The Management of the Central Bank of Nigeria (CBN) has been notified of a purported audio recording of selective conversations amongst the Governor, Deputy Governor and some Senior Officials. Contrary to the headline-grabbing narrative that the discussion was about a fraudulent transaction, this conversation – the beginnings of which was omitted to create a different impression-was simply to proffer solutions to a misunderstanding that affected the Bank’s balance sheet.
As publicly known, the CBN was approached in 2015 by the National Economic Management Team and the National Economic Council (NEC), chaired by the Vice President, to assist State Governments with Condition- al Budget Support, in the aftermath of the significant nose-dive in global oil prices and associated FAAC allocations. In order to ensure that ordinary Nigerian workers got their salaries, pensions and gratuities, and that the economy continued to recover from recession, the Bank provided about N650 billion in loans at 9% with a two-year grace period to 35 States of the Federation. These monies were distributed to the States monthly with documented approval of the Federal Ministry of Finance and the Presidency.
In closing the Bank’s 2018 accounts, external auditors in their Draft Account, erroneously classified about N150 billion of these loans as bad, which negatively affected the Bank’s Balance Sheet and shareholders fund. The selective conversation being circulated was simply a discussion to ascertain why the auditors took that position and next steps to resolving it. Obviously, it soon became clear that a State Government loan cannot be classified as “bad” or “irrecoverable” when the State still exists and getting FAAC allocations. The Bank then reached out to the Federal Ministry of Finance and they jointly gave comfort to the auditors who accepted in writing that these monies would be repaid.