House of Representatives and the Central Bank of Nigeria, Governor Lamido Sanusi, on Monday disagreed over the power of the bank to authorise expenditure without recourse to the National Assembly.
Members of the House Committee on Banking and Currency grilled Sanusi for hours on the matter in Abuja.
However, Sanusi insisted that the bank’s spending and donations to organisations and individuals had a legal backing under the CBN Act.
The committee, headed by Mr. Chukwudi Onyeriri, was mandated by the House to conduct a public hearing into the “expenditure of public funds by the CBN and AMCON”.
The House had described some of the actions of the CBN, including the bail out to banks, industries and donation of funds to individuals and organisations as “abuse of funds”.
The CBN, through the Asset Management Company of Nigeria, rescued troubled banks in 2009 with N620bn.
Financial bailout also went to the power sector, aviation, the Bank of Industry and Small and Medium Term Enterprises.
The CBN also donated N100m and N50m to the Kano and Madalla bomb blast victims respectively earlier in the year.
Defending the decisions, Sanusi said up to 4, 000 companies had received financial support from the apex bank.
He said while the donations to individuals were covered by the CBN’s policy on Corporate Social Responsibility, the bailout to companies were “loans and not expenditure”.
He added, “All the interventions are loans and they will be paid back with interests; indeed, they have been paid back.
“We got our power from Section 42 (2) of the CBN Act, which says we can lend money to any bank in crisis.
“The parliament gave us the power; a loan is not an expenditure and the CBN has powers to make loans.”
Sanusi, who defended the donations to bomb blast victims and other CSR spending by the bank, claimed that the CBN board was empowered to approve its expenditure without the input of the National Assembly.
“The Constitution empowered the National Assembly to pass laws to legalise what the CBN does through its Act,” he argued.
But lawmakers led by the Minority Leader of the House, Mr. Femi Gbajabiamila, disagreed with Sanusi, accusing him of violating constitutional provisions.
Gbajabiamila, for instance, told Sanusi that all expenditure by any agency of government was legal to the extent that it was appropriated by the National Assembly.
According to him, the autonomy that the CBN claims to have does not “preclude the bank from accountability.”
He said, “The CBN simply creates intervention funds without the approval of the National Assembly.
“Besides, the bank’s policy on donations says clearly that it can only donate to organisations and professional bodies, not individuals or state governments.
Gbajabiamila recalled that during the global economic crisis, the US Congress had to pass two legislation in succession to empower the Federal Reserve Bank to provide bailout funds to companies.
“But, in the case of Nigeria, the CBN has acquired the power of appropriation and continues to dish out intervention funds without seeking the approval of the legislature”, he argued.
However, Sanusi replied that what the US Congress did was similar to the passage of the AMCON Act by the National Assembly, thereby making AMCON the legal instrument for intervening in the affected companies.
The CBN governor appealed to the committee to invite the beneficiaries of the bailout funds to explain how the money assisted in keeping them in business till date.
The committee will submit the report of its findings to the House at the end of the investigative hearing.