Currency Trafficking, BDCs & CBN
By Les Leba
A report in the October 2nd edition of the Vanguard newspaper confirmed that two men are now helping Economic and Financial Crimes Commission (EFCC) operatives with information on how they came about $986,000 found on them at Lagos and Kano International airports respectively.
The duo, Nkem Sebastian and Alhaji Tasiu Kura, were apparently arrested in separate operations as they were about to board their flights to Dubai. Alhaji Kura was nabbed with the sum of $700,000 in Kano while Sebastian was arrested with $286,000 in Lagos.
The two arrests, according to the Vanguard report, came barely 48 hours after EFCC arrested 24-year-old Abubakar Tijani Sherif, whom EFCC described as a bulk money smuggler, with over $7 million at the Murtala Mohammed International Airport, Lagos, en route the United Arab Emirates.
In a related report, the EFCC noted that “globally, bulk cash smuggling is usually associated with proceeds of crime, where illegitimately earned funds are processed outside the banking system.”
Instructively, travellers leaving Nigeria are statutorily required to declare cash in excess of $10,000; however, under the provision of the Money Laundering Act, the onus is on the person making the declaration to explain the source of the excess cash and the reason for the export.
Incidentally, such arrests are not uncommon; for example, in December 2009, a Bank PHB Manager, Mrs. Emem Etuk, was apprehended at the airport with about $3 million, which she claimed was sourced from Bureau De Change (BDC); she was alleged to also be the account officer for Akwa Ibom State’s account with Bank PHB. Later in October 2010, a Nigerian family was also apprehended at a London airport with over £500,000.
In a statement on the 3rd of November 2010, the incumbent CBN Corporate Affairs Manager, Mohammed Abdulahi, noted that “CBN had been inundated with complaints from foreign countries that some Nigerian travellers indulge in cross border transportation of large sums of foreign currencies in cash, and that Nigerian Customs Service’s returns show that large amounts of up to $3 million cash had been taken out of Nigeria by individuals in single trips.” (See Business Punch 4/11/2010, pg. 15).
The more recent series of arrests confirm that currency smuggling and money laundering are still thriving businesses in Nigeria. However, such CBN sanctimonious posturing may just have been a subtle form of image laundering for the apex bank, whose misguided policies liberally fund the foreign exchange sources for currency traffickers, smugglers and money launderers.
The truth, of course, is that the huge sums of money trafficked would most probably have been purchased from various BDCs, to whom CBN regularly disburses hundreds of millions of dollars every month! Indeed, liberal market dollar supply was one of the policy support instruments demanded by the IMF and the London and Paris Credit Clubs before Nigeria’s controversial debt exit, which fleeced over $12bn from our tattered pockets in 2006, in the name of debt relief.
Our monetary authorities had cleverly put a positive spin on this IMF directive, by suggesting that such free dollar supply would reduce the existing huge gap between the official and the black market rates of exchange. Although the black market and the official rates are much closer, some analysts believe that the liberal supply of official dollars to BDCs for better exchange rate management may, in reality, be akin to smashing a cockroach on a glass table with a sledge hammer, when a less destructive repellant or insecticide could have been applied.
Incidentally, the difference between official and black market exchange rates continue to be between N5 and N10, a margin, which is still attractive enough to encourage underhand practices in the banks. In successfully run economies everywhere, it would be apocryphal for public sector dollars to be liberally sold to BDCs, whose cash flows are traditionally derived from the tourist market.
The above EFCC arrests suggest that BDCs may have graduated from merely meeting the retail requirements of travellers to becoming hard-core suppliers of foreign exchange to major money launderers and smugglers! In other words, CBN’s ill-advised liberal dollar allocations have become a supportive tool for national economic sabotage! For example, the near collapse of our industrial landscape is partly the result of porous inflow of contrabands from aggressive industrial economies.
Similarly, the motivation for money laundering and currency trafficking is facilitated by free access to public sector dollars made available to BDCs by CBN. Ultimately, adoption of IMF conditionality on liberal dollar supply to BDCs has evidently done much harm to the economy.
It remains inexplicable that IMF did not recommend that issue of multiple exchange rates, a weaker naira, inflation, non-productive economy can be more benignly resolved if CBN’s monopoly of the foreign exchange market is immediately dismantled.
SAVE THE NAIRA, SAVE NIGERIANS!!