country’s economy.

As of October 2022, about N9tn had been released as intervention funds by the apex bank.

The bank had said that about N3.7tn had been repaid by beneficiaries while over N5tn was not yet due for recovery.

Agric sector

The PUNCH observed that the agricultural sector has been the major beneficiary of the intervention funds, especially through the Anchor Borrower Fund and the Commercial Agriculture Credit Scheme.

About nine banks have at least N208.33bn undisbursed funds from the CBN for the Anchor Borrower Fund and the Commercial Agriculture Credit Scheme at little interest rates. 

According to the first half financial statements released to the Nigerian Exchange Limited, three of the banks; Guaranty Trust Holding Company, Wema Bank and Sterling Financial Holdings had N114.10bn of the Anchor Borrowers Fund still in their coffers.

While seven banks including GTCO, Wema Bank, Sterling Financial Holdings, United Bank for Africa, Access Holdings, Zenith Bank Plc, Fidelity Bank, Stanbic IBTC Holdings and FCMB Group combined had N94.23bn of the Commercial Agriculture Credit Scheme funds in their books not disbursed as of the end of June.

The Anchor Borrowers’ Programme was established by the CBN in line with its developmental function. It was launched by former president Muhammadu Buhari on November 17, 2015, to create a link between anchor companies involved in the processing and smallholder farmers of key agricultural commodities.

The CACS is a scheme powered by the CBN in collaboration with the Federal Government represented by the Federal Ministry of Agriculture and Rural Development with the aim of providing concessionary funding for agriculture so as to promote commercial agricultural enterprises in Nigeria.

So far, there have been controversies about the beneficiaries and repayments of the ABP fund.

Stakeholders in the economy also have to deal with a high cost of financing, which has been affecting production and expansion plans in some sectors of the economy. 

According to the financial reports of GTCO, the lender still had N75.35bn of the Anchor Borrowers Fund as of June 2023 (December 2022: N78.42bn), which shows that only N3.06bn had been disbursed in six months. The bank revealed that the tenor of the facility depends on the gestation period of the targeted commodity but will not exceed two years. The facility is disbursed at an all-inclusive interest rate of nine per cent.

For the CACS intervention fund, GTCO still had N3.29bn (December 2022: N5.05bn. The facility is for a period of seven years at two per cent annual cost to the company. The maximum interest rate to the borrowers under the scheme is nine per cent annually inclusive of all charges.

Sterling Financial Holdings had N37.90bn of the ABP funds in its coffers which reflected a N12bn increase in six months showing that it disbursed less of the loans to the targeted users. For the CACS, Sterling Holdco had N33.40bn, indicating another increase over N31.59bn recorded as of December 2023.

Zenith Bank still had N 23.53bn of the CACS intervention fund in its coffers. Compared to N32.89bn it had as of December, the bank has disbursed N9.35bn between January and June 2023. 

In its report, Stanbic IBTC said that it obtained an interest-free loan from the CBN for the purpose of on-lending to customers under the CACS. The tenor is also based on an agreement with individual beneficiary customers. It had N 6.78bn as of June 2023(December 2022: N8.99bn) showing N2.21bn was disbursed in the first half of the year.

Access Bank said, “The amount of N3.55bn represents the outstanding balance on the on-lending facility granted to the Bank by Central Bank of Nigeria in collaboration with the Federal Government of Nigeria in respect of Commercial Agriculture Credit Scheme established by both CBN and the FGN for promoting commercial agricultural enterprises in Nigeria.

“The facility is for a maximum year of seven years at a zero per cent interest rate to the Bank. The Bank did not provide security for this facility. From this creditor, the bank has nil undrawn balance as at 30 June 2023.”

Wema Bank in its half-year report said that it had N848.23m of the AB Fund in its coffers from N1.96bn signifying that it had disbursed N846.26bn between January and June 2023. 

Fidelity Bank reported N7.27bn in yet-to-be disbursed CACS funds as of June 2023, a decrease compared to N8.08bn in 2022 and FCMB had in its till N1.82bn of the same intervention fund as of June 2023, down from N3.58bn as of December 2022, reflecting that N1.76bn had been disbursed.

Experts react 

The Chief Executive Officer of the Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, told The PUNCH on Sunday that it is necessary to assess the intervention funds in order to find out what went wrong and what can be done to fix it. 

He said, “If you want to reform the system, you have to do a study of what is on the ground. For the intervention fund, it is good to do an assessment. What they are doing is an assessment to know, which areas they need to improve.

“As you know, the default rate is also very high. That is another reason it is important to do a proper assessment to know what went wrong and what can be improved.” 

Also speaking, a development economist, Dr Aliyu Ilias, stressed that the apex bank ought not to be involved in handling intervention funds. 

He also criticised the structure of the Anchor Borrowers’ Programme, which has been a major point of controversy.

He said, “First and foremost, CBN should not be involved in any intervention fund. We have Ministry of Agriculture and the Bank of Industry. So, any intervention that want to come should go through these agencies.

“If you look at Anchor Borrower, I think the structure is not very good. I think there is policy problem and we need to look at it.”

He added that it is usually not advisable to have a CBN governor with a background in banking as there tends to be a “romance” between the banks and the apex bank.

“There is no way they will not call those bank CEOs. Some people need to be called to assess the funds. Banks must have comprise the criteria or list of people to get the loans,” he noted.

 

Special report by the PUNCH.