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$7b CBN funds: Soludo versus Falana points and counter-points



“If a SAN can be confused about this, imagine non-SAN citizens?  This is why accountability and transparency are important in these matters….are these banks still managing our foreign reserves?  Are these partnerships still in existence?  What happened to the agreements when banks were taken over? Inquiring minds want to know”….Bolaji Aluko

Nigeria: CBN Selects 14 Banks to Manage Foreign Reserves

By Omoh Gabriel, Business Editor & Emma Ujah – VANGUARD 5 OCTOBER 2006

Lagos — THE Central Bank (CBN) has appointed 14 Nigerian banks and their foreign partners as managers of the country’s foreign reserves. This arrangement is part of the on-going reform in which Nigerian banks are to understudy their foreign partners with a view to gathering experience in foreign exchange management.

Deputy Director (Corporate Affairs) of the CBN, Mr Festus Odoko, named the 14 banks and their foreign partners as 

1. Black Rock/Union Bank of Nigeria Plc; 

2. J.P. Morgan Chase/Zenith Bank Plc; 

3, H.S.B.C/First Bank of Nigeria Plc; 

4. BNP Paribas/Intercontinental Bank Plc; ——> ACCESS BANK

5. UBS/United Bank for Africa Plc; 

6. Credit Suisse/IBTC-Chartered Bank Plc; 

7. Morgan Stanley/Guaranty Trust Bank Plc; 

8. Fortis/Bank PHB Plc/ ——–> KEYSTONE BANK

9. Investec/Fidelity Bank Plc; 

10. ABN Amro/Access Bank Plc; 

11. Cominvest/Oceanic Bank Plc; ——-> ECOBANK

12. ING/Ecobank Plc; 

13. Bank of New York/Stanbic Bank Plc; 

14, Crown Agents/Diamond Bank Plc. 




Nigeria’s Foreign Reserve: How Safe? By Peluola Adewale 


In October 2006, when the external reserve was about $38bn, the Central Bank of Nigeria (CBN) had shared $7bn among the 14 global asset management firms (apparently at $500 million each), mostly banks which had entered into partnership with some Nigerian banks. Most of the balance has been kept as deposits with some foreign banks. Since then Nigerians have never been told what have been the returns on the investment.

While there is cloud on returns or losses, it is crystal clear that the reserve has been put at risk – the risk of currency crisis and collapse of asset management firms. The collapse of financial giants like Lehman Brothers, Washington Mutual, Wachovia, etc and near collapse of AIG, Fannie and Freddie, UBS, etc. have proved that no institution is too big to be swept by the global financial tsunami. 




Allegation against Soludo: Falana confuses empowerment with fraud

The Cable 

As at 2010, Zenith Bank was still working with JP Morgan in managing its own $500 million portion of this reserve. Obviously, banks, who stopped meeting these baseline requirements, have probably been asked to stop managing these reserves – It’s like an investor choosing another stock broker.

These funds were not loans. The country had strict guidelines on what had to be met before a local manager qualified to manage these reserves.

The increased presence of international banks in Nigeria was as a result of this gesture. This synergy brought in investors such as Credit Suisse, Black Rock and other fund managers, who have just left the country’s stock market en masse, into Nigeria’s stock markets.



No Apology For Speaking The Truth- Falana Tells Former CBN Gov. Soludo 


Prominent Nigerian lawyer, Femi Falana has responded to requests by a former Governor of the Central Bank of Nigeria, Charles Soludo asking him to retract an earlier statement that he gave a large chunk of Nigeria’s foreign reserve to several commercial banks to manage. In a letter sent to SaharaReporters, Mr. Soludo had asked the famous lawyer to retract the statement and offer an apology to him. However, Mr. Falana responded swiftly today stating that he owes Soludo no apology for speaking the truth about his conduct in office. 

See full statement below:  

On October 3, 2006, the Central Bank of Nigeria under the management of Professor Chukwuma Soludo gave a loan of $7 billion to 14 commercial banks in Nigeria. The loan was confirmed by the  Head of the CBN Corporate Affairs, Mr. Festus Odoko when he announced that “deposits worth $7 billion representing the apex bank’s share of the foreign reserves estimated at $38 billion has been released to the consortium of bankers.” (The Guardian newspaper of 5/10/2006)

Barely four days later, a respected economist, Mr. Henry Boyo challenged the illegal claim that the $7 billion was a “share” of the CBN in the nation’s foreign reserves. Since the funds belong to the three tiers of Government by virtue of Section 162 of the Constitution Mr. Boyo rightly stated that “the Senate and the House of Representatives would have defaulted in their constitutional duties if CBN is not invited to defend why $7 billion of our reserves should be ‘given’ to 14 banks without oversight approval.” (Vanguard newspaper of October 9, 2006).

Having confirmed that the banks have failed to liquidate the said $7 billion loan, I have asked the Economic and Financial Crimes Commission to investigate the illegality of the loan and recover same together with other huge funds which have been criminally diverted or withheld from the Federation Account. With respect, the denial of the $7 billion loan by Professor Soludo has supported the request for a thorough investigation of the allegations contained in my petition. However, having regard to the facts and circumstances of the controversial loan, Professor Soludo may wish to direct his demand for the apology to Mr. Festus Odoko!

Femi Falana SAN. 



$7 billion: Why Falana must apologise to me – Soludo 

September 26, 2016 Premium Times

A former Governor of the Central Bank, Chukwuma Soludo, has insisted that senior lawyer, Femi Falana, apologise for making incorrect allegations.

Mr. Falana had called for Mr. Soludo’s probe, after he accused the former bank chief of doling out $7 billion to commercial bankers while he was in office. The Senior Advocate claimed that the loan was never returned by the beneficiary banks.

Mr. Soludo has, however, clarified the disbursements; saying it was never a loan, but deposits placed in the appropriate banks by the federal government.

“I can’t believe that the learned and respected Senior Advocate of Nigeria does not know the difference between a bank LOAN and a bank DEPOSIT,” Mr. Soludo said.

The former Central Bank chief added that “none of the 14 Nigerian banks needed a loan or requested for a loan, and the CBN did not grant any loan with our foreign reserves.”

Read Mr. Soludo’s full statement below:


Chukwuma Charles Soludo 

I have just read further statement from Femi Falana in response to mine and his position that he does not need to apologize to me but that instead I may wish to direct my demand for apology to Mr. Festus Odoko (then head of corporate affairs at the CBN). I hereby further wish to state as follows:

When I read Falana’s original statement, claiming that he had “evidence”, that I ‘dolled out’ $7 billion of foreign reserves to banks as a LOAN, I denied the charge and challenged him to publish such evidence. His “evidence” turns out to be a newspaper report quoting the announcement by CBN through Mr. Odoko that “deposits worth $7 billion representing the apex bank’s share of the foreign reserves estimated at about $38 billion has been released to the consortium of bankers” (The Guardian newspaper of 5/10/2006). The same newspaper report noted that the Investment Committee of the CBN (charged with responsibility for deciding where and how our foreign reserves should be kept) approved the decision to allow 14 Nigerian banks with capital base of more than $500 million to be part of the consortium of banks that hold our foreign reserves as deposits. 

In all honesty, I can’t believe that the learned and respected Senior Advocate of Nigeria does not know the difference between a bank LOAN and a bank DEPOSIT, and there is no way I would have imagined that he was referring to the deposits with banks as LOAN. As I stated in my earlier response, Nigeria’s foreign reserves are required by law to be kept in foreign currency abroad. This has been kept either as deposits in banks or invested in sovereign instruments such as the US treasury bill. Before 2006, none of the Nigerian banks was considered big enough or with the infrastructure to manage our foreign reserves. Consequently, our reserves were kept with a consortium of other countries’ banks such as JP Morgan Chase, USA, UBS of Switzerland, Citibank, USA, Bank for International Settlement (BIS), Switzerland, etc. Indeed, in much of the 1990s especially under Gen. Abacha, our reserves were almost exclusively kept with BIS Switzerland.

After the consolidation of banks by December 2005 and as part of our long term vision that Nigerian banks should ultimately take charge and manage Nigeria’s entire foreign reserves, the CBN took the patriotic step of allowing the biggest of our banks to join the consortium of other countries’ banks holding our reserves as deposits. The CBN decided as a first step to give the biggest Nigerian banks a small portion of our reserves, $7 billion as deposits, while the remaining $31 billion as at that date remained with other countries’ banks as deposits and other investments.

It is interesting that Femi Falana would refer to the deposits held by Nigerian banks as LOAN while saying nothing about the other deposits with other countries’ banks.

Let me state that none of the 14 Nigerian banks needed a loan or requested for a loan, and the CBN did not grant any loan with our foreign reserves. As I stated in my earlier statement, the CBN Act does not allow the CBN to grant loans with our reserves to banks, and no loan was ever made. Chief Falana is therefore looking for a repayment of a LOAN by banks that never existed in the first instance. Under my tenure, Nigeria’s foreign reserves grew from $10 billion to all time high of over $62 billion and due to our efficient management, Nigeria never lost a penny of it.

Finally, I must say that I don’t believe any of the conspiracy theories flying around, including those who question the motive, timing, and content of his bogus claims, and some even allude to it as a hatchet job. Going into the archives to fish out a newspaper report of 10 years ago about deposits and making up a fantasy story around it to become a loan, could give anyone cause for suspicion. Even several of the allegations against my successor, Emir Sanusi, are laughable and betray a lack of most elementary knowledge of how a bank such as the CBN works. As one of his admirers, I want to believe that this is one of those cases he is proving to be human after all and therefore could get his facts completely wrong. It may be challenging for him to admit his error and apologize, but if he is not on a mission, it is the only honourable thing for him to do. 


Soludo’s Demand For An Apology Is A Joke By Femi Falana


In  his rather hasty reaction to my petition to the Economic and Financial Crimes Commission (EFCC) on the criminal diversion of public funds from the Federation Account and the mismanagement of the nation’s foreign reserves, a former Central Bank of Nigeria (CBN) Governor, Professor Chukwuma Soludo, accused me of peddling falsehood by saying that he removed $7 billion from the nation’s foreign reserves and doled it out to 14 commercial banks in 2006. While insisting that the issue of $7 billion was a figment of my imagination, he asked for a retraction of the allegation and an apology from me. Although Professor Soludo’s rejoinder was full of vitriolic attack and unwarranted innuendoes, I decided not to react to them since he claims to have respect for me!

However, in rejecting his baseless demand for apology and retraction, I had pointed out that it was the CBN management that issued a statement on October 3, 2006 to the effect  that its share of $7 billion had been released  to the 14 banks. While confirming that the CBN management actually issued the statement, Professor Soludo has turned round to say that it was a deposit and not a loan. So the $7 billion transaction is no longer a lie emanating from me! But in a display of empty arrogance the former CBN governor proceeded to accuse me of exhibiting ignorance by referring to the deposit placed in the 14 banks as a loan. In his tirade, Professor Soludo never disclosed the terms of the “deposit” of the sum of $7 billion or when the principal sum and the accrued interests were paid back to the nation’s foreign reserves. 

For the avoidance of doubt,  I  wish to reiterate that it was the management of the CBN which claimed to have given out its own “share” of $7 billion from the foreign reserves estimated at $38 billion at the material time. Is Professor Soludo insisting that the CBN under his management was entitled to any “share” of the nation’s foreign reserves? In any case, whether it was a deposit or its own “share” of the foreign reserves, did the CBN ever announce that the deposit had been paid back to the foreign reserves which belong to the three tiers of Government of Nigeria? If there is nothing to hide why did the CBN ignore the request for information on the “deposit” of $7 billion? 

In my petition to the EFCC, I had equally alleged that the CBN also gave a bailout of N600 billion to the banks in 2008, made available intervention funds of trillions of Naira to the captains of industry, and paid N2.5 trillion for fuel subsidy in 2011 when the National Assembly had appropriated the sum of N245 billion. As far as Professor Soludo is concerned, these allegations are “laughable and betray a lack of knowledge of how a bank such as CBN works.” Since the allegations of gross mismanagement of public funds are “laughable,” are we to believe that these were “deposits” as well? Or the “share” of the CBN mismanagement under his predecessor? Has AMCON not been set up to recover those loans and deposits running to several trillions of Naira? For goodness sake, how does the CBN work outside the ambit of the Constitution and the Central Bank Act, 2007?

Frankly speaking, I am of the strong view that the demand for an apology by Professor Soludo is a joke since it was the CBN management under him that claimed to have given its own “share” of $7 billion to the 14 banks. Certainly, mine is not like the case of a banker who once alleged that the sum of N30 trillion was missing from the Federation Account without any scintilla of evidence to back it up.


On Mon, Sep 26, 2016 at 1:32 PM, Mobolaji Aluko wrote:

FIG. 1: Nigeria’s Foreign Exchange Reserves 1999 – 2016

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FIG. 2 – Nigeria’s Crude Oil Production – 1999 – 2016

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FIG. 3 – Crude Oil Prices 2000 – 2016

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FIGURE 4: Nigeria’s Debt Profile 2008 – 2015

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———- Forwarded message ———- 

From: Femi Falana  

Subject: Request for the investigation of allegations of criminal diversion of public funds and illegal withholding of funds from the Federation Account 

September 23, 2016 

The Acting Chairman,

Economic and Financial Crimes Commission,

15A Awolowo Road,

Ikoyi, Lagos. 


In our letter dated 8th April, 2016 we prayed the Minister of Finance to take urgent steps to recover billions of dollars either criminally diverted or illegally withheld from the Federation Account. Apart from informing us that the letter was receiving attention no step has been taken to accede to our request. Since then the peripheral capitalist economy of the country has slumped into recession. 

However, since the actions of the few corporate bodies and individuals who engaged in the criminal diversion of the nation’s wealth border on serious economic and financial crimes we are compelled to request the  the Economic and Financial Crimes Commission  to embark on the investigation of the following allegations:

1. By a letter dated January 27, 2016 the National Extractive Industries Transparency Initiative (NEITI) disclosed to us that from five cycles of independent audit reports covering 1999-2012 it had confirmed that the Nigerian National Petroleum Corporation, some oil companies and certain agencies of the Federal Government had withheld $20.2 billion from the Federation  Account. Despite repeated requests of  some civil society organizations  the Federal Government has refused to recover the said sum of  $20.2 billion.

2. Sometime in 2006, former Central Bank Governor, Profesor Chukwuma Soludo removed  $7 billion  from  the nation’s external reserves and doled it out  to 14 Nigerian banks. Two years later, the Central Bank Governor, Mallam Sanusi Lamido Sanusi (the current Emir of Kano) also gave a bailout of N600 billion  to the same  banks. The request of some civil society organisations for the recovery  of the huge  loan of $7 billion and N600 billion from the commercial banks  has been ignored by the  management of the Central Bank.

3. On September 6, 2016,  the Nigerian National Petroleum Corporation (NNPC) announced that arrangements had been concluded to recover the sum of $9.6 billion in over-deducted tax benefits from joint venture partners on major capital projects and oil swap contracts. Although  the NNPC has  recovered the said sum of $9.6 billion, it has failed to remit same to the Federation Account without any legal justification. 

4. In 2009, Mobil Oil Producing Nigeria Unlimited applied to the Federal Government for the renewal of three oil blocks. Upon granting the application, the NNPC asked Mobil to pay the sum of $2.5 billion for the renewal of the licenses. While Mobil made a part payment of  $600 million it  undertook to invest the outstanding sum of $1.9 billion in the energy sector. But as Mobil did not invest the said sum in the energy sector  the Civil Society Network Against Corruption has requested the EFCC to investigate the fraudulent transaction.

5. From 1998-2014, the Federal Government successfully recovered over $4 billion from the Abacha loot. Howeved, based on the refusal of the office of the Accountant-General of the Federation  to account for the recovered loot the Socio Economic Rights  and Accountability Project (SERAP) applied to  the Federal High Court for an order of mandamus. Even though the Court granted the order  the Federal Government has failed to account for the recovered loot. In the circumstances, we have submitted a petition to the EFCC to investigate the alleged criminal diversion of the recovered loot.

6. In the Appropriation Act, 2011, the sum of N245 billion was earmarked for fuel subsidy. In violation of the Act, the Central Bank of Nigeria headed by Mallam Sanusi Lamido Sanusi paid the sum of N2.5 trillion to a cabal of fuel importers. Following our petition the EFCC conducted an investigation into the  fraud but the exercise was compromised due to pressure from the former  Jonathan administration. Even though  the EFCC has charged some of the suspects to court the investigation ought to be reopened with a view to getting to the root of the monumental fraud. 

In view of the foregoing we are compelled to request you to use your good offices to recover the aforesaid sums of money and proceed to prosecute the corporate bodies and individuals involved in the economic  sabotage which has contributed to the nation’s economic recession. Be rest assured that we are prepared to provide all relevant documents to facilitate your  investigation of the serious economic and financial crimes disclosed in this petition. 

It is hoped that you will not hesitate to accede to our request in view of the increasing  pressures being mounted on the Federal Government by the parasitic faction of the ruling class to auction  the remaining assets  of the nation. 

Yours Sincerely,



Femi Falana’s Lies: Demand For Retraction And Apology By Chukwuma Charles Soludo


SEP 24, 2016

My attention has just been drawn to an article published in online news media, Premium Times and Sahara Reporters entitled “Falana wants EFCC to probe ‘diversion’ of state funds by Sanusi, Soludo, others.” Part of the said publication as it pertains to me reads:

“Sometime in 2006, former Central Bank Governor, Profesor Chukwuma Soludo removed $7 billion from the nation’s external reserves and doled it out to 14 Nigerian banks. Two years later, the Central Bank Governor, Mallam Sanusi Lamido Sanusi (the current Emir of Kano) also gave a bailout of N600 billion to the same banks. The request of some civil society organisations for the recovery of the huge loan of $7 billion and N600 billion from the commercial banks has been ignored by the management of the Central Bank|”.

I have come to terms with the fact that part of the burden one bears for having held public office in Nigeria is that one has to endure all kinds of uninformed and sometimes mischievous attempts to malign one’s character. I largely ignore such ignorant commentaries. However, Femi Falana is one of the Nigerians I deeply respect, and I am sure many Nigerians also hold him in very high esteem. I was therefore shocked beyond belief that someone like him could fabricate and peddle blatant lies. From the above quotation, Falana alleged that I “removed” $7 billion from Nigeria’s external reserves and gave same as a “loan” to 14 Nigerian banks in 2006, and apparently such a “loan” has not been recovered. This is a blatant lie, and I challenge Falana to publish the details of such a “loan” which remains unpaid or as a person with honour, publish a retraction and unreserved apology immediately. For the avoidance of doubt, I wish to state as follows:

One of the legacies of my tenure as CBN Governor was the highest rate of reserve accumulation in Nigeria’s history as well as its effective and efficient management. On the assumption of office, I met exactly $10 billion in foreign reserves. With an average monthly oil price of $59 during my tenure, we accumulated reserves to all-time high of over $62 billion. Even after paying off Nigeria’s external debt with $12 billion and facing unprecedented global financial and economic crisis, I still left $45 billion upon leaving office in 2009.

Throughout my tenure, Nigeria never lost one penny of the reserves. It is particularly important to note that even during the global financial crisis of 2008/2009 when major international banks collapsed and some countries lost some of their reserves, our prudent management ensured that Nigeria never lost a penny but earned returns on the reserves. Given the powerful interests that I fought during the consolidation of banks and even since I left office, one can only imagine the international headlines that would have been made if just one penny of the reserves was unaccounted for.

That under the provisions of the CBN Act as well as the guidelines for the management of foreign reserves, it is impossible for anyone to “remove” any sum of money from the reserves and give out as “loan” to commercial banks in Nigeria. To qualify as “foreign reserves” such reserves are held in foreign currency abroad as deposits with banks or in sovereign instruments such as the US treasury bills.

Finally, let me state that my records at the CBN are there for anyone to see, and I am ready at any time any day to respond to any questions regarding my stewardship. If the allegation had been made by certain people, I would have dismissed such persons as ignorant but certainly not Chief Falana.

-Chukwuma C. Soludo

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