Can you do a brief analysis of the 2012 budget as presented before the National Assembly by the president? What is your own assessment of it?
Candidly, I think this budget would not really grow the economy. There is too much emphasis on recurrent expenditure at the expense of capital appropriation. Ordinarily, I would have thought that given the parlous state of our infrastructure, vote for the capital expenditure would be higher than the recurrent expenditure, so that we would not be seen as a consuming nation. But, the way it is, it is like we just want to consume everything that we have. Then, one would also have to look into the issue of the purported fuel subsidy. As far as I am concerned, I dont believe there is subsidy ab-initio and therefore the removal of any purported subsidy does not even arise. For instance, in the fi rst place, if you look at the fact that for this year, the budget for the purported subsidy is just about 300 billion and at the end of the day I understand that as at October 31, the government had expended over N1.4 trillion on the subsidy.
I am aware that it is as a result of the lapses in the NNPC as well as the corruption and ineffi ciency. So by the government saying they want to remove the subsidy, it is like saying whatever the ineffi ciency of the government, the ordinary Nigerians on the street should bear the brunt. This is defi nitely not very fair. As I speak to you, Nigerians do not even know how much barrels of petroleum is pumped out every day or that is being sold by NNPC. So, everything is shrouded in secrecy. For me, the question is, why are the refi neries not working? If we have three refi neries and none of them is working even at 50 per cent capacity, then there is a problem somewhere. Because if the refi neries are working, then why do we need to import fuel ab-initio.
So, that is the reason why I said I dont believe there is any subsidy anywhere. Because even at N65 per litre, Nigeria still has the highest selling price for petrol among the oil producing nations. I am also aware that the moment the purported subsidy is removed and the price of petrol goes as high as N120, then infl ation will defi nitely shoot up. So, if the infl ation level is at 13 percent presently, I see it doubling over time and the spiral effect is that the common man would be the worst for it.
The issue of subsidy is a critical factor that would determine the shape of things to come in the coming year. What effect do you think th e removal or retention would have on the economy?
You see like I said earlier, we have been hearing the same sing song over this petroleum subsidy removal over time. I can remember during the time of Abacha, he came and said when he would remove subsidy on petroleum, he was going to set up the PTF, which he did. But you see, at the end of the day, we didnt know what happened to the PTF. Later, when successive governments came in, like that of Obasanjo, it was the same old story. So, the question is this, why cant the Federal Government look for other excuses? Why are the refi neries not working? Who is sabotaging the refi neries? Why is the government not looking in that direction? Look, the N1.4 trillion which they said the Federal Government said it is spending this year as subsidy, is it not enough to build another refi nery? And then, who are the benefi ciaries of this purported subsidy? It is just a cabal, not more than 20 people. So, why should 20 people put the entire nation into trouble? As far as I am concerned, if government insists on removing the subsidy, it would defi nitely cause escalated infl ation in the country.
You seem to have suddenly maintained a low profile after the dust raised by your fraud analysis in the banking sector. Could that mean an indication that the banking sector is now being done more professionally?Are frauds now things of the past in Nigerian banks?
You see, that I have decided to maintain a low profi le is another technique that I have adopted. You know initially from 2007 to even last year, I was writing petitions, granting interviews, making presentations left right and centre, but I have found out that the more I talk, the more people ignore me. So, I had to now revise my approach by going underground. For instance, if I dont talk, it is hard for you to know what I am doing. With my silence, let me begin to deal seriously with the banking industry and that is basically what I have been doing. You see, the banking industry is fraud incorporated.
The system is still laid with high grade fraud. From the Central Bank of Nigeria to the last man working in the banking industry in Nigeria, including the microfi nance banks, discount houses, all of them are all involved in fraud. Every financial institution in Nigeria is found out to be scamming or defrauding their customers. Now, as I speak to you, I have over 400 court cases against banks in Nigeria and there is no week that I dont file an action against banks in this country. It is simply over fraudulent manipulation of the customers accounts.
A bank makes an allegation of indebtedness against a customer, when I come around, I look at the statement of account, offer letter and other relevant correspondences between both parties and I would come out with my findings. One thing I have always found out is that, rather than the customer owning the bank like they have always alleged, it is the bank that has defrauded the customer.
And I come out with my proof, which the customer takes to court to claim the fraudulent manipulations in his account in naira and kobo as well as to reclaim his properties without paying a dime back to the bank. So, it is not correct for you to say I have maintained a low profi le because there is no fraud in the system again. No. On the contrary, we are working hard behind the scene because the fraud is still there in the banks. Let me give you an example. Look at the issue of AMCON for example; when Sanusi came on board, he said he wanted to revive AMCOM, which was initially mooted by Charles Soludo, the former CBN governor. When the House of Representatives did their public hearing on the AMCON stuff, we were not aware of it. But fortunately, when the Senate was to conduct its own public hearing, we were there.
Then I told the Senate; I said dont bother yourselves setting up this AMCON because it is bound to fail and that should it fail, they should not fail to come and hold me responsible. I said the reason is very simple. Nigerians are not indebted to the banks but rather it is the banks that owe the customers. If the Federal Government is going to bail anybody out, it should rather bail out the customers and not the banks. Definitely, I am aware that you cannot benefi t from your fraud. If you are involved in banking transaction with the sole aim of defrauding your customers, with the intention of cunningly taking away the properties of your customers, if you are caught in the act, then you have lost all rights in the transaction. Let me tell you why this AMCON thing would not work. One, AMCON is not a party to the contract between a bank and a customer on.
Now lets put that aside. Lawyers may come and say that is not under privity...then we say fi ne, that the exception to privity of contract is assignment. Now, if you say that the exception to privity of contract is assignment, I agree with you. However, the question is this - for an assignment to be valid, you must have a ca pacity, in which case for AMCON to take over a purported debt, AMCON must be licensed by the Central Bank of Nigeria, otherwise, AMCON cannot stand in the shoes of commercial banks.
Taking a critical look at the various reforms as initiated by the CBN, would you say it has brought any signifi cant change compared to what it was before? Which reform are you talking about?
The fact is that I have not seen any reform brought about by the CBN governor. In the fi rst instance, let me take you back to the early days of Sanusi as the CBN governor. When he came in June 2009, the fi rst policy he made was to deregulate interest rate in Nigeria by asking the banks to charge whatever rate they liked. I wrote him a petition then too. I told him that look, you met a very rotten banking or fi nancial system on the ground, and the only reason that system was rotten was because the banks were left by Soludo to do whatever they liked. They were left to charge whatever interest rate they liked. And because of that, in their quest to make stupendous profi ts, they were charging the customers outrageous rates far and above the agreement with customers. And by so doing, they were creating spurious debts, which they called assets. But now, they refer to those assets as toxic assets simply because they knew that those assets are unrecoverable.
And those are the toxic asset they said they are passing to the AMCON. Now, I told them, I said if you want the fi nancial industry to grow in Nigeria, regulate interest rate. That is when the banks can make genuine asset, valuedriven asset. That was the fi rst tactical mistake he made. When he came, he did the special audit as he said and he indicted some bank MDs, about eight of them. He sent them packing. Actually, that was a good thing and I dont have any issue with that because all along, I had known that all those bankers were crooks. But my only problem with him is that, I believe he did not do a thorough job in that bank audit because a lot of the banks that he gave clean bills of health were not truly healthy. And as I speak to you, a lot of banks in Nigeria are still terminally sick. Now, after he removed those MDs, what did he do thereafter? He brought in his own people and gave them about N620 billion. Now, where is the money? Is it not those banks that he gave N620 billion that people have come to buy over or that he has gone to nationalise? So, the question is where is the N620 billion that he gave to them?
So what are you suggesting?
The obvious thing is that they have squandered it. And who are the people that squandered the money? They are Sanusiappointed management teams for the banks. So the question is, was the Sanusiappointed team better than those he sacked? Now, lets even leave that one aside for now. Sanusi came and said he wanted to do AMCON, that it was the only solution to the problem plaguing the banking industry in Nigeria. The question is, how much has AMCON been able to collect back from the customers? Not one dime. Sanusi came; he said by the time he set up this AMCON he was going to fl oat the bond of AMCON at the capital market. Has he been able to do that? He forgot one thing that those who can subscribe to the purported AMCON bonds are the same people AMCON is alleging to have taken over their purported debt. Again, when he came, how much was the value of naira to a dollar? It was N150. How much is it now? It is N162 at the official rate.
Is he doing well or is he doing badly? Now, lets look at the reserve. How much was the reserve when he got there? How much is it now? The reserve then was about $50 billion, now it is barely over $30 billion. Look at the economy generally, how many banks did he meet when he came? How many do we have now despite the fact that he has injected billions of naira into these banks? So the question is, what can you say about his managerial capacity? For me, I dont really blame him because I understand the man only has BA in Business Administration as his fi rst degree while his second degree was in Islamic Studies.
I dont really blame him. Do you know that I know of a bank that has over 3,000 court cases with their customers? How would such a bank survive? And this is the same banks Sanusi is pumping money into. You see, I have told him he is wasting his time nationalising all those banks. I would say 2012 would be worse off for the banking industry in Nigeria because the moment the so called AMCON cannot recover debt from the customers, the banks would die. Quote me, more banks would die in 2012.
Looking at the recent merger and acquisition that have seen banks like Intercontinental and Union Bank being taken over by new owners, are you comfortable with the process and the procedures?
I dont think I am comfortable with the process. For instance, I believe the process that brought about the merger is far from being transparent. The Access Bank and Intercontinental purported merger, I dont think it has been transparent and fair enough. I want to believe that if anything at all, it should be the other way round. Intercontinental, to me, supposed to be the one to take over Access Bank. Thats what I strongly feel because the way the deal was done in such that Access Bank invested just N50 billion in Intercontinental Bank and controls over 50 percent and AMCON has less than 15 percent upon the billions of naira invested in Intercontinental Bank is very funny.
Over time, many people have been wondering over the role of auditors in corporate failure. As an expert in the industry, what roles do auditors really play in corporate failures?
I have to say something here. I am a member of Institute of Chartered Accountants of Nigeria, ICAN, but I dont practise audit. I practise fraud investigation. Though I am not speaking for ICAN, however, what I know is this, it is not the duty of the auditors to prepare the fi nancials, it is the duty of the company or maybe we can say the bank. The auditor is only to come in to give an independent opinion as to the true and fair state of the fi nancial. But that is not to remove any negligence or culpability on the part of the auditor if found to have compromised his position. So, my take is very simple. An auditor spending two weeks to do a purported audit cannot do a detail job as a forensic accountant because, he is to just state the true and fair deal and that is difference between an auditor and a forensic accountant.
A forensic accountant does a detail investigation, one hundred percent if not more investigation. Whereas an auditor would spend two weeks doing his own purported audit, a forensic accountant can do six months if not more if the pay is right. So, for me, I wont want to lay the blame totally on the doorstep of the auditors, I want to lay the blame on the doorsteps of the CBN as well as the NDIC, because they are the regulators. Everyday, the CBN relates with all the banks. So every transaction the banks are making, the CBN is aware.
If there is any transaction shrouded in secrecy, the CBN has the power to investigate such a transaction. But the auditor does not have such right. You have to call in the auditor periodically maybe at the end of the year to say come and have a look at our records. But the CBN, NDIC monitor the banking industry day by day. So, it is the CBN that would approve the published account. So, even when the auditor has completed his job, it still goes to the CBN. So, if the CBN is still not satisfi ed then it can call back the auditor to go back and do the proper thing.
So, are you saying that in most cases where corporate failures are not easily detected by auditors, they are far from being accomplices?
Definitely, it is possible for an auditor to be compromised. But I am not saying they are not compromised. Like I told you, I dont do audit. If it is something that I do, yes I can tell you but you know in Nigeria, anything can happen. But I am not indicting anybody. But for me, I know that if there is going to be any lapses in the banking industry, then the regulators should be held responsible.
So, can you throw more light on this forensic accounting of a thing?
In essence, what does it entails? Basically, forensic accounting is all about fi nancial fraud investigation with the ultimate aim of the matter being settled in court. As a forensic accountant, when you take up a brief, you are looking at the matter ending up in a civil court. The tool that a forensic accountant needs is to be strict in whatever knowledge he can gather. For example, he needs to be very strong in fi nancial accounting, fi nancial management and must be very good in law as well as Information technology.
Then, you must be a street wise man, not an ajebo to be successful. A forensic accountant who is an ajebo cannot succeed, am sorry to say that. He must be a street man because the skill that a forensic accountant deploys doing his job is far more than what auditors need because for audit, the reports are there, you are only trying to fi nd out based on information before you whether it is correct or not. But a forensic accountant goes beyond that. You have to probe every fi gure, every item. So as a forensic accountant, you dont believe anything, you dont believe anybody. Anything they tell you; you dont believe until you are able to confi rm it by yourself.
What is your take on the proposed cashless economy why the CBN is kick starting in January?
The Lagos cashless cannot work. This is because there is no alternative to cash for now. The ATMs are not working. Even the fact still remains that the banks use the ATM to defraud customers. Sanusi said he has deplored about 4,000 POS all over Nigeria. With the high level of illiteracy in this country, is he going to make all the over 50 percent of them literate overnight? The man is just dreaming. I am telling you, Sanusi is just a dreamer. Just leave the man alone. Defi nitely it cant work because the implication is that, pe ople would rather keep their cash at home and not even do business with banks. Thats what is going to happen and what he is trying to prevent would still happen.
Because you cannot say you want to encourage people to save and you are also putting in place anti-saving measure. Clearly, both of them dont go together. You cannot ask a bank to impose penalty on a customer just because the customer wants to withdraw above N150, 000 in a day. When the customer was opening an account with the bank, was there such an agreement? There was no such agreement.
So can CBN impose penalty on a customer? The answer is no. CBN can only regulate bank, it cannot regulate customers. Sanusi cannot tell me how I am going to run my business. He cannot tell me whether I should collect cash, naira, which is a legal tender in Nigeria or I should use ATM. He cannot tell me that. No bank in Nigeria can impose any penalty on any customer. According to provision of section six of the 1999 constitution as amended in 2011, it is only a court of competent jurisdiction that can impose penalty.
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