Nigeria caught up in Ksh 4 billion currency fraud scam

Six officials from the Central Bank of Nigeria together with 16 commercial bank staff were taken to court after an alleged currency fraud scheme in which 8 billion Naira equivalent to four billion Kenyan shillings worth of bank notes intended for destruction was stolen and re-circulated.

According to Nigeria’s anti-corruption body, economic and financial crimes commission (EFCC), the six central bank officials and 16 commercial bank staff re-circulated defaced and mutilated currency notes intended for destruction by substituting it with newspapers neatly cut into naira size.

The alleged fraud was uncovered last September when a routine audit revealed irregularities in the branch at the southwestern city of Ibadan.

Analysts now say the case shows the deep rooted challenge of corruption in a country where it is endemic in so many industries.

According to Tunde Obrimah, a financial analyst in Nigeria, this has implications for the economy since there is more money in circulation and when that happens, interbank rates go up; lending rates go up depending on how long the impact takes.

Officials from the Central Bank that regularly withdraws old and torn notes from circulation to replace them with new ones however say that the alleged scheme had no impact on money supply or inflation, which has hovered around 8.7 percent since April but it could dent the reputation of the bank.

This case came days after President Muhammadu Buhari was sworn in as leader of Africa’s biggest economy and top oil exporter.