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CBN under scrutiny over funds transfer by indicted oil firms

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An unexpectedly lax stance by the Central Bank of Nigeria (CBN) over  fund movements  by customers in the banking industry, contrary to the guidelines on remittances via domiciliary accounts, may have put the apex under scrutiny, BusinessDay investigations have revealed.

The Presidential Committee on Verification and Reconciliation on Fuel Subsidy has called for further investigations into the ease with which the indicted oil companies initiated their transactions in one bank and effected payments in another, in contravention of the guidelines. The committee has also expressed concern over the involvement of a local Bureau De change, in the successful transfer of $4, 999, 939 to one of the oil company’s accounts, as inflow from abroad.

The oil companies perfected their infractions by opening of ‘Form M’ with the banks, for the importation of petroleum products. However, the mode of payment was said to have changed from letter of credit to Bills for collection, with the approval of the CBN.

But further scrutiny of the report of the meeting between the Presidential Committee on Payment of Fuel Subsidy and representatives of the banks, held on July 18, 2012 showed that the form ‘M’ was later abandoned, and payment effected through any of the banks on behalf of the oil companies.

This is in disregard of the provisions of CBN guidelines which stipulate that payments for import transactions initiated in one bank, should be consummated in the same bank. Where there are cogent reasons for the transfer of the underlying Form (s) ‘M’ from one bank to another, the approval of the CBN should be obtained.

Consequently, the Aigbojie Aig-Imokhuede-led Verification Committee, in a report seen by Business Day, stated that “from the foregoing, it can be said that the banks involved in the transactions did not breach any regulation. However, the movement of funds among customers within the banks is suspicious and suggestive of money laundering.

“More worrisome is the fact that an indigenous Bureau De Change (BDC) …transferred a staggering sum of $4, 999, 939 to...account as inflow from abroad.”

The development may have put CBN under scrutiny, as analysts expressed worries over the apex bank’s seemingly lack of grip on the financial system in which the institutions have become instruments for both local and international money laundering.

However, they are waiting for CBN’s response to the development, even as the committee has recommended investigations into the transactions. Also, the committee has called for review of the CBN guidelines on remittances or transfers through domiciliary accounts.

“In view of the above, we recommend for thorough investigation of the transactions and companies involved. Also, there is need to revisit the CBN guideline which stipulates that for all remittances/transfers through domiciliary accounts funded via receivables, customers instructions only, can suffice.

This has led to reckless abandon of Forms ‘M’ (especially those established on Bills for collection) in one bank and payment in another, through domiciliary accounts without underlining documents. This window of opportunity created by the provision of the guideline, has been grossly abused by some customers of the deposit money banks,” the report said.

The meeting was at the instance of the Committee, to discuss the observations made during the verification exercise on the payment of fuel subsidy in 2011 held in Lagos between July 9 through 13, 2012.

“The alleged infractions carried out by oil marketing & Trading Companies in the above mentioned banks include transactions initiated in one bank and settled in another bank, through funds transfer from domiciliary accounts, among others. This is against the provision of the Central Bank of Nigeria (CBN) Foreign Exchange Guidelines which stipulates that payments for import transactions initiated in one bank should be consummated in the same bank.

“Where there are cogent reasons for the transfer of the underlying Form(s) ‘M’ from one bank to another, the approval of the CBN should be obtained,” the report said.

Article Credit:Businessday  News 

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Updated 6 Years ago

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