The Federal Government through the Attorney General has made the boldest statement yet about their plans to prosecute forex round trippers and those who have benefited from other forms of forex round tripping.
According to reports from Thisday, the Attorney General of the Federation (AGF), Abubakar Malami (SAN), revealed that the government is set to prosecute individuals or organisations that have engaged in round tripping and has directed the Economic and Financial Crimes Commission (EFCC) to investigate and confirm information available to government on the activities of market operators involved in such practices within and outside the country.
“Let me restate in the strongest terms that these nefarious malpractices by unscrupulous individuals and institutions will no longer be tolerated. In this regard, measures are already in place to deal with the infractions decisively and relevant security agencies are on the red alert to investigate these infractions and appropriate sanctions shall follow accordingly,”
“It has become obvious that having failed in the attempt to force devaluation, certain forces have now aligned to create an artificial situation whose primary purpose is to undermine the economic programmme of the Buhari administration.
“We are witnessing manipulation and coordinated speculative activities in the foreign exchange market leading to the current wide differential between the official rate at the Central Bank of Nigeria and the parallel market rate in a manner that defies rational economic analysis,”
The report also claimed that the government had concluded preliminary investigation and secured ‘proof’ of arbitrage activities engaged by suspected market operators. Excerpts of the Thisday report. They also revealed that some of the offences allegedly committed as follows
- Forex round-tripping
- Rendition of false forex utilisation data
- Non-repatriation of export proceeds
- Use of forex for non-eligible purposes, consumption of forex transactions with inadequate, expired and or forged documents
- Failure to report forex end users who default in the submission of required documents, amongst others.
The Attorney general also made some surprising remarks claiming that they actually know what the true value of the naira is.
According to him (that is Malami), available reports at the disposal of the government had confirmed suspicions that the current value of the naira was not reflective of economic factors or demand and supply forces alone, but was the deliberate action of some individuals who are undermining the current efforts of the present administration to reposition the economy on the path to sustainable growth through diversification and greater accountability.
The disparity between the naira and the dollar was as high as N200 earlier in February as suspected market operators obtained forex from the CBN only to sell at the parallel market. This then precipitated into a market bubble in the foreign exchange market as more speculators saw the huge arbitrage as an opportunity to make some quick money. Eventually the bubble will lead to a bust as the price of the dollar at the black market crashed from about N410 to N310.
The CBN has often blamed Bureaux de Changes for festering round tripping and forex arbitrage. They subsequently banned sale of dollars to the BDC’s directly instructing them to source for fx themselves.