Falana Demands Probe into Alleged Mismanagement of $3.4bn IMF COVID-19 Loan

Human rights lawyer Femi Falana, SAN, has urged the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission (ICPC) to investigate the alleged criminal diversion of the $3.4 billion loan Nigeria received from the International Monetary Fund (IMF) to combat the COVID-19 pandemic.
In a statement released on behalf of the Alliance on Surviving COVID-19 and Beyond (ASCAB) on Sunday, Falana also called on the IMF board to investigate the “alleged deliberate refusal of its management to ensure that the emergency funds were ‘used for their intended purposes‘.” He further requested that the IMF suspend the collection of scheduled charges amounting to SDR 125.99 million (N275.28 billion) pending the outcome of its investigation.  Falana recalled that Nigeria obtained the emergency assistance in 2030 “to shore up the country’s economy and help businesses weather the storm of a deadly pandemic.” He noted that the $3.4 billion financial support, approved on April 28, 2020, was intended “to provide critical support to shore up Nigeria’s health care sector, and shield jobs and businesses from the shock of the COVID-19 crisis.”
He quoted Mr. Mitsuhiro Furusawa, Deputy Managing Director and Acting Chair of the IMF, who stated that “‘The emergency financing under the RFI will provide much needed liquidity support to respond to the urgent BOP needs. Additional assistance from development partners will be required to support the government’s efforts and close the large financing gap.’” Furusawa also emphasized that “‘The implementation of proper governance arrangements—including through the publication and independent audit of crisis-mitigating spending and procurement processes—is crucial to ensure emergency funds are used for their intended purposes (emphasis ours).’”
Falana asserted that “characteristically, the IMF management… failed to ensure emergency funds were used for their intended purposes.” He referenced a 2020 audit report by the Office of the Auditor-General of the Federation, released in January 2024, which “flagged several irregularities in the handling of the fund.”
According to the audit, $2.4 billion of the loan was transferred to the CBN’s account at the Federal Reserve Bank of New York, and the remainder to the CBN’s account in China. The report stated that the $2.4 billion was subsequently moved to the Bank for International Settlements (BIS) for short-term investments, with the funds in China similarly transferred. Falana highlighted the audit’s finding that “‘These transactions… were not supported by documentation or approvals from the Federal Government or the CBN’s Investment Committee and that the funds were subsequently reclassified as part of the CBN’s external reserves rather than the Federal Government’s holdings.’” This reclassification, the report noted, allowed interest to be earned, “contrary to the emergency spending purpose for which they were approved.”
Falana also cited the audit’s finding that “‘on August 7, 2020, the Federal Ministry of Finance requested the monetisation of 700milliontosupportthe2020federalbudget.Oneweeklater,theCBNapprovedadebitofN265.65billion,applyinganexchangerateofN379.5/, higher than the official N360.5/$ rate at the time.’” He added that “‘The funds were credited to three separate accounts… The audit noted that a two percent commission was deducted from the monetised amount, even though the funds were categorised as Federal Government property. At the end of 2020, an unmonetised balance of $2.7 billion… remained unaccounted for, according to the Auditor-General’s report.’”
Falana stated that “‘The report recommended that the CBN Governor should explain the movement and classification of the funds without proper authorisation. It also requested bank statements to confirm the unmonetised balance and demanded the recovery of N13.3 billion and N350 million into the Federal Government’s account. It further called for the remittance of all interest earned from the investments and warned that sanctions under relevant financial regulations would be applied if there was no accountability.’”
He noted that the Auditor-General wants the money recovered and remitted, with evidence sent to the Public Accounts Committee of the National Assembly. The report also recommended that anyone involved “‘should be sanctioned and handed over to the EFCC and ICPC for investigation and prosecution, as provided for in paragraph 3112 of the Financial Regulations’.”
Falana lamented that despite the submission of the 2020 Annual Report to the National Assembly, “both Houses have failed to cause the report to be considered by the committees responsible for public accounts, in order to cover up the criminal diversion of the $3.4 IMF and several trillions of Naira set out in the Auditor-General’s report…”
In light of these findings, ASCAB called on the EFCC and ICPC to “investigate the criminal diversion of the $3.4 billion loan obtained by Nigeria to fight the Covid-19 pandemic.” The group also urged the IMF board “to probe the deliberate refusal of its management to ensure that the emergency funds were used for their intended purposes” and to “suspend the collection of the scheduled charges… pending the conclusion of its investigation.”