CBN Unveils Forex Scandals, Promises Swift Sanctions Amid Economic Challenges

The Central Bank of Nigeria has uncovered infractions, gross abuses, and non-compliance with foreign exchange market regulations.

 

Consequently, the apex bank vowed it would punish those responsible for these abuses in collaboration with relevant agencies.

 

The CBN Acting Director of Communication, Mrs. Sidi Ali, disclosed in a statement in Abuja on Wednesday.

 

The development came about six months after the CBN removed the rate cap on the exchange rate and announced other measures aimed at unifying the exchange rate.

 

However, the move by the CBN has led to a huge depreciation of the naira, a situation that has also worsened inflation.

 

The CBN has forward contract obligations above $7bn to banks and firms.

 

But the CBN spokeswoman on Wednesday in the statement said in its bid to clear the backlog of outstanding foreign exchange liabilities, the apex bank has paid approximately $2bn across various sectors, including manufacturing, aviation, and petroleum.

 

She said the bank had also cleared up the entire liability of 14 banks and started settlements with foreign airlines.

 

She revealed that the bank commissioned an independent forensic review of the process by a reputable firm as she affirmed that payment of forex backlog for qualified transactions had commenced.

 

Ali, however, pointed out that the review of the forex transactions revealed gross abuses.

 

The statement read in parts, “The review revealed grave infractions, gross abuse, and significant non-compliance with market regulations, and appropriate sanctions will be enforced in collaboration with relevant agencies.

 

“The CBN is resolved to sanitise the financial services sector and foster trust among all market participants, as well as internal and external stakeholders, in the Nigerian economy. Nevertheless, she said the CBN will continue to settle the legitimate foreign exchange backlog as it has consistently been doing in the last three months.”

 

Reports have put the CBN’s forward contract obligations to banks at $7bn.

 

Earlier, the bank disclosed that it had paid $2bn to clear part of its backlog of matured foreign exchange obligations to Deposit Money Banks.

 

It also disclosed that it paid $61.64m to foreign airlines.

 

At the time, Ali said, “These payments signify the CBN’s ongoing efforts to settle all remaining valid forward transactions, to alleviate the current pressure on the country’s exchange rate.

 

“It is anticipated that this initiative by the CBN should provide a considerable boost to the Naira hug against other major world currencies and further increase investor confidence in the Nigeria economy.”

 

Recently, the Economic and Financial Crimes Commission visited the headquarters of Dangote Industries Limited in Ikoyi, Lagos as part of its probe into alleged preferential allocations of forex to the Dangote Group owned by and 51 other companies.

 

The anti-graft commission had earlier reportedly written to 52 companies directing them to provide documents supporting the allocation and utilisation of foreign exchange sold to them at official rates in the last 10 years.

 

The commission asked the firms to submit Form A and Form M between 2014 and June 2023.