CBN, AMCON, SEC Stall Capital Market Probe Report

The House of Representatives ad-hoc committee into the investigation of the collapse of the capital market Thursday accused the Central Bank of Nigeria (CBN), Asset Management Corporation of Nigeria (AMCON) and the Securities and Exchange Commission (SEC) of frustrating the completion of its assignment.

Chairman of the committee, Hon. Tukur El-Sudi, accused the three institutions of withholding some vital documents and information regarding the forensic audit of some commercial banks, the nationalization of the banks as well as Project 50 celebration. El-Sudi said a substantial part of the report was ready and the committee would have submitted the report this week if not for the uncooperative attitude of the CBN and others.
He, however, pledged that with or without the vital documents with the three institutions, the committee might lay the report before the House next week.

“There are some particular documents which our consultants felt are very necessary for examination so as to enable us make certain findings, reach certain conclusions and make our recommendations. “We wrote them asking for this information but the CBN, AMCON and SEC blatantly refused to release the documents in their custody. We followed procedure and have written again to them on the issues. “Particularly, the CBN refused to release the report of the forensic audit it conducted on the banks, hiding under the provisions of Sections 88 and 89 of the 1999 Constitution.

“The CBN claimed that there are some exceptions to the rule and took it upon itself to define the exceptions to those documents that should be given in evidence or testimonies and the committee wrote back that it does not have the powers to interpret the constitution and the Legislative Houses Powers and Privileges Act which empowers us to summon anybody to bring any document.

“The only exception is if such a document is in the custody of a security outfit such as the army, navy or air force and its release has security implications. In a swift reaction to the position of the ad hoc committee, the CBN said its governor, Mallam Sanusi Lamido Sanusi, would respond to the committee’s request as soon as he returns from an official trip abroad.                                                                                                                                                           A letter from the Director, Legal Services of the central bank, Mr. S. M. Onekutu, said Sanusi and members of the board of the CBN were currently attending a retreat in South Africa.

Dangote, GTBank, Zenith Top W’African Capital Market

Dangote Group, Nigeria Breweries Plc, Zenith Bank Plc, First Bank  Plc and Guaranty Trust Bank Plc are listed among 25  top companies in the West African capital market.
Other companies include, Access Bank Plc, United Bank for Africa Plc and Nestle Nigeria, Ecobank Nigeria Plc, Flour Mills Nigeria Plc, Union Bank Nigeria Plc. The companies were unveiled by Forbes Africa at a dinner in Lagos.

The list covered the companies on the  Nigerian Stock Exchange, Ghanaian Stock Exchange and the Abidjan-based Bourse Régionale des Valeurs Mobilières SA (Regional Securities Exchange SA) or BRVM and ranked them in terms of market capitalisation, revenue and profit.

Managing Editor, Forbes Africa, Mr. Chris Bishop, who presented the awards to the top five companies, said:  “I think this was a hugely successful night and a signal to African companies everywhere that their time has come. All too often the lists of the world have overlooked the success of African companies.

“Nights like this show how important successful African companies are in the progress of the world economy. He further added ‘It is especially pleasing to hold this event in Nigeria which is a very important and loyal market for Forbes Africa that we cherish dearly,"

Also, Vice-Chairman, ABN 360 Group, Rakesh Wahi, stated: " We have a 5-year history of analyzing and reporting economic and commercial data on the continent, and now believe we are in a unique position to begin celebrating the success of African companies and business leaders who have performed exceedingly well despite the economic crisis,” he added.  ABN 360 Group is the parent company of CNBC Africa, Forbes Africa and ABN Productions.

 

Banks worry as CBN’s offshore policy expires tomorrow

With the expiration tomorrow, of the June 30 deadline for banks to recapitalize their offshore subsidiaries or quit their various foreign jurisdictions, operators are jittery over the next line of action which the CBN may take, BusinessDay investigations have revealed. Further investigations revealed that most of the banks which are yet to recover from the mergers and acquisition (M&A) expenses are finding it difficult to convert to local bank licenses by selling some stakes to local investors, while banks with ambitious offshore expansion plans are considering dropping the idea for now.

The development is as a result of the fact that some of the offshore subsidiaries, particularly those inherited from the acquired banks, are not doing well. The CBN is expected to issue a circular on the issue on Monday, a source told BusinessDay yesterday.

Determined to check capital flight and strengthen offshore subsidiaries for international competitiveness, the CBN had through a circular on May 18, directed deposit money banks to either raise fresh capital from the offshore capital markets via private placements or public offerings; pursue a merger or acquisition and if external capital raising fails, submit a strategy for exiting the relevant foreign jurisdictions not later than 30 June 2012.

Razia Khan, analyst with Standard Chartered Bank, London notes that the conditions of these banks mean a lot to the economy of Nigeria, which puts the CBN’s action in the right direction, adding, “Now one potential source of risk to Nigerian banks, and perhaps ultimately Nigerian tax payers, would perhaps be risky activities undertaken by Nigerian banks operating abroad.”

Efforts to reach Ugochukwu Okoroafor, CBN’s spokesperson, to comment on the issue failed, as he failed to take his calls. But a top industry operator told Business Day that the CBN may extend the deadline as, according to the source , “taking any drastic action now could rock the boat and derail achievements so far made.”

Analysts at the Renaissance Capital (Rencap) in their recent publication, ‘Nigerian Banks’ said, “Among our coverage universe of Nigerian banks, we think UBA and Access Bank will be the most affected, given that they have the highest number of offshore operations within the sector.

UBA has operations in 18 offshore countries, while Access Bank is operational in nine. According to the managements of both banks, they face the most near term pressure in their Zambian operations, where the minimum capital requirement for foreign banks has been raised from $2mn to $100mn (and to $20mn for local banks), with a 31 December 2012 deadline for full compliance.                                                                                      “Access Bank is already working on the disposal of one or more offshore subsidiaries. We highlight that while the intention of the CBN’s directive appears to be to retain capital in Nigeria, it seems more focused on the recapitalization of Nigerian banks’ existing subsidiaries, while there is less clarity about the deployment of capital for future/new subsidiaries. On this front, we highlight First Bank and GT Bank as banks that could be affected, given their planned expansions outside Nigeria in the medium term.”, Rencap analysts said.

Major Marketers Cited in Widespread Subsidy Abuse

•        FG owes NNPC, oil companies N384.4 billion

•       Marketers demand payment of outstanding claims

Major oil marketers comprising Oando Plc, Forte Oil Plc, Total Nigeria Plc and MRS Plc, among scores of other independent oil marketers and importers of petrol, have been named by a Federal Government committee as having committed multiple infractions in the fuel subsidy scheme.                                                                                                                                                                                                                             Details of the 17 infractions, which were exclusively reported by THISDAY yesterday, are contained in the report of the verification committee headed by the Managing Director/Chief Executive Officer of Access Bank Plc, Mr. Aigboje Aig-Imoukhuede.

The report also showed that despite the payment of N451 billion as 2011 subsidy arrears from the N888 billion earmarked for subsidy payments in the 2012 budget, the Nigerian National Petroleum Corporation (NNPC) and private oil marketers still have outstanding claims of N384,450,487,333.99 to be paid by the Federal Government.

Independent oil marketing companies fingered in the report include Capital Oil & Gas, NIPCO Plc, SPOG Petrochemical Limited, Sahara Energy Limited, Masters Energy, Honeywell Oil & Gas, Rahamaniyya Oil & Gas, Atieo Energy Resources Limited, Eterna Plc, Obat Oil & Petrol Limited and Folawiyo Oil Limited, among others. The report showed that the oil marketers committed a wide range of infractions ranging from lack of evidence of sales proceeds in commercial banks, to the non-payment of a N20 million re-engagement fee for non-performance in the area of petrol importation, which should have been surcharged by the Petroleum Products Price Regulatory Agency (PPPRA).

For instance, of 857 transactions reviewed by the committee, 112 transactions were discovered as not having evidence of sales proceeds based on banks' available records at the date of verification.
The total subsidy claims in respect of these transactions was N157, 549,854,482.55.

Similarly, 88 companies were discovered to have collected subsidies amounting to N121,897,757,962.56 without the signatures of external auditors and independent inspectors on shore tank certificates. Marketers, which were identified by the committee to have committed infractions, will have the over-payments ascribed to them deducted from their outstanding subsidy claims, presidency sources revealed.
The report also showed that the total outstanding arrears owed the private marketers from 2011 amounted to N67,298,074,641.03, while the outstanding NNPC claims was N317,152,412,692.96.

Both NNPC and the marketers made total claims of N2,109,386,944,946.92 in 2011, with the corporation claiming N981,734,423,649.56 while the oil marketing and trading companies submitted claims amounting to N1,127,652,521,297.36. The committee’s report, however, noted that outstanding arrears from 2009 and 2010 subsidies were included in NNPC’s claims for 2011.

Of the N981.7 billion claims submitted by NNPC for 2011, the corporation paid itself N764,944,448,471.72 by deducting it directly from the cost of crude oil allocated to it by the Federal Government.
NNPC also deducted another N210 billion in 2012, leaving N6.78 billion as government’s outstanding obligation.

But in 2012, the corporation submitted fresh claims of N310,362,437,515.12 as arrears of 2009, 2010 and 2011, bringing its total outstanding arrears from 2011 to N317.15 billion.

Of the N1.125 trillion claims made by the oil marketing and trading companies in 2011, the Federal Government paid N866,665 billion to the marketers in 2011, while another N246.171 billion was paid in 2012 as part of the 2011 arrears, leaving a balance of N12.8 billion.

However, in 2012, the marketers submitted additional claims of N54.48 billion as arrears of 2011, bringing their total unpaid arrears to N67.298 billion. Of the N888.1billion earmarked for subsidy payments in the 2012 budget, a total of N231.8 billion was meant for the payment of the 2011 arrears.
But the payment of the arrears has gulped N451 billion, with N384.45 billion outstanding, which prompted the Minister of Finance and Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, to suspend the payment of both the arrears from 2011 and claims for 2012, pending the completion of the forensic audit and verification exercise undertaken by the committee.

Meanwhile, oil marketers yesterday called for the immediate payment of all valid outstanding claims for 2011 and 2012. The marketers also urged the finance ministry to ensure the immediate resumption of the issuance of Sovereign Debt Notes (SDN) by the Debt Management Office (DMO) for all legitimate transactions that have been completed and audited.

In a statement, the marketers said due to the fact that the issuance of SDNs for 2011 arrears and the current 2012 petrol import transactions were initially delayed and now currently suspended, they now have huge outstanding, verified and unpaid subsidy claims in excess of N200 billion with the Federal Government. They argued that the non-reimbursement of the subsidy claims impairs the ability of any company to meet its obligations to the banks for loans advanced for the purpose of importing petrol under the scheme.

Index Summary
BusinessDay Afrinvest-30 Index
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