AFTER a series of stories done by Economy Post on related-party loans, the Central Bank of Nigeria (CBN) has set up a team of experts to investigate loans and transactions to banks’ insiders.
People who are knowledgeable about this development told Economy Post that CBN Governor, Dr Yemi Cardoso, had set up a team of accountants and auditors to examine the books of banks and flag suspicious transactions.
The experts are looking at facilities granted to insider-related parties totalling $20 trillion to $25 trillion, which have become non-performing or lost loans.
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The team is also to examine critically loans denominated in foreign currencies, whose values have appreciated significantly in naira owing to currency devaluation or depreciation.
The apex bank governor is interested in identifying areas where there have been breaches of Prudential Guidelines 2010 on loans to related parties released on June 30, 2010.
“Sanctions will be applied where necessary. Directors or related parties who have violated the Prudential Guidelines will be sent to the Economic and Financial Crimes Commission (EFCC) or the State of State Services (SSS) for further investigation and prosecution,” a source in the apex bank said.
Up till now, several deposit money banks are yet to release their full-year 2023 financial statements due to the CBN investigations regarding banks’ insider loans, sources say.
The apex bank must approve of financial statements before they are published or made available to the public, according to the CBN Act.
Economy Post had earlier reported related party loans in Polaris Bank, United Bank for Africa, Access Bank, Zenith Bank, among others, flagging suspicious transactions where there was evidence that they occurred.
Guidelines on insider-related loans
Section 3.4 of the Prudential Guidelines 2010 says that the director, insider and significant shareholder credit exposure should be fully disclosed by banks in their financial statements and returns prescribed by the CBN.
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It states that banks should ensure that their credit policies specifically address lending to directors as part of related parties or insiders lending policies.
It further says that “the aggregate amount of insider-related loans, advances and leases outstanding as at the financial year end should be separately stated in a note to the accounts and the non-performing component further analyzed by security, maturity, performance, provision, interest-in suspense and name of borrowers.”
The policy notes that “any approval granted by the Credit and Risk Committee shall be valid for a period not exceeding one year and the Committee shall grant fresh approval on expiry of the validity period.”
It stresses that “insider and director related credit accounts (if any) can only be written-off on the approval of the Central Bank of Nigeria.”
The CBN’s threshold on insider related credits is 10 percent of shareholders’ funds unimpaired by losses.
Emefiele still being investigated
Economy Post learnt that former CBN Governor, Mr Godwin Emefiele, is still being investigated in relation to loans to banks’ insiders to ascertain his level of complicity in some infractions.
Details on this were still sketchy as at press time, but the apex bank’s source noted that there would be another round of revelations “that would startle Nigerians.”
Mr Emefiele has been a subject of investigations since he was suspended on June 9, 2023.
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Reports released by the Special Central Bank of Nigeria (CBN) investigator, Mr Jim Obazee, on December 23, 2024, had alleged that Mr Emefiele used proxies to acquire three banks in Nigeria, Economy Post had earlier reported.
The reports, which focused on the acquisition of Union Bank, Keystone Bank and Polaris Bank, said: “Keystone was acquired for free as did Polaris Bank and the special investigator should liaise with the CBN to recover these two banks to the Federal Government of Nigeria,” said a statement in a letter to the president.
The investigator stated in one of his reports to the president that he
“discovered that some persons were used as proxies by Mr Godwin Emefiele to set up Titan Trust Bank (TTB) and acquire Union Bank, all from ill-gotten wealth. We were able to secure some documents, and investigation reports will lead to the forfeiture of the two banks by the federal government.”
Also, in a fresh charge taken before Justice Hamza Muazu of the Federal Capital Territory High Court in Abuja in January 2024, the Economic and Financial Crimes Commission (EFCC) had accused Emefiele of impersonating former Secretary to the Government of the Federation, Mr Boss Mustapha, to illegally obtain a sum of $6.2 million to pay foreign observers.
When Mr Mustapha appeared as the fourth prosecution witness in the ongoing fraud trial of Mr Emefiele on February 13, 2024, he noted the documents and the signature were forged.
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“All through my service year as the SGF, I never came across these documents it was claimed that Buhari signed. From the face value of this document, having served for five years and seven months as SGF, this document did not emanate from the president for the following reasons,” part of his statements read.
The case is still in court.
