The Federal Government Panel which investigated the activities of the Africa Finance Corporation (AFC) said that Chukwuma Soludo, the Governor of the Central Bank of Nigeria (CBN), used the AFC for “Round-Tripping.” Round-Tripping is a scheme whereby bank executives and Bureau-de-Change operators speculate on their demand for foreign exchange to get a higher allocation, which they stuck, with a view to selling at a higher exchange rate.
It is a criminal offence under the Money Laundering Act. The committee went further to recommend that “Government should take appropriate action against Prof. Chukwuma Soludo and Mr. Austine Ometoruwa ...”
Auspicious beginnings
AFC, founded in 2007, was the brainchild of the CBN Governor who proposed the idea to former President Olusegun Obasanjo in 2006. The idea was also sold to some African Countries which led to a tripartite Agreement, on May 28, 2007 between the Federal Republic of Nigeria, the Republic of Ghana and the Republic of Gambia. However, the agreement was only signed by Nigeria.
Guinea-Bissau also signed a similar agreement on the same day. However, the AFC was declared illegal by the Attorney General of the Federation (AGF), Michael Aondoakaa.
“The procedure and processes ordinarily required in processing an application by an organisation is that the FEC must have given its approval that the treaty establishing the organisation be ratified and the office of the AGF prepares instruments of ratification and same forwarded to the President for his signature,” said Mr Aondoakaa in a letter to the panel.
Mr Aondoakaa further said that “even if it is assumed that both agreements signed by Nigeria and Guinea Bissau suffice to establish AFC, there is no evidence on ground to show that the FEC’s approval/ratification of Mr President’s approval was subsequently sought and obtained.”
The minimum equity contribution for any country, individual or corporate body that wanted to be part of the AFC was fixed for $50m. Nigeria, the only country which made a contribution, bought $462 million naira worth of equity in AFC. Other investors were UBA plc, $101m; First Bank Plc, $100m; Zenith Bank plc, $50m; Union Bank plc, $50m; Intercontinental Bank plc, $50m; Oceanic Bank, $50m; and Western Metal Company (WEMPCO) ltd, $100m. WEMPCO plc, a Chinese company based in Lagos, got tax waivers from the Federal Government worth over $300m a few months after this contribution.
Wholly Nigerian
In other words, AFC which was supposed to be modelled after the International Finance Corporation (IFC) was wholly Nigerian. Mr Soludo was its pioneer Chairman, a position he held until the corporation was dissolved in 2008.
Mr Soludo, while appearing before the panel explained that he only occupied the position of Chairman in an acting capacity. The committee, however, faulted this by saying the minutes of AFC meetings at its disposal did not indicate that he was an acting Chairman. He was thus found guilty of violating Section 9 of the CBN Act.
The Act bars principal officers of the CBN from holding any public office by virtue of their respective offices. He was also accused of violating Section 25 of the ICPC act.
The Verdict
The panel directed that the money invested by Nigeria through the CBN in AFC be returned. This was returned and placed in JP Morgan Chase Bank in New York, in May 2008. The AFC also said that Nigeria had earned an interest of $11,370,350.
It however said it could not compute the expenditure incurred to generate this income, in order to determine the actual amount payable to the Federal Government. However, a larger percentage of the returned money was returned in Naira before it was transferred to New York. The committee explained that it suspected the money was used as a source of trading funds by some Nigerian banks.
The routes through which the money was recovered shows that the larger amount ($264mn) was repaid in Naira before being retransferred to New York. These question the use these monies were put to. “We are particularly worried that the money may have been used as a source of trading funds by certain Nigerian banks.
Ecobank Nigeria plc, UBA plc, FCMB plc, Oceanic bank plc, Stanbic bank limited, and Access bank plc, were the banks the panel alleged benefited from this.” The panel thus concluded in its recommendation that
“The Committee finds Prof. Chukwuma Soludo liable for gross negligence, recklessness and gross abuse of office.”