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Why FG Is Probing Soludo....As Tension Builds at CBN over $480m AFC investment probe
April 19, 2008 | posted by Mobolaji Aluko (Archives)

NATIONAL MIRROR
April 19, 2008

Why FG Is Probing Soludo

By KOLA JIMOH

There are not the best of times for governor of Central Bank of Nigeria (CBN), Professor Charles Soludo as the federal government is miffed at the institution's disregard for due process in committing a whopping $480 million from the treasury to the African Finance Corporation (AFC).

The amount which translates to about N58.7 billion investment in the AFC is subject of the five-man probe panel inaugurated by the Attorney-General of the Federation, Chief Michael Aondoakaa (SAN), Wednesday in Abuja.

According to sources at the Abuja Federal Secretariat offices of the Secretary to the Government of the Federation (SGF) Thursday, Soludo may not have received any official authorisation by the National Assembly before the huge financial commitment "The committee headed by Assistant Police Commissioner, Tunde Ogunsakin is to ascertain the allegation. If it is proven, then a clear case of breach of due process would have been established against the CBN management", source the top government source.

The senior civil servant was however, quick to point out that the development should not in any way be seen as witch-hunt. Instead, he said that Nigerians want the nation to operate as an organised one where things are done according to the law "and not the abitiariness that for long characterised governance in this country."

He found a supporter in a North Central State Senator who told National Mirror that "the CBN may not have been cleared to invest that money", adding that Nigerians should patiently await the outcome of the probe panel's report.

"The amount is so huge that only a recourse to due process could have authorised the investment. Anything to the country could mean serious trouble for Soludo and his team", said the Senator.

On the immediate cause of the probe, another official of the SGF's office disclosed that in a bid to consider a request for the conferment of legal status on the AFC, the federal government decided to conduct due diligence on the international organisation before it could consider the request.

At the CBN headquarters in Abuja Thursday, senior officials declined to comment on the probe with one of the saying that "the CBN cannot make official statement on the probe until after its completion.

AFC was the product of one of the economic reform policies initiated by former President Olusegun Obasanjo in April 2007.

It is a private sector-led investment and development finance institution with the objective of promoting economic growth in the Africa continent, the institution is expected to have the same status with the International Finance Corporation (IFC).

BUSINESS DAY

FG institutes probe into CBN's $468m investment in AFC

16 April, 2008 12:00:00 Anonymous

The spectre of probe that has been sweeping across some federal establishments yesterday moved to the Central Bank of Nigeria (CBN) as the Federal Government is believed to have ordered an investigation into the apex bank's investment of $468 million in the African Finance Corporation (AFC).

CBN's investment which represents 49 percent of AFC's holdings was ordered to be withdrawn by the Federal GovernmentThe government also directed immediate withdrawal of the $468 million invested in the AFC.

The AFC is being solely sponsored by the CBN and is aimed at providing finance for infrastructural development in Africa . Some banks in the country also made contributions to the AFC.

Michael Aondoakaa, Attorney General of the Federation and justice minister, inaugurated a five-man committee to investigate the payment by the CBN.

The panel is chaired by an assistant commissioner of Police and director of operations of the Independent Corrupt Practices and Other Related Offence Commission (ICPC), Tunde Ogunsakin.

Other members of the panel include B.B. Verr, former director-general of the Bureau of Public Enterprises ; Mohammed Garba, economic affairs officer in the office of the Secretary to the Government of the Federation; director, consolidated accounts, in the office of the Accountant General of the Federation; E. Oshibite; and Pius Oteh of the federal ministry of justice.

Maxwell Eseigbe, chief press secretary to the justice inister, said Aondoakaa inaugurated the committee on behalf of President Umaru Yar'Adua, who is presently recuperating in a German hospital. "The five-man panel was instituted following request for conferment of a legal status on AFC by a letter dated April 14 and signed by the Secretary to the Government of the Federation, Baba Gana Kingibe. The committee has three weeks to submit it findings," Eseigbe stated. Eseigbe gave the terms of reference of the panel to include:

* ascertaining the source of authority for the withdrawal of the sum of $480 million in respect of the purchase of equity in AFC by the CBN and determine whether there was relevant authorisation by the National Assembly or the President for the investment;
* ascertaining 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;
* determining the laws and procedures relating to the setting up of institutions such as the AFC and ascertain whether such laws and procedures have been complied with to date by all relevant persons and authorities in the establishment, funding and operations of the AFC;
* evaluating the past and present details of the bank account from where the funds were withdrawn; * obtaining all necessary particulars to evidence the investment made by the CBN in the confirmation and ascertaining the dealings in the invested funds to date.
* entering into appropriate correspondence with the receiving bank and taking all further necessary actions for the purpose of preventing further transactions on the account, as well as effecting the return of the invested funds to the paying bank as soon as possible;
* obtaining details and documents of withdrawals made from the Federal Government of Nigeria account maintained with the Bank of England and ascertaining by whom such withdrawals were made; and * determining the role played by any authority or person in the formation and funding of the AFC and make necessary recommendations in respect of such authorities or persons.

Officials of the CBN were reticent yesterday when Business Day sought their view on the issue.

decision to probe the apex bank's venture in AFC.

CBN'S spokesman, Festus Odoko could not be reached on his mobile phones.

The promoters of the AFC seek to raise $1 billion as its initial share capital through the issue of one billion ordinary shares of $1 each.

CBN had last year pledged to invest up to $500 million in the AFC to leap-frog its establishment and thereafter scale down its holdings subject to total public sector stake not exceeding 49 per cent.

The AFC board comprises CBN governor, Chukwuma Soludo as chairman; finance minister, Shamsuddeen Usman; CBN deputy governor, financial sector surveillance, Tunde Lemo; and Austine Ometoruwa, president and chief executive.

other members of the board include CEOs of some Nigerian banks. They are Cecilia Ibru, Oceanic Bank; Jim Ovia, Zenith Bank; Bartholomew Ebong, Union Bank; Erastus Akingbola, Intercontinental Bank; and Tony Elumelu, United Bank for Africa.
The rest are non-bank members, including Aliko Dangote, his friend, Femi Otedola, Oye Hassan-Odukale, and Lewi Tung.

PUNCH
Published 4/18/2008 12:48:00 AM

Tension at CBN over $480m AFC investment probe

Atser Godwin, Abuja

Anxiety griped senior officials of the Central Bank of Nigeria on Thursday after media reports that President Umaru Yar'Adua had ordered a probe into the bank's $480m investment in the African Finance Corporation.

Besides, documents obtained by our correspondent from the CBN also faulted the claim that about $480m was invested in the AFC."

The CBN had invested $462m in the corporation and was expected to draw down its investment as soon as the shares of the corporation were listed on any international exchange within five years of operation,"the document said.

An official of the bank who spoke with our correspondent said the probe might be aimed at rubbishing the reputation of the bank's top management.

"What is most annoying is that the investment was never done in secret. Former President Olusegun Obasanjo approved the proposal," the source, who has no permission to speak with the press, said.

On Wednesday, the Attorney-General of the Federation and Minister of Justice, Mr. Michael Aondoakaa, inaugurated a panel to, among others, ascertain the source of authority for the withdrawal of the sum of $480m in respect of the purchase of equity in AFC by the CBN and determine whether there was relevant authorisation by the National Assembly or the Presidency for the investment.

The official, who is familiar with the matter said the CBN Act empowered the bank can make investments on behalf of the Federal Government.

CBN insiders said the AFC was a response to the yearnings by the government and people of Nigeria to be part of the global economic growth and attack on poverty, which requires that a suitable and strong financial infrastructure be put in place.

"It is primarily intended to bridge the huge funding gap in Africa's infrastructure, agriculture, solid minerals, services, etc and indeed to play complementary role to other financial institutions," a source said.

It was learnt that Presidential approval was given on January 14, 2006 authorising the CBN to take necessary steps to set up the AFC while a technical committee with CBN governor, Professor Charles Soludo as Chairman and current Minister of Finance, Dr Shamsudden Usman, as well as managing directors of three banks as members.

The CBN Board subsequently approved the investment of $500m in AFC equity on August 2, 2006, pursuant to its authority and limits set by Section 27(1) (i) and (ii) (in the new CBN Act, 2007 Sec. 31.)

For some background, see: http://www.africafc.org/index.html

Established in 2007, the Africa Finance Corporation (AFC) is a private sector-led investment bank and development finance institution created to help mobilize and channel required capital towards driving Africa's economic development.

AFC's mission is to address Africa's development needs in a profitable way, creating benefits for both investors and societies in the region.

There is an estimated $130 billion of investment opportunities across Africa over the next five years through which AFC can help drive Africa's economic development.

AFC has a number of advantages which allow it to participate in this scenario. These include a large (US$1 billion) capital base to support early and intermediate stage projects; access to cheap long-term funds through an anticipated investment grade rating; and deep sector knowledge from industry experts. In addition, as a hybrid investment bank and international development finance institution, AFC enjoys privileged access to policy makers in Africa. AFC uses these advantages to help address one of the biggest impediments to the successful implementation of many projects on the continent; namely the lack of anchor risk-capital combined with well packaged investment structures. When done, this attracts complimentary sources of finance, both public and private to create truly bankable projects out of what are currently just potential projects.

The AFC has developed key guiding corporate governance principles benchmarked against global investment banking institutions and has a tight and well controlled cost base. It has a lean organisational structure designed along product, industry and advisory business units and functions.

The AFC's business development process is founded upon a system of proactively creating, acquiring and managing infrastructural, industrial and financial assets. The AFC's business execution focuses on providing anchor risk capital, playing a catalytic role, providing advisory services and forging partnerships.

AFC has recruited world class capabilities by offering globally competitive market and incentivebased compensation. AFC has succeeded in attracting professionals and top management drawn from the private sector, investment banks and multilateral development finance institutions.

The AFC has been built around four core pillars:

- Fostering private sector solutions to Africa's development
- Driving Africa's competitiveness and industrialization
- Catalyzing private sector participation in Africa's infrastructure
- Facilitating Africa's private sector access to capital markets

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