Those following the ongoing currency market rigging scandal may be surprised to learn it isn't just a "developed" world phenomenon in which virtually all TBTF commercial and central banks, such as the Bank of England, take part and engage in criminal manipulation of everything that trades. Apparently even plain-vanilla "developing" countries, elsewhere also known as 'banana republics', do it too such as that ground zero of 419 scams, Nigeria, only there FX manipulation takes place at such a modest degree most "cartel" chat room members wouldn't even bother to waste their time.
According to Bloomberg, six Nigerian central bankers were charged with fraud in an 8 billion naira ($40.2 million with an m, not a b, not a tr) currency "scam." No chat rooms here, just a plain old "mega scam involving the theft and recirculation of defaced and mutilated currencies,” the Abuja-based Economic and Financial Crimes Commission said in a statement dated Sunday on its website. In addition to the central bankers, among those charged are also sixteen commercial bankers who conspired with Central Bank of Nigeria regional executives. The suspects will appear at the Federal High Court in the southwest city of Ibadan from Tuesday to June 4.
This is where it gets amusing: "instead of destroying defaced local currency, the officials substituted it with newspaper cut into the size of naira notes, the EFCC said. The fraud was partly to blame for the failure of monetary policy to check inflationary pressure for years, according to the agency."
In other words, Nigerian authorities blame financial executives for using currency-like newspaper clippings in lieu of notes for propagating inflation. Let that sink in for a second.
The “systematic scheme” had been running for several years and “middle-level officers” were either dismissed or placed on indefinite suspension in October and handed over to the EFCC, the central bank said in a separate statement on its website on Monday. A national audit at the regulator’s 37 branches found it was an “isolated scheme” in the southwestern city of Ibadan.
The EFCC said the scam was exposed on Nov. 3 through a petition alleging more than 6.6 billion naira was diverted and recycled by “light-fingered top executives of the CBN at the Ibadan branch.”
The suspects, who were responsible for taking mutilated notes in exchange for fresh cash equivalent to the amount deposited, abused their positions, the EFCC said. Investigations found boxes that should have contained bundles of naira notes filled with newspaper instead.
“This practice, known as interleafing, basically labels a box with a higher value than its true content,” the central bank said. “The bank will continue to collaborate with the EFCC to ensure that affected CBN staff, as well as their accomplices in some commercial banks, are brought to justice.”
And unlike in the US, where the criminal bankers control the regulators and enforcers through the "rotating" (and in Goldman's case, double-rotating) door phenomenon, in Nigeria President Muhammadu Buhari, a 72-year-old former military ruler, has made battling endemic corruption one of his administration’s top priorities.
It is therefore likely that if convicted, the accused will likely see many years of prison time or worse, instead of just suffer a monetary penalty paid for by shareholders and a deferred prosecution.
Which may explain why rumors are already rife the currency manipulation crew has begged the Southern District of New York to extradite them to the United States where they can face the proper "justice" for financial criminals which guarantees immunity from any actual hard time.
Joking aside, after several central bankers are sentenced to spend years to contemplate their criminal decisions in Nigerian prison, one may ask "who truly is the banana republic", especially since the most difficult decision facing those who colluded, defrauded and manipulated tens of billions, will be in which of their numerous East Hampton mansions they will spend the upcoming weekend.