FG reveals why it opted for out of court settlement in suit with 7 banks over TSA
The Accountant General of the Federation (AGF), Idris Ahmed, has given a graphic explanation on why the Federal Government, after taking seven commercial banks to court over breach of provisions of Treasury Single Account (TSA), made a U-Turn to seek for out of court settlement.
In an interview during a recent workshop in Abuja on ‘Prospects and challenges of TSA’, Ahmed said government considered withdrawing the matter from court to avoid heating up the financial system which has been already at breaking limits due to recession and forex crisis.
According to him, “Sometimes, it is better to manage systems like this particularly when we are in a recession because it would overheat the system and create some negative things on the other angle”.
“The most important thing is that the monies are under our watch and government is doing all it takes to take its money without jeopardizing the financial system and that I think informed the decision of government to treat the matter out of court.
Continuing, the AGF averred that “I think it’s a good thing. The economy needs to come back to life fully, no intention from any circle of government to strangulate the economy further. Government is doing all it takes to come out of recession and we must be seeing some of these issues in this light”.
But giving further insights on observed sharp practices and real breaches of the policy by some banks, Ahmed said “When TSA was rolled out as a policy, obviously as the driver, we took all mechanisms, did all we could to enlighten and sensitise the people because there are different dimensions to it”.
“One; there were those that were directly affected – the Deposit Money Banks and financial institutions and two, the agency, equally affected. Three, members of the public and what we did was to embark on massive awareness creation and engagement and dialogue.
“This dialogue involved the Central Bank of Nigeria, MDAs and others. The purpose of the dialogue was to let them know that this was a policy that government had rolled out, there was no going back and so we needed to see how we were all affected.
“So all stakeholders vented out their feelings and from what they told us, we discovered that most of the apprehension were mere perceptions. TSA simply meant moving accounts from Deposit Money Banks to CBN, and ordinarily, one should seem to be more secured with CBN than commercial banks with our experiences with failure of commercial banks. Has CBN ever failed? I am not casting aspersion on commercial banks; failures had happened and we cannot run away from that fact.
He noted that as government operated for the first few months of the scheme, “there were people who refused to come within the time specified; they were waiting to see whether to proceed or remain with commercial banks”.
“We now put a ceiling and massively, through the means of technology, we transferred all the monies onto TSA. Those who came voluntarily during the timeframe were okayed and had even started operating but they were few.
“Many that refused and who were affected by that movement of funds woke up one day and couldn’t see their monies in the commercial banks. The first question they asked was where were our monies? The commercial banks told them, CBN took your money into TSA.
”Then they asked where they would go and they stared rushing into this office. This office was filled like Millennium Park on Christmas Day. CBN was directed by government to move the money and it was moved.
‘So we went on reconciliation because some said we have N2m; others N100m and some N1bn. So we have to trace it and confirm if it is their money and the first step is for the agencies to bring evidence in form of statements from commercial banks. At what point was your money taken? How much was taken and on which day?
He revealed that the development further compounded operations, saying that was when they started shouting that TSA has come to kill the financial system and that they cannot make payment.
In his submission, the AGF maintained that “even one year after implementation of TSA, we still discovered monies hidden. So it’s not surprising. We are not CBN and certainly we are not God to know this is where something is hidden. That responsibility was vested on the agencies themselves but we have our own way”.
“We kept writing to the banks telling them that if they know of any public funds lying with them, they should disclose it and that was why they were able to take those banks to court in the first instance.
“It means they were deliberately denying this information, hiding money for reasons best known to them. But the most important thing is that monies have been discovered and they are now in the custody of government,” the AGF, Ahmed averred.
Business Hilights recalls that on August 9, the federal High Court in Lagos on the demand of the Federal Government granted federal government’s application seeking to withdraw its suit against seven banks accused of violating the Treasury Single Account (TSA) policy. The seven banks are Diamond Bank, United Bank for Africa (UBA), First Bank, Skye Bank, Fidelity Bank, Sterling Bank and the defunct Keystone Bank (now Heritage Bank).
The Federal Government had alleged that the banks connived with some government agencies to illegally conceal 793.2 million dollars meant to have been transferred to the TSA domiciled in the Central Bank of Nigeria (CBN). The government had in the suit alleged that 367.4 milliion dollars was illegally hidden by three government agencies in UBA, while 41 million dollars was illegally kept in a NAPIMS fixed deposit account with Skye Bank. Another 277.9 million dollars was allegedly hidden in Diamond Bank, 18.9 million dollars in First Bank, 24.5 million dollars in Fidelity Bank, 17 million dollars in Keystone Bank and 46.5 million dollars was kept in Sterling Bank.
The funds were alleged to be revenues, donations, transfers, refunds, grants, taxes, fees, dues, tariffs etc accruable to the Federal Government from different ministries, departments, parastatal agencies. Justice Chuka Obiozor had on July 20 granted an interim order in favour of the Federal Government, directing that the seven banks should temporarily remit the funds to the TSA.
The court then adjourned until Aug. 8 for the banks to show cause why the interim order should not be made permanent.
But at resumed proceedings, the Counsel to the Federal Government, Prof. Yemi Akinseye-George (SAN), said he had been instructed by the Attorney-General of the Federation to discontinue the case in the “overall interest of the public”. The application was granted, but with costs awarded to banks.
