The Office of the Auditor-General of the Federation has accused the Central Bank of Nigeria, under the leadership of the former Governor, Godwin Emefiele, of re-circulating dirty and unfit banknotes valued at N29.77bn 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.
According to the audit report, the CBN released the condemned notes across Abuja, Lagos, Bauchi and Jos branches between April and December 2022. The Abuja branch accounted for the bulk of the re-issued notes, with N28.615bn released between October and December 2022.
The Lagos branch issued N970m in December 2022, while Bauchi released N30m in April of the same year. The Jos branch issued N50m and N100m on May 16 and May 27, 2022, respectively.
The report stated, “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,” noting that the action contravened 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.
In response, the CBN offered varying explanations for the breach across the implicated branches. The Abuja branch blamed the COVID-19 pandemic for operational disruptions, saying 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 then 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.
