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FGs N4.7bn trapped in failed banks, says FIRS

Posted by By JAMES OJO, Abuja. on 2008/06/10 | Views: 1478 |

FGs N4.7bn trapped in failed banks, says FIRS


The Federal Government on Monday said that it had lost N4.73 billion and $350,511.25 as tax collected on its behalf by failed banks.

The Federal Government on Monday said that it had lost N4.73 billion and $350,511.25 as tax collected on its behalf by failed banks. Chairman of Federal Inland Revenue Services [FIRS], Ifueko Omoigui-Okauru, told the House of Representatives Committee on Banking and Currency, probing unethical conducts by banks that the amounts represented tax funds collected on behalf of government by the financial institutions, as well as penalties and interests for delayed remittances.

However, she disclosed that the sum of N264.3 million had been recovered from the vaults of some of the banks after they were absorbed by the healthy banks.

Ifueko Omoigui-Okauru in a submission to the committee noted that, amount so far collected was made possible with the assistance of NDIC.

According to the breakdown of non recovered money, N2.201 billion and $350,511.25 were trapped in Metropolitan Bank alone, while Savannah Bank, Broad Bank, AIB Bank and Liberty Bank had N56,632,540, N56,082,173, N73,157,524 and N111,651 respectively.
Others are Center Point Bank [N71,761,579], Gulf Bank [N1,441, 532, 913] and Society Generale Bank [N829, 275,676.80].

She submitted that the recovery made by the service was possible because of the insistence that any bank that wants to collect money for government agencies must first pay the arrears of the tax collected before.

The FIRS boss also stated that the collaboration efforts with the Nigeria Deposit Insurance Corporation [NDIC] helped in the recovery drive of the service.
However, she noted that this effort has not been successful as the money collected was not considered as secured creditor, hence, not treated as priority debt.
"This not with standing, FIRS has continued to dialogue with the NDIC on the remaining taxes due," she noted.

To prevent a situation where funds are trapped in banks, Omoigui-Okauru suggested that an automated bank collection system be put in place, where banks would be categorized into lead and collecting banks to enable effective monitoring and supervision.

She equally proposed that funds collected by banks are automatically swept online within 24 hours from the collecting banks to any of the lead banks and thereafter remitted to the CBN on daily basis.
Criteria for qualification as lead and collecting banks be set and should not be less than the minimum capital base.

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