AGF trails saboteurs of e-payment regime
By Enitar Ugwu (Lagos) and Mathias Okwe (Abuja)
ARE profits being declared by Nigerian banks genuine? Are these banks adhering to the rules of the prudential guidelines, especially as regards their loan status in arriving at their profit margins?
These posers and more are what the Central Bank of Nigeria (CBN) is currently battling to unravel.
Consequently, The Guardian reliably gathered, the apex bank has dispatched another set of its officials, known as Income Auditors to all the banks in the country.
In another development, the Accountant-General of the Federation is on the trail of saboteurs of the recently introduced e-payment regime in government transactions.
According to investigations by The Guardian, the CBN officials are mandated to examine banks' schedules on foreign exchange transactions, schedules on banks' 50 top loan customers, 50 top depositors, and also banks' Commission on Turnover (CoT).
The essence is to match CBN findings with the profits being declared by banks to ensure that no bank is declaring bogus profit.
According to sources in the banks, the CBN income auditors are generally allowed access to the banks sources of income.
To complement the apex bank's Income Auditors efforts in this quest, the CBN has also mandated Resident Examiners it had earlier dispatched to banks to have access to every bank's software, in order to monitor transactions, The Guardian also gathered.
The Resident Examiners are also mandated by the CBN to attend banks' credit committee meetings and equally be kept abreast of every bank's loan recovery efforts.
The CBN had over the weekend, imposed restrictions on campaigns, promotions and advertisements by financial institutions.
The directive, according to the apex bank's boss, Prof. Chukwuma Soludo, is aimed at stopping them from indulging in propaganda or spreading information that may deceive the public.
The decision was taken at the end of the breakfast meeting of the Bankers Committee in Lagos.
According to Soludo, the move was intended "to tone down banks' display that suggest propaganda."
By this directive, the CBN has effectively banned banks from engaging in undue or excess celebrations of milestone, financials, awards or other parameters through which they communicate their achievements.
For instance, according to Soludo, banks are to restrict press publications of their audited financial statements to not more than two full pages of black and white advertisements published in two national newspapers of their choice.
He also said quarterly financial reports or management accounts, will either be carried in a quarter or half-a-page of the newspaper, in black and white and published in not more than two national dailies.
The banks are also banned from issuing press releases on their financials.
He stressed that, henceforth, the CBN will monitor the communications of banks and will sanction erring ones.
Meanwhile, as regards the issue of suspected declaration of "bogus" profits by banks, a CBN source informed The Guardian that the problem lies with the way banks handle their loan portfolios.
According to him, the prudential guidelines made it clear that any loan that is above 90 days should be classified as sub-standard loan, 180 days as doubtful loan and one year, a loss.
Based on this, he stressed that in some cases, banks do not make provisions for these loans and declare them as part of their profits, hence the CBN's action.
Reacting to the development, Lawson Omokhodion, former Managing Director, Liberty Bank informed The Guardian that the issue of sending Income Auditors to banks by the CBN is not entirely a new development.
He said that it is expected that prior to the approval of any bank's financials by the apex bank, the Income Auditors would have had a look at the bank's books.
However, he explained that the issue of cut-throat competition and the need to post mega-profits among banks heightened after the banks consolidation.
He said that with huge funds in their kitty, banks now have a new challenge and everyone wants to be the biggest in Nigeria.
He said: "Having amassed funds from the market, the money had to be used so that returns to shareholders would justify the projections made in the various information memoranda", adding that, "at this point, banks started to copy one another and were no longer willing to specialise and deepen on areas of financing.
"It is because of the quest to build huge profits fast that prompted banks to resort to granting margin loans to customers".
Similarly, reacting to the development, an Executive Director in one of the first generation banks, said that the thorough manner to current crop of Income Auditors sent by the CBN are going about their duties cannot be compared with the past.
He stressed that by sending in Resident Examiners, coupled with these Auditors, and the new directives on limited publications of banks financials, the CBN is sending strong signals to banks on the issue of declaring accurate profits.
Meanwhile, the Office of the Accountant - General of the Federation (OAGF) has begun trailing account staff in government organs working to scuttle the implementation of the e-payment regime.
In fact, the Accountant-General of the Federation (AGF), Mr. Ibrahim Dankwambo, has promised such accounts staff hard times. He described them as saboteurs working against the credibility plank of the President Umaru Musa Yar'Adua administration.
The action is coming on the heels of reported hitches in the implementation of the new payment strategy in most government organisations, leading to even delay in payment of most government workers' salaries for the month of January 2009.
In a bid to instil transparency and speed in service delivery by government ministries and agencies, the Federal Government last month outlawed payments in cash and cheques for all government transactions from January 1, this year. In its stead, it introduced the electronic payment strategy to reduce corruption in government transaction.
Implementation orientation exercises have been held for all staff of the OAGF who are accounting personnel in most MDAs, but it appears some of them are not happy with the development and are working to scuttle it, prompting the action by Dankwambo.
Speaking at the weekend at the Federation Accounts Allocation Committee (FAAC) meeting in Abuja where the sum of N285.58 billion was shared among the three tiers of government, Dankwambo said the Federal Government was not treating the matter lightly.
He said: "We are trying to find out what is happening in MDAs that people are complaining about. This new payment strategy was introduced to fast-track service delivery in government organisations and to also ensure transparency, accountability and credibility.
"Besides, the e- payment strategy is less cumbersome and stress-free for account staff who before now work long hours after the official closing time because it makes it much easier for them to balance their books and are better primed to know their balances at all times.
"I am therefore surprise at the complaints we are having concerning the new payment strategy. We have begun action at investigating the causes for the complaints. In the civil service, there are rules guiding the actions of staff and if it is discovered that these rules have been flouted, such staff would be dealt with thoroughly," the AGF declared.
Meanwhile, the Minister of State for Finance, Mr. Remi Babalola, hinted on Friday that the FAAC might have to consider other options to ease the expected drop in revenue into the Federation Account.
He was reacting to the drop in revenue from N435.40 billion last month to N285.58 billion this month due to the decrease in oil production quota as well as production shut- in at Tebidaba Flow Station as a result of militant and pirate activities.
Babalola listed the options to include expenditure reduction, non-oil revenue enhancement and tolerable deficit/borrowing.
Babalola, who presided over the monthly FAAC meeting in Abuja, explained that new options were necessitated by the need to manage the revenue shortfall without jeopardising macro-economic stability.
He said: "The current global outlook provides us an opportunity to take dramatic measures that will improve the robustness and stability of our economy both now and in the future.
"Our economy, like other economies of the world, is undergoing a very challenging period. The global economy is still sliding. We are likely to be living with a high degree of uncertainty for some period of time as a consequence of the ultimate magnitude and duration of the slowdown underway.
"The challenges ahead are huge. The speed and agility with which we, as public policy makers, respond to the continuing pressures in a rapidly evolving environment will determine how quickly and how smoothly our economy is stabilised - and how rapidly the risks to the economic outlook of the country are mitigated."
Based on an oil benchmark price of $45 per barrel and oil production of 2.292 million barrels per day, the Federal Government has projected an aggregate receipt of N4.529 trillion into the Federation Account in 2009.
Oil-related revenue is expected to account for N3.606 trillion or 80 per cent of the aggregate revenue while non-oil sources of revenue are to account for the balance of N923 billion or 20 per cent.
Even President Yar'Adua had last Tuesday requested the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) to review downward the salaries and allowances of "certain political, public and judicial office holders" in view of the current global crises.
On the oil price shocks, Babalola reiterated his warnings to the FAAC members, including states' commissioners of finance and accountants-general that the oil prices were going firmly against market fundamentals.
He emphasised that the oil prices volatility have serious implications for the Nigerian economy, with Nigeria's OPEC quota reduced to 1.88 million barrels per day (mbpd) compared to the budgeted 2.292 mbpd.
