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23November2014

 

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Corruption, Double Speak & Banking of Public Funds!

The recognition of the current abysmal depth of corruption in public office is probably shared by discerning citizens of this country; consequently, some well-meaning Nigerians have prescribed death penalty for anyone convicted of treasury looting!  The obvious provocation of the recent slap-on-the-wrist punishment to a civil servant for conspiring to steal over N27bn of Police Pension Fund may have prompted the fresh call for the ultimate penalty!

In reality, it will probably be impossible to find anyone, who has served in any Legislature in any part of the country who will come away with clean hands.  The allegation and audio-recorded evidence relating to the bribery of the House of Representatives’ 'Mr. Integrity', himself, by an oil magnate, may have destroyed any vestige of hope of altruism or patriotism in our lawmakers!

The Legislators are therefore unlikely to enact laws that would prescribe harsh prison terms or the death penalty for treasury looters!

Incidentally, death penalty for corruption in some Eastern bloc countries, has not stopped top public servants from dipping their hands in the public till.  The lesson, therefore, is that we should look elsewhere for a more practical solution to corruption. 

Thus, rather than the public fixation on the measure of punishment, it would probably be more sensible for us to identify and reduce existing opportunities that facilitate corruption in public office.

In response to this challenge, we published an article with the above title in April 2008 (see http://www.lesleba.com/070408.doc); the following excerpts from that piece still remain relevant if we truly wish to reduce the level of corruption in Nigeria.

"Many years from now, historians may conclude that the most obvious defining feature of public servants in the first nine years of the third Republic was the art of ‘double speak’ or in plain language, the penchant for insincerity and deception.  Today most Nigerians are no longer in doubt that whenever government expresses its intentions to pursue noble ideals, the people would instead expect the direct converse of such propaganda. 

"For example, former President Obasanjo promised steady and adequate power supply within 2 – 3 years of coming to office, but regrettably, even after an alleged sum of $10-16bn had been expended, power generation and distribution capacity remained less than the 3000MW inherited when he came to power. 

"Furthermore, Obasanjo was, initially, totally opposed to any form of constitutional review and anyone who supported such reform was labelled as renegade.  The nation, however, witnessed a total somersault when the same President suddenly became the senior apostle for constitutional amendment so long as it accommodated the introduction of a third term in office for the incumbent!

"Obasanjo’s administration also paid lip service to adherence to rule of law….  In reality, the former President rode rough shod over any law or judgment that was not in consonance with his own desires…. 

"The prevailing level of hypocrisy is probably also, most glaring in the area of government’s declared war on corruption.  The series of revelations of the sordid and unpatriotic deals in the power sector; the mal-administration of the Petroleum Trust Fund; the huge fraud associated with COJA, the sale of our undervalued common-wealth to cronies and party stalwarts; the arbitrariness in the composition and management of the Police Equipment Fund, the illegal withdrawals from the equally illegally consolidated excess crude account; the list of malfeasance is open-ended, and ultimately, the trust Nigerians had in public office holders was woefully betrayed and the forebearance of our people became countenanced as foolishness.

"Much against the assurances of government, our economic situation continued to deteriorate despite the exalted capacity of Okonjo Iweala and Soludo at our Finance Ministry, and Central Bank respectively.

"In focused economies, worldwide, the Central Bank is the prime custodian of the nation’s wealth and treasury; therefore, the Central Bank is the banker to government!

"Thus, if our government and its agencies do what is expedient and  best practice by placing its cash deposits with CBN, it would, for instance, have been impossible or at worst very difficult for the Ministry of Health to disregard the instruction of President Obasanjo to MDAs to return the unspent portion of their 2007 budget to the treasury, as the CBN would simply have frozen the balances in the Ministry’s  account immediately on receipt of Mr. President’s directive. 

"In the above event, financial audit of disbursements by MDAs would not only be facilitated, but also become more transparent, as the abuse of the convenient instrument of irrevocable standing payment order, ISPO – a system which facilitates treasury looting with conscious collaboration of commercial banks, will become less prolific.  It would also be impossible, as often claimed, for public officers to collect up front interest on MDAs deposits with commercial banks!

"Equally important is the beneficial impact on the economy if CBN performs its role as banker to the three tiers of government; similarly, the perennial problem of excess liquidity, which is induced by the extended capacity of banks to injuriously expand credit whenever monthly allocations to the three-tiers of government are all paid in naira, will be assuaged, as less naira deposits will become available to instigate the usual scourge of a burdensome cash surplus in the system.” 

Consequently, it may be more realistic to tackle the problem of corruption by reducing the stimulus to the burdensome plague of excess cash in the system.  The church rat, for example, remains lean and impoverished because there is not much to eat, while those rats in a bakery will become obese because of inevitable excess food in their habitat!

We have ceaselessly indicted the CBN's substitution of naira allocations for constitutionally distributable dollar revenue, as the major instigation of ever-present cash surfeit, and ultimately, also for the expansion of the pool of slush funds; thus, the opportunities for blatant treasury looting would be significantly minimized, when our dollar-derived revenue is shared with the instrument of dollar certificates to constitutional beneficiaries.  This system will undoubtedly eliminate the unending naira ‘Tsunami’ in the system

"In the same vein, the CBN and Debt Management Office would have no excuse to condone unnecessary increase in the Nation’s indebtedness by borrowing back from the banks, with oppressive double-digit interest rates, funds, which were earlier deposited as naira allocations to the three tiers of the government by the same CBN!"

In other words, CBN's monopoly of the foreign exchange market is probably the major feed-mill for corruption, and also responsible for our increasing national debt profile.  

 

By Henry Boyo