23 October 2016
The currency scam was partly blamed for the failure of Nigeria's policy makers to check inflationary pressure for years. Photo: Bloomberg
The currency scam was partly blamed for the failure of Nigeria's policy makers to check inflationary pressure for years. Photo: Bloomberg

Nigeria central bankers charged in US$40 mln currency scam

Six Nigerian central bank officials have been charged with fraud in an 8 billion naira (US$40.2 million) currency “scam”, Bloomberg News reported, citing a statement from the country’s Economic and Financial Crimes Commission.

Sixteen commercial bankers were also charged with conspiring with regional executives of the Central Bank of Nigeria in a “mega scam involving the theft and recirculation of defaced and mutilated currencies”, the Abuja-based EFCC said.

The defendants will appear at the Federal High Court in the southwest city of Ibadan from Tuesday to June 4.

Instead of destroying defaced local currency, the officials substituted it with newspaper cut into the size of naira notes, the EFCC said. The fraud was partly to blame for the failure of monetary policy to check inflationary pressure for years, according to the commission.

The “systematic scheme” had been running for several years and “middle-level officers” were either dismissed or placed on indefinite suspension in October and handed over to the EFCC, the central bank said in a separate statement on its website.

A national audit at the central bank’s 37 branches found it was an “isolated scheme” in the southwestern city of Ibadan.

President Muhammadu Buhari, a 72-year-old former military ruler who was inaugurated on May 29 after defeating Goodluck Jonathan in March elections, has made battling endemic corruption one of his administration’s top priorities.

The EFCC said the scam was exposed on Nov. 3 through a petition alleging more than 6.6 billion naira was diverted and recycled by “light-fingered top executives of the CBN at the Ibadan branch”.

The suspects, who were responsible for taking mutilated notes in exchange for fresh cash equivalent to the amount deposited, abused their positions, the EFCC said. Investigations found boxes that should have contained bundles of naira notes filled with newspaper instead.

“This practice, known as interleafing, basically labels a box with a higher value than its true content,” the central bank said. “The bank will continue to collaborate with the EFCC to ensure that affected CBN staff, as well as their accomplices in some commercial banks, are brought to justice.”

The naira has fallen 7.4 percent this year, according to Bloomberg.

Corruption has continually dogged Nigeria’s institutions. Africa’s largest economy is ranked 136th out of 175 countries in Transparency International’s 2014 Corruption Perceptions Index, in joint place with Russia and Iran, the report said.

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