The Office of the Auditor-General of the Federation (AGF) has accused the Central Bank of Nigeria, of re-circulating dirty and unfit banknotes valued at N29.77 billion in violation of the apex bank’s own Clean Note Policy.
The allegation is contained in the newly released Auditor-General’s Annual Report on Non-Compliance and Internal Control Weaknesses in MDAs for the year ended December 31, 2022, which detailed how several CBN branches issued out banknotes already classified as “Counted Audited Dirty”, a category of notes formally processed and certified as unfit for circulation.
The said offence was committed under the leadership of the former Governor, Godwin Emefiele
Details of the report show that the CBN released the condemned notes across Abuja, Lagos, Bauchi and Jos branches between April and December 2022, with the Abuja branch accounting for the bulk of the re-issued notes, with N28.615 billion released between October and December 2022.
The Lagos branch issued N970 million in December 2022, Bauchi released N30 million in April of the same year, while the Jos branch issued N50 million and N100 million on May 16 and May 27, 2022, respectively.
“Audit observed that Counted Audited Dirty banknotes amounting to N29,765,000,000.00 were re-circulated into the system by the Central Bank of Nigeria,”the report read.
It pointed out that the action contravenes the Clean Note Policy Version 0.1 (2018), which states that only authenticated fit notes may be issued into circulation, while unfit notes must not be released by the CBN or commercial banks.
The audit team attributed the violation to weaknesses in the CBN’s internal control systems. It warned that the irregular release of dirty notes could expose the country to reputational damage and reduce note durability.
Meanwhile, the CBN, in its defence, said in the case of the Abuja branch, it had to do with the COVID-19 pandemic which disrupted operations, and that the scarcity of cash at the time forced the bank to supply dirty notes to “meet cash shortfalls.”
The Bauchi branch denied issuing unfit notes, while the Jos branch said the release was necessitated by military cash demands during periods of heightened insecurity. The Lagos branch attributed its action to increased cash demand during the Christmas season.
However, the Auditor-General rejected all explanations, describing them as “not satisfactory.”
The report insisted that the findings would remain valid until the CBN implemented corrective measures.
It recommended that the Governor of the CBN be summoned by the Public Accounts Committees of the National Assembly to justify the breaches. Where such justification fails, it advises the application of sanctions under the Financial Regulations, which prescribe penalties for gross misconduct by public officials.
The audit document also revealed the delayed destruction of unfit notes, pointing out that 997 boxes of N10 notes valued at N99.7 million, declared unfit since November 2021, were still in the vault as of October 2023.
Also, 695 boxes of N500 notes valued at N3.475bn, processed between October and November 2022, were yet to be destroyed. In total, N3.57bn in condemned notes had accumulated due to delays in the briquetting and disposal processes.
The audit warned that the delay created risks of pilferage, loss of public funds, and inefficiency in the bank’s currency management system. The CBN responded that briquetting activities had started and destruction of the notes was ongoing, but auditors again rejected the explanation and maintained their findings.
