Falana Seeks Investigation into Alleged Diversion Of $3.4bn IMF Mortgage

Human Rights lawyer, Femi Falana, SAN, has referred to as on the Financial and Monetary Crimes Fee (EFCC) and the Unbiased Corrupt Practices and Different Associated Offences Fee (ICPC) to research the alleged legal diversion of the $3.4 billion mortgage obtained from Worldwide Financial Fund (IMF) by Nigeria to battle the Covid-19 pandemic.

He made the decision in an announcement he signed on behalf of the Alliance on Surviving Covid-19 and Past (ASCAB) on Sunday.

Falana additionally referred to as on the IMF Board to probe alleged deliberate refusal of its Administration to make sure that the emergency funds have been “used for his or her meant functions.”

He additional urged the IMF to droop the gathering of the scheduled prices, together with internet prices, fundamental curiosity and administrative charges, amounting to SDR 125.99 million (N275.28 billion) pending the conclusion of its investigation.

Final week, the Worldwide Financial Fund (IMF) confirmed that Nigeria had totally repaid the $3.4 billion COVID-19 monetary assist it acquired underneath the Fast Financing Instrument (RFI).

Though Nigeria’s principal stability stands at zero, however scheduled prices, together with internet prices, fundamental curiosity and administrative charges, quantity to SDR 125.99 million. On the present change fee, this interprets to roughly N275.28 billion.

“It’s pertinent to recall that within the wake of the COVID-19 in 2030, Nigeria requested emergency help of about US$3.4 billion—equal to 100% of its quota from the Worldwide Financial Fund to shore up the nation’s financial system and assist companies climate the storm of a lethal pandemic that disrupted international markets and plunged the world right into a recession.

“On the assembly of the IMF Govt Board held on April 28, 2020, the monetary assist of $3.4 billion was permitted to supply vital assist to shore up Nigeria’s heath care sector, and protect jobs and companies from the shock of the COVID-19 disaster. Specifically, the mortgage was designed to assist alleviate the affect of the COVID-19 pandemic and the sharp fall in oil costs and likewise assist restrict the decline in worldwide reserves.

“Following the Govt Board’s dialogue of Nigeria, Mr. Mitsuhiro Furusawa, Deputy Managing Director and Performing Chair, said that, “The emergency financing underneath the RFI will present a lot wanted liquidity assist to reply to the pressing BOP wants. Extra help from improvement companions will likely be required to assist the federal government’s efforts and shut the big financing hole. The implementation of correct governance preparations—together with by way of the publication and impartial audit of crisis-mitigating spending and procurement processes—is essential to make sure emergency funds are used for his or her meant functions.”(emphasis ours)

“Characteristically, the IMF Administration which collectively manages the neocolonial financial system of Nigeria with the Federal Authorities failed to make sure emergency funds have been used “for his or her meant functions.”

A 2020 audit report by the Workplace of the Auditor-Normal of the Federation, launched in January 2024, flagged a number of irregularities within the dealing with of the fund. The report said that on April 30, 2020, $2.4 billion of the mortgage was transferred to the CBN’s account on the Federal Reserve Financial institution of New York, whereas the remaining stability went to the CBN’s account on the Financial institution of China, Shanghai.

The report additional said that by June 1, the $2.4 billion had been moved to the Financial institution for Worldwide Settlements (BIS) for short-term investments. The funds in China have been equally transferred to the Industrial and Business Financial institution of China (ICBC).

“These transactions, in line with the audit, weren’t supported by documentation or approvals from the Federal Authorities or the CBN’s Funding Committee and that the funds have been subsequently reclassified as a part of the CBN’s exterior reserves slightly than the Federal Authorities’s holdings. This reclassification, the report famous, allowed curiosity to be earned on the funds, opposite to the emergency spending goal for which they have been permitted.

“Moreover, the report said that on August 7, 2020, the Federal Ministry of Finance requested the monetisation of $700 million to assist the 2020 federal price range. One week later, the CBN permitted a debit of N265.65 billion, making use of an change fee of N379.5/$, greater than the official N360.5/$ fee on the time. The funds have been credited to 3 separate accounts: N252 billion to the COVID-19 Public Sector Account, N13.3 billion to the Foreign exchange Equalisation Account and N350 million to the Change Fee Account.

“The audit famous {that a} 2% fee was deducted from the monetised quantity, regardless that the funds have been categorised as Federal Authorities property. On the finish of 2020, an unmonetised stability of $2.7 billion — equal to roughly N1.02 trillion — remained unaccounted for, in line with the Auditor-Normal’s report.

“The report really helpful that the CBN Governor ought to clarify the motion and classification of the funds with out correct authorisation. It additionally requested financial institution statements to verify the unmonetised stability and demanded the restoration of N13.3 billion and N350 million into the Federal Authorities’s account. It additional referred to as for the remittance of all curiosity earned from the investments and warned that sanctions underneath related monetary rules could be utilized if there was no accountability.

In line with Falana, the Auditor-Normal desires the cash recovered and remitted to the general public treasury and for the proof of remittance to be forwarded to the Public Accounts Committee of the Nationwide Meeting.

He added that the Auditor-Normal additionally recommends that anybody suspected to be concerned ought to be ‘sanctioned and handed over to the EFCC and ICPC for investigation and prosecution, as offered for in paragraph 3112 of the Monetary Laws’.”

“Regardless that the Auditor-Normal of the Federation submitted the 2020 Annual Report back to to every Home of the Nationwide Meeting, each Homes have did not trigger the report back to be thought of by the committees accountable for public accounts, with a view to cowl up the legal diversion of the $3.4 IMF and a number of other trillions of Naira set out within the Auditor-Normal’s report, in utter contravention of part 85(5) of the Structure of the Federal Republic of Nigeria as amended.

“In view of the foregoing, the Alliance on Surviving Covid-19 and Past (ASCAB) hereby calls on the Financial and Monetary Crimes Fee and the Unbiased Corrupt Practices and Different Associated Offences Fee to research the legal diversion of the $3.4 billion mortgage obtained by Nigeria to battle the Covid-19 pandemic.

“We additionally name on the IMF Board to probe the deliberate refusal of its Administration to make sure that the emergency funds have been :used for his or her meant functions.” In the meantime, the IMF ought to droop the gathering of the scheduled prices, together with internet prices, fundamental curiosity and administrative charges, amounting to SDR 125.99 million (N275.28 billion) pending the conclusion of its investigation.”