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BREAKING: Waiting game as lawyers argue CBN’s compliance with S’Court verdict

The silence of the Central Bank of Nigeria (CBN) regarding the decision of the Supreme Court on the naira redesign policy, is raising a serious debate among lawyers on whether the judgment is binding on the apex bank as a non-party to the suit.

The Supreme Court had, on Friday, March 3, held that the old naira notes would remain legal tender until December 31. By the decision, the apex court nullified the order made by President Muhammadu Buhari-led Federal Government to use only the old N200 notes till April 10

Interestingly, CBN, the only body statutorily saddled with the responsibility of introducing monetary policies, was not joined as a party to the suit at the apex court, generating arguments on whether the decision of the court could be binding on it to enforce compliance.

A Senior Advocate of Nigeria (SAN), Terkura Douglas Pepe, argued that the apex bank must comply with the decision, since it is an agency of Federal Government. He said the judgment should be binding on Federal Government as a party to the suit, and so, by extension, binding on CBN.

The senior lawyer explained that the CBN Act and Banks and Other Financial Institutions Act (BOFIA) recognised CBN as an agency of FG, adding that the FG is its sole shareholder.

Mr. Douglas Ogbankwa, also a lawyer, argued that the judgment is binding, as CBN is an agent of a disclosed principal, which is the FG.

“The CBN is a creation of statutes as a Body Corporate that is an agent of the Federal Government in the formulation of government policy. Any order given against the Attorney General of the Federation (AGF) is binding on any related body that is a creation of a written law.

“The AGF is the chief law officer of the federation and he should be in the forefront of ensuring a seamless and expeditious obedience of the judgment of the Supreme Court. Judgments of courts are meant to be obeyed, as a society, which does not follow the rule of law, like fish out of water, will die.

“The law is both for the governed and the government, and it is in the interest of the government to obey court orders as it is usually the ultimate casualty in a state of breakdown of law and order,” he argued.

Also, in his view, an Abuja-based lawyer, Maliki Sylvanus, stated that CBN is bound by the decision despite not being a party to the suit.

He, however, explained that such binding decision is by the premise of inclusion, because it is a principle of law that no party should be bound by a decision of court where such party is not heard in the matter.

His words: “Generally speaking, no court of law has the jurisdiction to make a decision by way of an order in favour or against a party, who is not before it. This position of the law is rooted on the principle of fair hearing, which is constitutionally guaranteed.”

But Sylvanus pointed out that the apex court has the powers to make an order against a non-party before it.

“On this premise, CBN is bound by the decision of the apex court on the naira redesign, even if it was not a party before it. This principle of the law is the reason court injunctions are usually granted to restrain the privies of the parties before the court who themselves are not before the court .

However, Kenechukwu Maduka, also a lawyer, thinks differently. He believes that non-joinder of a party in a suit is of paramount importance on its enforceability. For a judgment to bind a party, such a person, he insists, must be a party to the action.

“Considering the relevant laws, especially CBN act section 1 (2) of CBN act, CBN is an independent body that has its own legal statutes.

“The fact that FG is its principal does not make CBN lose its legal personality. CBN, as an agency of FG, has its legal capacity/right and as a distinct person to sue and be sued on its own by law,” he argued.

Maduka, however, stated that since the Supreme Court, being the final court of the land, has decided the issue, it has no choice but to obey.

Meanwhile, Nigerians may endure the cash squeeze a little more, as procedural challenges threaten the speedy recirculation of old N500 and N1,000 notes still kept in CBN vaults across the country.

The higher and most-used denominations, reliable sources disclosed, would likely follow the path of mopped N200 notes, which were scarcely or never released by the apex bank despite President Buhari’s approval that it should be re-circulated on the heels of intense political horse-trading over the issue.

The eventuality would leave Nigerians trading with the few notes held by those who could not beat the deadline. This comes as The Guardian is reliably informed that much of the cash mopped by the apex bank is yet to be destroyed.

Cash destruction is typically at different regional headquarters across the country in the presence of security personnel. CBN has been quiet about the status of the old notes.

The Guardian gathered in Abuja last night that there won’t be any pronouncement by the CBN Governor, Godwin Emefiele, until President Buhari returns from Qatar.

A source said: “It is normal for the CBN governor to wait for the President for further directive on how to proceed since he got the buy-in of the President on the matter.”

When prodded further on why the governor could not call the President considering the importance of the matter, the source explained the reason such is inappropriate: “How can the governor pick his phone and call Mr President on a matter like this? That will smack of disrespect. The governor is a man of protocol and he is an African.

He won’t do such.

“However, it is a different matter if the President calls him and gives specific instruction on how to move forward. Where the matter is now, what is needed is a political solution. Governors are involved, political parties are involved and there are other interests in this matter. The more it stays unresolved, the more difficult it might be.”

According to sources, the Supreme Court judgment does not contemplate the procedure involved in recirculating currency initially packaged for disposal.

They said the apex bank would need to audit available cash, separate the mutilated note and sort the rest before mapping out distribution.

While the process, as revealed by sources, could take at least more than a week, The Guardian was informed that the first step is yet to be taken.

Within the regulatory institution, opinions are divided as to whether CBN would want to go through the rigorous process of re-introducing currency that could be mixed with worn-out notes rather than concentrating on scaling up circulation of the new notes.

“The old banknotes will eventually be phased out this year. If you consider the time and cost of bringing out the old notes, it makes sense to ask if it is worth the stress. Somebody may ask why not rather print more of the new naira. The decision would eventually be made, but it won’t be an easy one,” a source said.

The cash audit, it was disclosed, could expose some banks that would have been involved in over-declaration during the recent rush to beat the deadline.

A former assistant director at the CBN, Stanley Ukeje, confirmed that the responsibility is on banks to tell CBN the value of each box delivered. He added that fraudulent declaration would be expected as CBN officials would hardly have the time to confirm the declared amount.

“If a box is marked N400 million, the incentive to confirm might not be there. Banks also know that CBN might not be eager to confirm the value. That could add to the cost of the exercise, which invariably would also fuel fraudulent practices,” Ukeje explained.

A source close to CBN’s process told The Guardian that the apex would need to confirm the actual value of each of the boxes of cash kept at regional and branch offices before deciding on recirculation.

The source added that banks found wanting could face severe sanctions, which are part of the issues that would be sorted before a decision is taken on the fate of warehoused money.

As at yesterday, The Guardian learnt, no definite decision was made on whether recirculation is possible and how the process would kick-start. CBN has chosen to keep mute on the matter but individuals not authorised to speak were awaiting a situation report by the currency department.

Nigerians who are hard-pressed to access cash to get their lives going trooped to different banks to demand access to their savings. The cliché ‘there is no cash yet’ is all the majority could get from their bankers, who also bear the brunt of failed naira redesign.

Head of the operation in one of the old banks told our correspondent that the court ruling “cannot perform any magic” much as the President’s directive to go on with N200 could not. She revealed that most banks had returned the deposited funds to the regulator and can only pay customers when the former released what it keeps in its vaults.

“We are in the same country; we only provide intermediation service. We don’t print money. When people say banks are not paying, I ask them where they expect banks to source the money from,” another banker queried.

Across the country, individuals continue to groan over cash scarcity. In Lagos and some other cities, what used to be the respite (point-of-sale operators) have run out of cash and are currently unable to provide any succor. Where available, individuals pay as much as 30 per cent premium to get cash.

The situation is worst in rural communities. Those who spoke with The Guardian said they have not touched money for a week. Some of the rural dwellers pay as high as N2,500 to ‘buy’ N5,000.

“I would rather do without money than give somebody hard-earned N5,000 just to get N10,000. This is unthinkable,” ThankGod Bernard, a local government employee in Edo State told The Guardian.

There were claims some banks were paying out old notes yesterday in the face of continued silence by the regulator. The Guardian could not independently confirm the claims. A few automated teller machines (ATMs) that were dispensing cash in Lagos were crammed with customers in their hundreds.

At such ATMs, tallies are given as early as 6:00a.m. – long before the arrival of bank officials. The processes of assigning numbers are marred by rancour and all manner of antics.

Against the growing hardship, Agusto & Co, Nigeria’s leading rating firm, has raised the alarm that cash-based businesses are at the brink of collapse even as the standard of living among rural dwellers ebbs.

In its report titled, ‘Redesign Gone Wrong? – Costly Cashless’, the firm faulted the execution, noting that the rating is below average while sensitisation activities were not sufficient.

“In our opinion, the CBN failed to do enough through the media (television, radio, newspapers and new media) to effectively sensitise the public, particularly the rural dwellers, and manage expectations. Most Nigerians assumed a simple exchange of old Naira notes for new ones.

“However, if we are to believe claims by the Kaduna State governor, Nasir el-Rufai, CBN printed circa N400 billion in new notes, leaving a shortfall of N2.3 trillion.

So, while the exercise has reportedly reeled in 80 per cent (N2.1 trillion) of the N2.7 trillion held outside the banking system thus far, the average Nigerian is once again confronted with a test of resilience. Cash has become commoditised, hoarded by many and now commanding outrageous premiums of up to 20-30 per cent at point-of-sale (PoS) outlets.”