Nigerian president suspends Central Bank chief

Lamido Sanusi has been accused of “financial recklessness and misconduct” after billions of petrodollars were missing from government coffers.

By (AFP)

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Published: Thu 20 Feb 2014, 4:36 PM

Last updated: Sat 4 Apr 2015, 12:41 AM

Nigeria's Central Bank Governor Lamido Sanusi has been suspended.-AFP

Nigerian President Goodluck Jonathan suspended Central Bank Governor Lamido Sanusi on Thursday, removing an increasingly outspoken critic of the government’s record on tackling rampant corruption in Africa’s leading energy producer.

Several dealers told Reuters that Nigeria’s foreign exchange, bond and money markets had all stopped trading because of the uncertainty and volatility created by the suspension.

Sanusi, who was due to end his term in June, had been presenting evidence to parliament which he said showed the state oil company Nigeria National Petroleum Corporation (NNPC) had failed to remit around $20 billion that it owed to federal government coffers.

NNPC has repeatedly denied Sanusi’s allegations.

Deputy Governor Sarah Alade was appointed acting governor, the presidential spokesman Reuben Abati said on Thursday.

“Lamido Sanusi’s tenure has been characterised by various acts of financial recklessness ... inconsistent with the administration’s vision of a Central Bank propelled by the core values of focused economic management,” Abati said, without providing details of the acts.

Sanusi told CNBCA that he was proud of what he had done, and he hoped the economy would not be hurt by his suspension.

Asked by CNBCA whether his suspension was politically motivated, he said: “It’s not for me to comment. I think the answer to that is obvious.”

Analysts predicted that foreign investors would be active sellers of assets in Africa’s second biggest economy, just when it is attracting more interest than ever for the huge potential of its 170 million population and a backlog of work needed to update its inadequate infrastructure.

“The nature of the suspension will come as a significant shock to foreign portfolio investors, whose willingness to invest in Nigeria was very much influenced by the transparency and anti-inflation credibility associated with Sanusi’s policies,” said Razia Khan, head of Africa research at Standard Chartered.

If Jonathan wants to remove Sanusi entirely, he needs the consent of a simple majority of the Senate.

The Senate could also vote to reverse the suspension if they aren’t satisfied with the reasons, though that looks unlikely, since the ruling party has a comfortable majority in the Senate, and Sanusi was also a vocal critic of wasteful spending in the national assembly.

Before trade ceased, the naira had fallen 1.4 percent to 166.50 to the dollar on the news. Sanusi, a career banker, earned a reputation as monetary policy hawk while governor from June 2009 - raising interest rates, tightening liquidity and aggressively defending the naira with frequent foreign exchange auctions.

“Sanusi has been the face of naira stability,” Nwabueze Okonne, a Nigerian currency trader, told Reuters.

The stock market was down 1.7 percent in thin trade.

President under pressure

The governor’s suspicion of massive fraud at the heart of one of the world’s most opaque national oil companies has brought him into conflict with the administration of President Jonathan a year ahead of elections. Jonathan was already under pressure because of a failure to quell an increasingly violent Islamist insurgency in the north.

“This is very worrying for the central bank’s independence, and it creates uncertainty about future monetary policy direction,” said Melisaa Verreyne, an Economist at NKC Economists in Cape Town.

The governor made a name for himself two months into the job when he engineered a rescue of nine Nigerian banks in the wake of a financial crisis that nearly caused a wave of bankrupcies. He bailed them out and forced out seven of their chief executives.

In doing so, he made a rare example of some of the country’s most powerful people. Critics said he was getting too big for his boots when last year he began using his bi-monthly monetary policy committee meetings to lampoon the government for reckless spending.

Yet his aristocratic lineage - he is heir apparent to the throne of Kano, traditionally one of West Africa’s most powerful Islamic caliphates, with a history going back to medieval times - had made him seem untouchable.

However, his exposure of what he said was severe malpractice at the state oil company spooked debt investors worried about government squandering of oil revenues during election cycles. Sanusi says graft is slashing forex reserves needed to support the naira.

The biggest gap in accounting is for $8.5 billion the NNPC says it retained from revenues during the 19-month period to cover subsidies it was owed on importing gasoline and kerosene.

Sanusi also says some of the $6 billion that the NNPC’s producing arm, NPDC, earned during the period should have been submitted to government accounts. Instead, he says, it has been funnelled into private hands through special deals given to oil companies.

NPDC denies this.

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