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That former CBN’s Dep. Gov’s hint on $7Bn ‘dash’ to 14 banks in 2006

Poser: Was the $7bn taxpayers’ fund a bailout really of a surreptitious attempt by then CBN leadership to channel parts of Nigeria’s foreign reserves to select Nigerian banks for management which later turned ‘dash’ for the banks? 

Let’s start like this: On February 11, 2019, cerebral economist, late Mr Henry Boyo wrote in PUNCH, giving a rather shocking preamble to the attempted investigation by the SPIP, saying “The subject of the narrative, in this column, last week, was the $7bn which Festus Odoko, a former Central Bank of Nigeria Corporate Affairs Director, confirmed had been deposited with 14 Nigerian banks in October 2006.”

“It is not clear how many banks, actually, succeeded in raising the mandatory capital base of N25bn, and the additional N35bn steep threshold, required to manage part of Nigeria’s foreign reserves. Nevertheless, on hindsight, the CBN might have quietly dropped this clearly ambitious requirement so as to pursue its declared agenda.

“Regrettably, despite several promptings in repeat publications of the above title by this writer since 2006, the CBN management remained inexplicably, and taciturn to any request to confirm the status of the $7bn placed with Nigerian banks, without collateral, equity participation or profitable return after 13 years!

Buhari Obla better
Former chairman of the Special Investigation Panel for the Recovery of Public Property (SPIP), Okoi Obono-Obla

Recall that the Chairman of the Special Presidential Panel for Recovery of Public Property, Mr. Okoi Obono-Obla, noted in a NAN report, in Abuja, on September 7, 2018, that these banks have not repaid the $7bn to government’s treasury “after 13 years.” Curiously, according to him, “when we enquired from the CBN the state of that money, the banks told us that the money was ‘dashed’ to them.”

Late Boyo made it clear that consequently, upon the presidential panel’s request, the Economic Financial Crimes Commission ultimately invited Dr. Obadiah Mailafia, a former CBN Deputy Governor, to shed light on the controversial $7bn ‘gift’ to banks, when Chukwuma Soludo was the CBN Governor in 2006. It is a story of how hapless Nigerians may have been insensitively betrayed when the CBN dashed $7bn of scarce forex to 14 banks, even when the apex bank and the same government were already neck deep in debt to these bankers.”

Former CBn Dep Gov., Dr Obadiah Mailafia


Below is Mailafia’s testimony, which was published in BusinessDay edition of 24/1/2019. Please read on.

“On request from the Federal Government of Nigeria, I was seconded from the African Development Bank Group as Deputy Governor of the CBN in May 2005. I left a highly paid and pensionable post as Chief Economist, Planning and Budgeting, to serve at the CBN at a much lower salary. I have always believed that serving one’s country is one of the noblest tasks anyone could be called upon to do.



In early October of 2006, the then Governor of the CBN, Prof. Chukwuma Soludo, brought a proposal to the Board to the effect that he wanted 14 of our commercial banks to take part in the management of our external reserves in partnership with foreign banking associates. He explained that it was rather unfair that only external custodians such as J. P. Morgan, Goldman Sachs and others were having a piece of the action. At the time, we were feeling rather triumphal. The banking reforms had been a success. We had managed to reach a deal with the Paris Club of international creditors. The economy was booming. Our foreign reserves had grown from a lowly US$10bn in 2004 to an impressive US$38bn in 2006… We had just launched the FSS2020 project which aimed to position our country as the financial hub of the continent by 2020.

As I recall, there was a lively debate on the matter. On the face of it, it seemed a good idea to allow our banks to have experience of managing our external reserves as a means of socialisation into the complex world of financial engineering and global financial markets. I had a modicum of doubt, but, alas, could not voice it. The professor was a Mister Know-All with an ego of the Order of Lucifer. The Curse of Mephistopheles.

CBN Soludo C
Former Governor of the CBN, Prof Chukwuma Charles Soludo

Moreover, he always brandished his closeness with Aso Villa to neutralise any dissent. There was a whispering campaign about me being ‘the black sheep’ that would not play ball…


At the end of the day, the majority carried the day with regard to local participation in foreign reserves management. I must emphasise, for the avoidance of doubt, that at no stage did anyone get even the remotest impression that it was meant to be a loan, bailout or forbearance.

Obadiah Mailafia added that “Of course, it would be another matter entirely if the banks, as an afterthought, after more than a decade, would now prefer to give a different interpretation to that financial deal. This should be confirmed from the archival records of the CBN. The banks had a mandate as fund managers of the US$7bn that was distributed to them; of which principal and interest were to be returned within the agreed tenor. But I was not privy to those details.

Still on this matter, few years ago, South South Reawakening Group (SSRG) issued a statement charging the CBN to investigate and respond to claims that the seven billion dollars ($7bn) bailout fund to commercial banks in October 2006 is “free money”.

A statement signed by the convener, Joseph Ambakederimo, and issued to newsmen in Warri, Delta State, was never responded to by the CBN till today.

Fact check showed that Ambakederimo demanded that all information regarding the transaction be made available to Nigerians in line with the Freedom of Information Act, adding that the fund, which belongs to the three tiers of government, could be deployed for infrastructural development of the nation.

Describing as a “rape of the Nigerian state” reports that the then CBN Board of Directors resolved that the bailout money to the banks was “not repayable”, the statement emphasised that the banks are private establishments with the aim of making profits.

Hence the $7 billion and its dividends over the years should be recovered and “returned to taxpayers”.

The statement said: “We have come to the conclusion that the $7bn bailout funds given to banks in October 2006 was a grand scale fraud primarily designed to deny the Nigerian people of good life and happiness.

Banks in Nigeria
Banks in Nigeria

“It is safe to say that this could be the first of its kind we have seen where people in the private sector collude with people in the public sector to deliberately engage in schemes that would take away so much money and deprive the Nigerian people good infrastructure these funds would have provided for them

“If what we are hearing is true that the funds are a “dash”, “not repayable” to the banks who are purely private entities that were set up by private people to make profit that would pay for their holidays in the Bahamas and Acapulco, then it is nothing but a rape of the Nigerian state.

“The claim that the then board of directors of the CBN through a resolution passed and gave out such an amount of money free of charge sounds very insulting and nonsensical and a joke taken too far.

“The conduct of those who superintended over this mess breached professional standards, their duties, responsibilities, discreditable conduct, integrity, authority, respect and courtesy. It is an abuse of position for personal gains.

“It is for this singular reason that the SSRG is working with the special panel on recovery of public property to ensure that we unravel the mystery surrounding this issue.

“Our mandate would be to unravel the many unanswered questions. Those who authorised the resolution of ‘Dashing $7bn to private entities,’ what were the conditions attached to the transaction, the memorandum of understanding between the CBN and the banks which was deliberately executed in secrecy?” the statement said.