E-Financial
Reps Say Banks Evade Taxes in Billions
House of Representatives Committee on Finance, probing tax remittances, tax assessments and payments by banks, has accused some Nigerian banks of inflating their operating costs to reduce their taxes.
The lawmakers said that the banks are making false declarations and distorting information in attempt to mislead or confuse the Committee as balances reported in the published audited accounts of some of them showed huge variation with the figures submitted to the committee.
Abdulmumin Jibrin, Committee chairman said that his committee found out that data submitted to the CBN in the banks’ monthly returns on the same issues were different from what they presented the Committee for investigation.
According to Jibrin Committee was not making unsubstantiated comments, as the documents submitted by the banks were analysed with capacity support from the United Kingdom’s Department for International and Development (DFID), National Assembly Budget and Research Office (NABRO) and reputable professionals in the industry in conducting the investigations.
“Preliminary findings show a poor quality of returns by the banks, discrepancies in data submitted, outright refusal to present documentary evidence, blanket violations of existing laws, self exemption from existing rules, false declaration, manipulation and distortion of information among others” Jibrin added
The Committee chairman said that “These despicable acts of gross misconduct clearly depict the unscrupulous and roguish character of some banks and their Chief Executive Officers. For the Committee on Finance, this is unacceptable.
“For instance, balances reported in the published audited accounts of some banks show huge variance with the figures submitted to the Committee. The data submitted to the CBN in their monthly returns on the same issues were found to be different from what was tendered before the Committee.
“Even more embarrassing are the inconsistencies and huge variances in some data provided in different pages of documents submitted, thus leaving the committee to conclude that many banks blatantly engage in the creative accounting technique of inflating their operating costs to reduce their exposure to taxes.
“Furthermore, some banks have also created exemption rules for themselves in total disregard for the provisions of extant tax laws, particularly violations of the stamp duty, withholding tax and VAT acts.
“Some chief executives deliberately refused to sign the templates, obviously evading presentation of the documents under oath, in line with legislative procedure. Similarly, key information and data were omitted.
“Such data include details of staff PAYE and utilities with tax implications, etc. There are also many cases of late remittances or outright failure to remit money collected on behalf of government.
“Generally, returns made so far by the banks are incomplete, as the order of presentation was contrary to the guidelines provided in the template. Clearly, this is aimed at misleading the committee.
“Documentary evidence requested was also provided in a haphazard manner.”
According to the committee Chairman, of the 21 banks under scrutiny, only six have supplied information requested, though with certain queries to answer.
On the other hand, he said against banks’ tradition of attention to details, 15 banks suddenly found it convenient to provide poor and incomplete documentation.
“It is obvious that over the years, government has lost billions of naira in fraudulent and underhand dealings corruptly designed by some banks to evade tax.
“This is in addition to being massively and callously shortchanged by banks saddled with the responsibility of collecting and remitting taxes,” he noted.
The committee chairman said it should be of concern to Nigerians that the government continues the yearly ritual of domestic borrowing to balance its budget deficit while the deposit banks continue to manipulate the situation to the detriment of the private and real sectors.
His words: “This domestic borrowing has become a bazaar for many banks, which provide such funds at outrageous interest rates and care less about the implication to the private and real sector, both of which continue to struggle to get the crumbs at a very high cost.
“Domestic borrowing by government has denied the private sector access to affordable funds to grow their businesses and in the process generate employment and create wealth.
“Yet again, some reprobate banks are involved in the criminal act of converting the huge funds in dormant accounts into profits, even with known and accessible next of kin.
“Why should they not pay their taxes in full and remit in full and promptly what they collect on behalf of government?”.
Jibrin said at the end of the investigation, the committee intends to examine various extant tax laws, introduce new clauses or make amendments where necessary to strengthen the country’s tax system and block leakages.
“Chief executives of such Banks must sign the templates and complete their outstanding checklists within 48 hours to set the stage for the last round of engagement between the Committee and the banks,” he said, adding: Between September 23 and 27, the chief executive o fficers of the banks must appear in person to defend their templates in a technical session before the committee.”
Stakeholders in the banking and financial ecosystem, yesterday, decried the surge in cyber fraud as Deposit Money Banks (DMBs) lost N10 billion in the second quarter of 2023, representing almost 300 per cent year-on-year compared to the previous year.
At a Mastercard forum convened to tackle fraud and cybersecurity threats in the financial sector, Kari Tukur, vice president, Customer Solutions Centre, East and West Africa at Mastercard, said despite the massive awareness and innovations aimed at combating cybersecurity, the amount lost last year by DBMs was “staggering”.
She said, “With Nigeria’s rapidly growing economic expansion, we are starting to see an increase in the adoption of digital financial services, and the financial landscape is also evolving at an astronomical speed.
“What was staggering for me was in spite of the huge investment around innovation, funding in the cyber space, DBMs lost almost N10bn in Q2 last year, and that was almost 300 per cent growth year-on-year when compared to the previous year.”
She noted that there was the need for collaboration among stakeholders “to combat this rising sophistication of cyber security threat.”
Tukur further stated that Mastercard was deeply committed to cyber security and fraud prevention within the payment industry, disclosing that the company invested $250m “to assist small businesses in addressing their cyber security needs.”
She disclosed that Mastercard payment portals incorporated multiple layers of security such as tokenisation technology, encryption and biometrical to stay ahead of cyber attackers.
She added that, “The sector continues to struggle with the aforementioned challenges, necessitating vigilance, proactive action and comprehensive security strategy, and Mastercard remains committed to providing safe, secure and seamless payment services and experiences for our partners and customers in Nigeria and beyond.”
Celestina Appeal, chairman, Committee of e-Business Industry Heads (CeBIH), stated that the total loss to the banking industry in the last couple of years totalled hundreds of billions of naira while Nigeria’s Consumer Awareness and Financial Enlightenment Initiative had projected a $6trn loss by 2030 to cybercrime within and outside Nigeria.
Represented by Mr Temitope Onibaniyi, secretary of the committee, she stated that the committee was ever-willing to collaborate with industry stakeholders to fight against the perpetrators who “constantly rob banks and other stakeholders in the payments industry of their hard-earned money.”
She said the need for collaboration could not be overemphasised as no individual organisation was immune to cyber security attacks.
President Bola Tinubu has approved the appointment of some Nigerian professionals to the Board of the Securities and Exchange Commission (SEC).
This is contained in a statement issued by Ajuri Ngelale, special adviser to the President on Media and Publicity.
Tinubu appointed Mr. Mairiga Aliyu Katuka as the Chairman of the board of SEC, while Mr. Emomotimi Agama has been appointed as the Director-General of the board.
The president also appointed Frana Chukwuogor as Executive Commissioner (Legal and Enforcement) of the board.
Tinubu further appointed Mr. Bola Ajomale as the Executive Commissioner (Operations) of the board, while Mrs. Samiya Hassan Usman is the Executive Commissioner (Corporate Services) of the board.
Also appointed into the board are Mr. Lekan Belo as Non-Executive Commissioner and Mr. Kasimu Garba Kurfi as Non-Executive Commissioner.
According to Ngelale, the president anticipated that “all members of the Board of this critical commission will bring to bear their wealth of experience and competence in advancing the commission’s core mandate of developing and regulating a capital market that is dynamic, fair, transparent, and efficient, to bolster investor confidence and contribute immeasurably to the nation’s economic development.”
Ecobank has announced the successful repayment of its $500 million five-year Eurobond issued in 2019. According to a statement filed on the Nigerian Exchange Limited (NGX), the Eurobond garnered considerable interest from a diverse range of global investors, including long-term development partners such as FMO and Proparco, who served as anchor investors.
Commenting on this achievement, Ecobank Group Financial Officer, Ayo Adepoju, said: “The bond was listed on the main market of the London Stock Exchange with a coupon rate of 9.5 per cent. The principal and interest repayment, totalling $524 million, was distributed to bondholders through the transaction agent on the bond maturity date of April 18, 2024.
“This inaugural bond we are retiring today was critical in introducing our firm to a wider array of global investors and contributed to the increased visibility of our brand in the capital markets.”
Against the backdrop of challenges posed by the global operating environment, including disruptions in the world supply chain and financial markets, Adepoju highlighted the Group’s resilience. He cited strong liquidity, a robust balance sheet, and a solid leadership team as key factors enabling Ecobank’s success.
He added that the successful repayment of the Eurobond underscores Ecobank’s commitment to financial stability and investor confidence, positioning the firm for continued growth and success in the global market.
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