 |
Charles Soludo |
TERM OF REFERENCE 4
3.5 Obtain details, documentary and otherwise, of withdrawals made from Federal Government of Nigeria Account maintained with the Bank of England and Ascertain by whom such withdrawals were made.
The Committee visited the Bank of England on 13th June, 2008 and requested for the Statements of CBN and FGN from 1st January 2007 to 13th June, 2008. The relevant portions of the said Statements of Account are attached to this Report as ANNEXURE 11. We noted that the highest credit balance of ₤16,348,021.51 was on 08/08/2007 and the lowest balance of ₤3,219,484.35 on 31/01/2007.
Judging from the balances and transactions on this account, it is obvious that the CBN’s investment in the AFC was not funded from this account.
TERM OF REFERENCE 5
3.6 Obtain Necessary Evidence of Remittance of the Equity Contribution by the CBN to the Receiving Bank for the AFC Initiative, ascertain the source of authority for the said Remittance and determine the signatories to the Account in the Receiving Institution.
The CBN invested US$462,923,000 as 42.499% equity contribution in AFC. The amount was deposited in an account named AFC Equity Investment Account opened in the CBN for that purpose. The Receiving Bank for this purpose is also the CBN which opened an account known as the ‘AFC Equity Investment Account’ into which the CBN’s equity and the equity contributions from other shareholders were paid pending transfer to the AFC. The CBN Board approved the transaction at its 371st Meeting on 2nd August, 2006.
Despite the Board approval, this Committee however believes that an investment of this nature being of an international character needed an express approval of the Federal Government of Nigeria as provided under section 31 of the CBN Act 2007/section 26 of the 1991 Act and the Treaties Making Act, respectively before the actual committal of funds by the CBN.
The CBN Board therefore lacked the authority to approve an investment in an international organization of the nature of AFC, in the manner in which it did, without the express approval of the Federal Government as provided in its own enabling Act.
3.7 Obtain All Necessary Particulars to Evidence the Investment made by CBN in the Corporation and Ascertain the Dealings in the invested Funds to date.
3.7.1 As indicated in the Finding under Term of Reference 5 above, the transfer of the CBN’s equity investment of US$462,923,000 to the AFC is not in doubt. This equity constituted part of the total equity transferred from the CBN to the AFC’s bank accounts in two trances ($750 million on 22nd November, 2007 and $143,219,033 on March 5 & 6, 2008) in the following manner:
UBA New York US$250,000,000 22/11/07
Citi Bank London US$500,000,000 22/11/07
Citi Bank London US$93,219,033 05/03/08
UBA New York US$50,000,000 06/03/08
3.7.2 The treatment of the invested funds thereafter has been a subject of intense scrutiny by the Committee since the commencement of the present assignment. To ascertain the nature of dealings by the AFC in the invested funds, the Committee took the following steps:
(a) By a letter dated 16th April, 2008, the Committee requested the Governor of the Central Bank to submit to it details of all bank accounts operated by the AFC or operated by the CBN on its behalf:
(b) By another letter of the same date, the AFC was equally requested by the Committee to submit similar details regarding its bank accounts to the Committee;
(c) At its meeting with the President/CEO of the AFC on 30th April, 2008, the Committee elicited explanations/documentary evidence from him on the nature of the AFC’s financial and operational activities as detailed in the attached Minutes of the said Meeting; (ANNEXURE 12)
(d) A detailed study of the bank accounts and other documents submitted by the AFC to the Committee was undertaken;
(e) The Committee held a meeting on June 9, 2008 with the management of UBA New York which is one of the main banks used by the AFC for its financial transactions;
(f) The Committee held a meeting on Friday, June 13, 2008 with the management of Citibank, London which is the second major bank used by the AFC for its financial transactions.
3.7.3 The Committee’s scrutiny of the AFC’s two major bank accounts (UBA New York) and Citibank, London reveals that the AFC was involved in substantial money market activities with investor funds. For example, the UBA New York Account No. 68959013 which was opened on 26th November, 2007 with the sum of US$250,000,000.00 (Two Hundred and Fifty Million United States Dollars) had a credit balance of US$18,732.29 (Eighteen Thousand, Seven Hundred and Thirty-Two Dollars and Twenty-Nine Cents) as at 4th April, 2008 (a period of barely five months).
The explanation for the massive transfer of funds from this account by the UBA New York officials and AFC officials respectively was that there was a need for the Corporation to move the funds in trances into more favourable investment instruments around the world. A significant and interesting finding for the Committee however, was the fact that the bulk of the funds transfers were made to Nigerian banks and institutions either as foreign exchange sales or as investments in Commercial Papers. The total interest generated by the AFC Funds for the period it was domiciled in UBA New York has been put by the bank at US$1,748,762.69. The said UBA New York Statement of Account is attached hereto as ANNEXURE 13
In respect of the AFC Account with Citibank London, the Committee after its meeting with the bank on Friday, 13th June, 2008 and obtained Statements of Account in respect of the three accounts maintained by the AFC with Citibank. Although two of the accounts were never active, the active account (Account No. 0011815768) reveals that its proceeds were essentially used for money market operations, utilizing the services of several Nigerian banks, in the same manner the UBA New York account was used by the Corporation, as already discussed above. ANNEXURE 14 attached hereto contains the details of the Citibank London account. As indicated therein, the opening balance was US$500 million as at 8th November, 2007 while the balance as at June 9, 2008 stood at US$82,713,408.84.
TERM OF REFERENCE 7
3.8 Ascertain the ownership structure of the AFC, determine the percentage equity holding of such investors, and determine the representation of Nigerians on the Board of the Corporation;
3.8.1 The AFC, from all evidence available to the Committee, was promoted by the CBN. The first approach to investors was apparently therefore made to Nigerian-based investors, particularly the Commercial banks. The CBN equally embarked on a road-show to certain other countries ( Ghana, South Africa, Kenya, Ethiopia, Tunisia, Algeria, Egypt and Gambia) to sell the idea to potential investors. The promoters of the venture (CBN and the commercial banks) fixed the minimum shareholding for institutional or individual investors at US$50,000.00 (Fifty Thousand United States Dollars). However, as at the date of the present investigations, there was no investment from Governments of other countries. The Committee however notes that although the Governments of Guinea-Bissau and Sierra-Leone have transmitted ‘Letters of Acceptance’ to join the AFC dated 20th January and 7th April, 2008 respectively, to the AFC Chief Executive Officer (ANNEXURES 15 and 16), the two countries have not made any financial investment in the corporation.
The ownership structure of the AFC and the percentage equity holdings by the various investors as at the date of commencement of the Committee’s assignment on May 14, from documents made available by the AFC was as follows:
REGISTER OF SUBSCRIBERS
SN INVESTOR SUBSCRBED CAPITAL (USD) PAID-UP CAPITAL (USD) % HOLDING
1. Central Bank of Nigeria 462,923,000.00 462,923,000.00 42.499
2. United Bank of Africa Plc 101,000,000.00 101,000,000.00 9.272
3. First Bank of Nigeria 100,119,013.00 100,119,013.00 9.191
4. Oceanic International Bank Plc 50,000,000.00 50,000,000.00 4.590
5. Zenith Bank Plc 50,000,000.00 50,000,000.00 4.590
6. Intercontinental Bank Plc 50,000,000.00 50,000,000.00 4.590
7. WEMPCO Limited 50,000,000.00 50,000,000.00 4.590
8. Gloria Investment Ltd 50,000,000.00 50,000,000.00 4.590
9. Union Bank Nigeria Plc 50,000,000.00 50,000,000.00 4.590
10. Access Bank Plc 50,000,000.00 50,000,000.00 4.590
11. Zenon Petroleum & Gas Fund Ltd 25,000,000.00 25,000,000.00 2.274
12. First City Monument Bank Plc 10,000,000.00 10,000,000.00 0.910
13. First Inland Bank Plc 10,000,000.00 10,000,000.00 0.910
14. Fidelity Bank Plc 5,000,000.00 5,000,000.00 0.455
15. Equatorial Trust Bank Plc 5,000,000.00 5,000,000.00 0.455
16. UBA Asset Management Limited 5,000,000.00 5,000,000.00 0.455
17. Guaranty Trust Bank Plc 5,000,000.00 5,000,000.00 0.455
18. NOFEC Investment Ltd 5,000,000.00 5,000,000.00 0.455
19. Leadway Assurance Company Ltd 2,500,000.00 2,500,000.00 0.227
20. Ekulo International Ltd 1,000,000.00 1,000,000.00 0.091
21. Megachem Nigeria Ltd 500,000.00 500,000.00 0.045
22. Nondon West Africa Ltd 200,000.00 200,000.00 0.018
23. Dyer & Blair Investment Bank, Kenya 100,000.00 100,000.00 0.009
24. APT Securities & Funds Ltd 100,000.00 100,000.00 0.009
25. Elka Investment Ltd 75,000.00 75,000.00 0.007
26. Capital Assets Ltd 50,000.00 50,000.00 0.005
Corporate Shareholders 1,088,567,013.00
1,088,567,013.00
99.872
27. Prof. Owodunni Teriba 150,000.00 150,000.00 0.014
28. Mr. Akindipe Ebenezer Akintayo 100,020.00 100,020.00 0.009
29. Mr. Nwosu Raphael A. Ozoemena 100,000.00 100,000.00 0.009
30. Okafor Paul Okwudiri 51,000.00 51,000.00 0.005
31. Obiakor Uchendu Paulinus 51,000.00 51,000.00 0.005
32. Mr. Mekwunye Dumbiri Charles 50,000.00 50,000.00 0.005
33. Prof. Festus O. Fajana 50,000.00 50,000.00 0.005
34. Dr. Samuel Idumonyi 50,000.00 50,000.00 0.005
35. Mr. Anozie Nnamdi Ignatius 50,000.00 50,000.00 0.005
36. Modupe Ayodeji Omotosho 50,000.00 50,000.00 0.005
37. AFC Staff Equity Scheme 10,000,000.00
38. Mr. Victor Hammond 50,000.00
0.06
TOTAL 1,099,319,033.00 1,089,269,033.00 100
3.9 Composition of the AFC Board
The Committee was informed by the CBN, as promoter of the AFC, that the basis for representation on the Board of the AFC was a minimum investment of US$50 million (US$50m) by an investor. Consequently, the present Board is largely made of Nigerians (with the exception of a certain Mr. Lewis Tung, (a Chinese national and Managing Director of the Lagos-based WEMPCO Group which holds a USD 100 million share capital in the AFC).
The Board is composed of the following persons as at date:
1. Prof. Chukwuma C. Soludo, CFR (Governor, CBN) - Chairman
Members
2. Dr. Shamsuddeen Usman ……(present)Hon. Minister of Finance
3. Mr. Tunde Lemo….Deputy Governor, CBN
4. Mr. Austine Ometoruwa, President/ CEO, AFC
5. Alhaji Aliko Dangote,CON, CEO Dangote Group
6. Mr. Ebong Bassey, MD, Union Bank of Nigeria
7. Mrs. Cecilia Ibru, MFR, MD/CEO, Oceanic Bank Intnl Plc
8. Mr. Erastus Akingbola, MD, Intercontinental Bank Plc
9. Mr. Jim Ovia, MD Zenith Bank Plc
10. Mr. Tony Elumelu, MFR, MD, UBA Plc
11. Mr. Hassan Odukale, MD, Leadway Assurance Co.
12. Mr. Femi Otedola, CEO Zenon Limited; and
13. Mr. Lewis Tung, MD, WEMPCO Group.
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