As stated in part 1, the acting Governor of the Central Bank of Nigeria (CBN), Folashodun Shonubi, tried to falsely claim that Diaspora remittances ending up in the black market was responsible for naira almost hitting the N1000 to $1 exchange rate. However, the real question is why has official dollars in the CBN been getting into the black market?
A comparison of CBN looting under Generals Buhari & Abacha shows uncanny similarities:
A. CBN LOOTING UNDER GEN BUHARI VIA RABIU
E-Nigeria Newspaper reports that “at the expense of impoverished Nigerians, the embattled CBN Governor (Godwin Emefiele) opened a forex credit line for Rabiu which enables him to borrow at the official rate of N199 at the time, resell at a black-market rate of N495, and rake in billions of naira in turnover in quick succession.
For instance, Emefiele allegedly ordered the transfer of N1,382,500,000 being a forex purchase to BUA on 8th January 2016.
On 18th January, BUA International purchased the dollar equivalent of N386,799,033.70 using the official rate of N199 while the black-market rate at the time was N495.
On the same day, Emefiele was said to have ordered another disbursement of forex worth N520,217,528 to BUA.
Another N1,382,500,000 was also sent on the same day as well as on 22nd January respectively.
On 22nd January, another N386,799.033 and N520,217,528 was again wired from CBN account in forex to BUA.
On 15th February, similar disbursements of N386,799.033, N1,382,500,000, and N520,217,528 left the nation’s account to BUA.
Similarly, on 23rd February, N386,799.033 and N520,217,528 made BUA International smile on the order of Emefiele.
In like manner, again on 2nd March the company got another lodgment of N386,799.033 and N520,217,528.
On 11th March, BUA further purchased $12,282,002 in double tranches from CBN while on 23rd March, $29,625,000 was also moved from CBN to the government-fed billionaire to its BUA Sugar Refinery account to Ecobank account number 9992021618.
On 31st March, the country’s foreign reserve depleted with $49,375,000 from CBN to BUA into its Ecobank account number 9992023306.
Via its GTB account 214161839, USD sale of forex at the official rate of N197.5 worth N2 billion was again given to the company by CBN.
Via CBN intervention fund when the company was financially viable, the sum of N392,034,060 in three tranches was paid to BUA Sugar Refinery using the official rate of N198 to its Stanbic IBTC account number 11889618.
Troves of these financial documents saw over N40 billion in returns to Abdul Samad Rabiu-led BUA alone, in the year 2016 with the active connivance of Godwin Emefiele.” e-nigeriang.com
B. CBN LOOTING UNDER GEN ABACHA VIA BAGUDU
Per the Special Investigation Panel to establish “cases of swindled public funds and recover same back to the federal government coffers
Abacha had taken from the CBN funds totaling $2,263,520,497 in cash withdrawals, travelers cheques and telegraphic transfers, in the name of “security vote”.
However, one of the Abacha family associates, Alhaji Abubakar Bagudu…(exGovernor of Kebbi State) was ready to return some of the loot.
On May 26, 1999, just three days before handing over power, General Abubakar promulgated Decree 53 of 1999 on forfeiture of assets by certain persons which listed the monies returned by the Abacha’s family.
Abacha’s contempt for accountability commenced less than two weeks after he took power from Chief Ernest Shonekan. In a memo reference NSA/A/320/S/46 dated 30th November 1993, the then National Security Adviser, Alhaji Ismaila Gwarzo, requested for $100 million to combat “an economy that was deflected and distorted through the black market.” In the same memo, Gwarzo also undertook to pay back the naira equivalent into government coffers. Having apparently been briefed by Abacha, the then Central Bank of Nigeria (CBN) Governor, Dr Paul Ogwuma released the money in the following sums: $95 Million and 3.2 million Pounds Sterling, all in cash.
So primitive was the whole arrangement that the principal job of some security officials was to be bagging and re-bagging millions of dollars and Pound Sterling. The following are a few of the documented transactions:
On February 13 and 15, 1995 Gwarzo collected US$200,000 and US$600,000 respectively (totaling $800,000) from the CBN.
On 29th December 1995, Gwarzo collected from the CBN the sum of US $5 million based on Abacha’s approval of his letter to deal with “situation at hand”!
On 23rd August, 1996, Gwarzo collected US $30 million from the CBN following Abacha’s approval of his letter dated 20th August 1996, requesting for the said money to “assist our immediate neighbours and others within this sub-region”.
On 18th December, 1996, Gwarzo collected US $ 66.5 million and GB £20 million following Abacha’s approval of his letter to meet “some requests from Heads of State of some Francophone countries, and to cultivate African solidarity.”
A month later on 30th September, 1996, Gwarzo collected US $50 million and GB £20 million from the CBN sequel to his letter dated 24th September 1996, requesting for the money to “prop some African and other Third World countries” to assist in Nigeria’s “democratization and economic recovery”.
On 28th April, 1997, Gwarzo collected US $60 million GB £30 million sequel to Abacha’s approval of his letter dated 22nd April 1997, in which he requested for the said sums for “public relations to international communities and organizations”.
On 9th July, 1997, Gwarzo collected US $ 5 million from the CBN following Abacha’s approval of his letter dated 23rd May, 1997 to meet all “demands and commitments as directed”.
A month later on 8th December, 1997, Gwarzo collected US $120 million and GB £50 million sequel to Abacha’s approval of his letter dated 26th November 1997. And on 19th January, 1998, Gwarzo collected from the CBN the sums of US $100 million and GB£ 50 million to “counter insinuations that (Lt. General Oladipo) Diya’s coup was not real, and the government framed them to remove and replace the coupists with stooges.”
The interesting thing about this particular transaction was that while re-bagging the money, “four cartons containing a total of about US$ 8 million were set aside” in Gwarzo’s own residence, while the balance of US $57 million and GB£ 30 million were delivered to the late Head of State through Mohammed Abacha.
On 25th October, 1997, Gwarzo collected US$ 80 million and GB £40 million “to sponsor military intervention in Sierra Leone, and garner support for same in the West African sub-region.”
On 30th April, 1998, a few weeks before Abacha died, Gwarzo collected US $ 80 million, GB £50 million and N250 million based on his letter dated 29th April 1998 for the conduct of an enlightenment campaign on the “virtues” of an “Abacha Presidency”.
On 5th July, 1996, Gwarzo collected from the CBN the sum of US $8.1 million and GB £ 5.2 million based on his request dated 14th June 1996, to support five presidential aspirants in the Niger Republic general elections.
On 21st February, 1997, Gwarzo collected from the CBN the sums of US $60 million and £20 million for “pro-Nigeria propangada” abroad.
On 1st April, 1998, Gwarzo collected from the CBN the sums of US $65 million and GB £30 million for “Public Relations at home and abroad, to counter the European Union campaign against the transition programme.”
On the 8th of May, 1996 Gwarzo collected US $3 million and US $9 million respectively from the CBN. Out of this sum, he reportedly sent US $7 million (on behalf of Abacha) to then President Matthew Kerekou of Benin Republic as “assistance to the country to pay outstanding workers’ salary” while US $2 million was for Kerekou himself.
On 13th November, 1996, Gwarzo collected US $5 million and GB £3 million from the CBN based on his letter dated 7th November, 1996 “to take care of foreign dignitaries who will attend the burial ceremonies of the first President of Nigeria, Dr. Nnamdi Azikiwe.”
On 10th September, 1997, Gwarzo collected US$ 60 million and GB£30million from the CBN “to finance a campaign for a seat on the Security Council of the United Nations Organisation.”
On 9th December, 1996, Gwarzo collected US $5 million from the CBN sequel to Abacha’s approval of his letter dated 21st November, 1996 in which he requested the said sum “to finance the purchase of ten Toyota Land Cruisers, and ten Peugeot 505 saloons for the Republic of Mali”.
Atiku Bagudu who planned the laundering of unbudgeted billions of dollars abroad has just been appointed Minister of Budget & Planning by Tinubu.
In ongoing money laundering forfeiture proceedings in Washington, the US District Judge said, “The government alleges that the funds in defendant investment portfolios are traceable to two illegal schemes. The first scheme is referred to as the “Security Votes Fraud,” which began when, between January 1994 and June 1998, General Abacha, National Security Advisor Gwarzo, and others “stole more than $2 billion from Nigeria by fraudulently and falsely representing that the funds were to be used for national security purposes.” Id. ¶ 25. The theft of funds was allegedly committed by General Abacha and Gwarzo when they “executed false national security letters [referred to as “security votes letters”] directing the withdrawal of funds from the [Central Bank of Nigeria].” Id. Gwarzo, “at General Abacha’s direction,” prepared these security votes letters and addressed them to General Abacha “purporting to request millions of U.S. dollars, British pounds sterling, and Nigerian naira to address unidentified ‘emergencies’ that threatened Nigeria’s national interests.” Id. ¶ 26. General Abacha “endorsed each letter with his signature” to approve the disbursements. Id. Over sixty such endorsed security votes letters were sent to the Central Bank of Nigeria in Abuja, Nigeria, where the bank disbursed the funds as requested in each letter, “in cash or traveler’s checks, or through wire transfers.” Id. ¶¶ 26, 28. Instead of using the funds for national security purposes, “the stolen money was transported out of Nigeria and deposited into accounts controlled by General Abacha’s associates, including [his son] Mohammed Abacha and Bagudu.” Id. ¶ 25. The complaint includes three examples of these security votes letters. Id. ¶ 28.
The process of using security votes letters “to take [funds] from the [Central Bank of Nigeria] violated what the [Central Bank of Nigeria] has described as ‘accepted government procedures.’” Id. ¶ 27. “The proper procedure required the Minister of Finance and the Accountant-General to each approve disbursements in accordance with Nigeria’s budget.” Id. The security votes letters at issue were not properly approved “and were also not included in Nigeria’s budget for the relevant fiscal years.” Id. After General Abacha’s death, Nigeria established a Special Investigation Panel, “which found that General Abacha and his co-conspirators had used the false security votes letters to steal and defraud more than $2 billion in public funds, including: (1) at least $1.1 billion and £413 million pounds sterling (GBP) in cash; (2) at least $50,456,450 and £3,500,000 GBP in traveler’s checks; and (3) at least $386,290,169 through wire transfers.” Id. ¶ 29.
After the funds were disbursed from the Central Bank of Nigeria, bank staff and “other individuals known and unknown to the United States” would deliver the funds to National Security Advisor Gwarzo at his residence. Id. ¶ 31. “Gwarzo and others acting at his direction would [then] repackage the currency in secure bags and…deliver it to General Abacha at his residence.” Id. “General Abacha, or those acting at his direction, [then] delivered more than $700 million of these funds to [General Abacha’s son] Mohammed Abacha in bags or boxes full of cash.” Id. ¶ 32. Mohammed Abacha, in turn, gave that cash to Bagudu, who “arranged for the money to be transferred to accounts controlled by Bagudu and Mohammed Abacha in foreign countries.” Id. ¶ 33. “In order to move the money overseas,” Bagudu deposited the money, which he referred to as his “‘cash swaps,’” in two local Nigerian banks, and then he “and/or Mohammed Abacha” instructed those banks to transfer the funds to accounts overseas owned by Mohammed Abacha and Bagudu. Id. ¶ 34. “Transfers included deposits into accounts in the name of [defendant corporations]” under the control of Bagudu and Mohammed Abacha. Id. ¶¶ 33–34. “[A]t least $137 million” of these funds were “transported into and out of the United States.” Id. ¶ 35. The complaint describes various specific transactions in support of these allegations. Id. ¶ 35(a)–(f). And as discussed below, the funds were later pooled with funds from the second scheme and then laundered and transferred to defendant investment portfolios. See id. ¶¶ 52–93.
The second scheme, referred to as the “Debt Buy-Back Fraud,” began in 1996, when Bagudu and others arranged for the Nigerian government, with General Abacha’s approval, to repurchase its own debt from Mecosta—a company owned by Bagudu and Mohammed Abacha—at a price significantly higher than what Nigeria would have paid on the open market. Id. ¶¶ 36–44.
The background of this scheme is as follows. Nigeria had agreed to pay a Russian company (TPE) in debt instruments in exchange for the construction of a steel plant. Id. ¶ 37. A dispute arose, however, and Nigeria suspended payment and defaulted on the outstanding debt. Id. ¶ 38. Bagudu learned that another company (Parnar) “would be willing to sell the debt to one of Bagudu’s companies (in this case, Mecosta).” Id. ¶ 39. Bagudu approached General Abacha’s other son Ibrahim Abacha and Nigerian Finance Minister Anthony Ani, who assured Bagudu that if Mecosta bought the debt, Nigeria would buy it from Mecosta. Id. ¶ 40. “To guarantee that Nigeria would purchase the debt, Ani entered into an agreement on behalf of Nigeria to buy the debt from Mecosta on April 14, 1996, more than four months before either Parnar or Mecosta actually acquired the debt.” Id. Bagudu then “orchestrated a series of transactions through which Mecosta received money in escrow from Nigeria, used that money to purchase the debt from Parnar, and sold the debt back to Nigeria at a significant markup.” Id. ¶ 41.
Specifically, Bagudu arranged for TPE to sell approximately 1.6 billion [German Deutschemarks (“DM”)] of its Nigerian debt instruments to Parnar on or about September 30, 1996, for 350 million DM. That same day, Parnar resold the same debt to Mecosta, raising the price to 486 million DM. Mecosta immediately marked up the price again and sold it back to Nigeria for 972 million DM, which the Nigerian government paid in two installments of 486 million DM.
Id. ¶ 42. General Abacha “personally approved” Nigeria’s purchase of the debt, “even though Nigeria would have saved hundreds of millions of dollars by buying the debt on the open market at the price TPE was willing to sell it, which was nearly two-thirds less than Nigeria ultimately paid for the debt.” Id. ¶ 44. “Mohammed Abacha and Bagudu, as the owners of Mecosta, yielded a profit of approximately 481 million DM or $282,506,664.” Id. ¶ 43.” (See attached court judgment.) https://cases.justia.com/federal/district-courts/district-of-columbia/dcdce/1:2013cv01832/163245/79/0.pdf?ts=1426843689
Not much has changed since the Abacha kleptocracy a quarter century ago.
NNPC has just borrowed $3billion from AFREXIM to defend the naira despite supposedly being an income earner for Nigeria while spending trillions on admin costs.
Yet the Diaspora remittance incentive, which is a debt-free forex inflow, has not been reinstated by the CBN.
- Emmanuel Ogebe is a US-based lawyer and Nigeria international affairs expert with the U.S. Nigeria Law Group, Washington.
