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Urhobo Historical Society |
Culled from:
Sunday, September 06, 2009
'Sanusi Neither Considers the Economy nor
Banks' Shareholders'
By Dr. Frederick Fasehun
I called this Press conference to review the Central Bank of Nigeria's
recent action against some prominent banks, bank executives and their
investors. Of the 25 banks that survived
the mandatory N25 billion
recapitalisation,
the CBN Governor has declared five insolvent and incompetently
managed. They are Union Bank, Afribank,
Finland Bank, Oceanic Bank and Intercontinental Bank. The banks were
said to have been owed bad loans
totalling about N747 billion (about $5.1
billion).
Governor of the Central Bank, Mallam
Sanusi Lamido
Sanusi, said he has injected N420 billion
(about $2.6 billion) to bail out the affected financial
institutions.
But many Nigerians like me cannot forget the fact that just last
March, Vanguard Newspapers exclusively
reported that some faceless interests planned to take over five banks.
Initially, we took the story with a pinch of salt. But the benefit of
hindsight has bestowed upon that Vanguard's report an uncanny degree
of accuracy, because not only did it pinpoint the five target banks to
be disgraced, it also identified the future CBN Governor that would
undertake the job.
Now that the newspaper's prediction has
materialised, the public will like to know
if this whole affair were not a carefully scripted secret agenda. In
the light of the newspaper's accurate prediction five months ahead,
can we resist the urge to say that these banks and their executives
were simply sitting ducks for a well-schemed frame-up."?
Apparently, this insinuates that the CBN has not told us the whole
story. Our private investigations, for example, showed that the
Federal Government itself owes Nigerian banks about N3.2 trillion
(about $220 billion). These
uncleared government debts certainly
compounded the problems of the banks. The Government also owed local
contractors over N1.5 trillion; many of these represent loan
obligations these contractors have been unable to discharge.
So, does the government really have the moral right to cast stones? It
would be wiser for the Federal Government to lead by example and first
liquidate its own debts before pointing fingers at "fellows
partners in debt." Maybe for all these unpaid government debts, the
CBN should go ahead and hand over the Accountant-General, the
Auditor-General of the Federation and the Minister for Finance to the
Economic and Financial Crimes Commission (EFCC) as well.
Curiously too, all the loans that the CBN has taken to the cleaners
are private loans. What about the various bonds and loans that State
Governments sourced from the capital market and the banks, why has the
CBN not addressed them?
Moreover, what is wrong with borrowing? The United States is the
world's biggest debtor with trillions of dollars indebtedness to
virtually every institution including the World Bank, the
International Monetary Fund (IMF) and even the United Nations. Its
whole economy, like those of other developed nations is built on
credit. This is because no nation develops or
industrialises with 'cash-at-hand'. There
is no way young men like
Jimoh Ibrahim, Femi
Otedola, Pat
Utomi and
Aliko
Dangote employ the great number of people
they have employed without solid bank backings.
Curiously too, we find that the five indicted banks are headed by
Southerners. In view of this, we will caution the CBN to refrain from
fanning the embers of Northernisation,
which the Umaru
Yar'Adua's administration appears to be
pursuing since inception.
Sanusi has remained unapologetic and
unrepentant of his ethnic chauvinism. In the past, he has said of the
Igbos, in a newspaper article titled,
"Issues in Restructuring Corporate Nigeria," that: "The
Igbos themselves must acknowledge that
they have a large part of the blame for shattering the unity of this
country."
Having said that this nation must
realise that
Igbos have more than paid for their
foolishness, he said in the same piece: "The
Yorubas, , the greatest obstacles to
nation-building, are the Yoruba Bourgeoisie, I say this also to
underscore my point that until they change in this attitude, no
conference can solve the problems of Nigeria. The country cannot move
forward if the leadership of one of the largest ethnic group continues
to operate, not like statesmen, but like common areas boys."
And on Afenifere he declared: "A Syllabus
of Errors, , the problems of this country have a lot to do with
the shift in power away from the Fulani to individuals like
Babangida and
Abacha, products of lower cultures. The
Fulani of the North, proud of the history of the establishment in
Nigeria - Ahmadu Bello,
Murtala Mohammed,
Aminu Kano,
Shehu
Yar'Adua,
Shehu Shagari,
Jibril Aminu.
They are sad that other Nigerians do not know the difference in ethnic
background between say, Murtala Mohammed
and Ibrahim Babangida."
Information at my disposal also showed that the between January and
April this year, all the banks borrowed N8.7 trillion from the CBN,
the country's lender of last resort. That makes all the banks equally
liable.
So, if the five banks under investigation borrowed only N800 billion
out of the gross N8.7 trillion released by the CBN, which other banks
owed or borrowed the balance of about N7.9 trillion? Why have they
been spared? And why should the CBN deal with a general problem
instalmentally? Let the CBN tell the whole
world where its N8.7 trillion went.
The CBN Governor should have handled the present scandal
administratively and internally. Financial markets are naturally
fragile and sensitive and require the apex bank's reinforcement, and
not erode confidence.
The CBN Governor should be temperate and mild, and his first line of
action should have been to give the affected persons the benefit of
doubt. After all, these executives have not been accused of personally
embezzling the funds in question. It is rather unfortunate that the
CBN is criminalising routine commercial
transactions.
Granted that the Central Bank carried out an independent audit of the
banks, it should have followed due process by inviting the bank
executives to defend themselves about the result of such auditing. CBN
should never have gone public
ab initio.
Moreover, the steps taken so far raise fundamental questions. As the
Federal Government has released N420 billion to the ailing banks, do
we regard the injected fund as a loan to be repaid or a grant to
prepare them for the government's virtual take-over? Where does all
this leave the shareholders? Who protects the shareholders and their
interest especially in a situation where the Federal Government goes
ahead to fulfill its threat to bring foreign investors to buy the
concerned banks? Would it not make more sense to accord shareholders
first-line bids? Or is the Government saying that the country, with
nationals in leadership positions at the World Bank and IMF, cannot
get suitable Nigerians capable to run the banks profitably? Moreover,
we wrested our economic independence from foreigners through such
policies as the Indigenisation Act, is it
wise now to sell ourselves back through the backdoor to new foreign
interests? Or could it be that the foreign interests are masquerading
for faceless Nigerians? The shareholders have been completely ignored
in the whole process, when they should have been called to an
emergency meeting where they would have democratically elected another
Board.
Well-meaning Nigerians like me hope that the Federal Government does
not produce a paradoxical result from this unilateral bank
regularisation scheme. The entire episode
smacks of an exercise designed to cut the nose in order to spite the
face and this is dangerous.
The affected banks are employers of
labour, having at least 5,000 branches and
well over 100,000 people in their employ. In the light of this
confusion, the employees' job security cannot be guaranteed. The
agitated economy will provoke capital flight and inflict greater
damage on the economy than whatever
misdemeanours these bankers may have been
accused of. Because many of these beleaguered bankers originally
founded the concerned banks, their present travails can discourage
future generations of investors.
Rather than sack the bank executives, CBN should have borrowed a leaf
from other economies that have similarly bailed out their mortgage,
stock-broking, banking and industrial institutions. President
Barack
Obama injected $700 billion into corporate
America and allowed the executives to continue in office. The only
debate was whether benefiting American executives should take a cut in
their usual fat allowances in view of the injection of public funds.
The debate is still going on. I entirely condemn the detention of the
bank chiefs by the EFCC. They should be released to enable them work
out creative and feasible modalities for revamping their banks and
liquidating the offending loan facilities.
Banks may have problems but the CBN appears to have over-amplified the
situation. The world over, financial institutions are going through a
rough time. In Europe, Asia, America, Australia and other parts of
Africa, banks have failed. This was what gave rise to the global
economic meltdown. In fact, prior to the CBN exercise, the Nigerian
economy was the envy of the world. And experts internationally
commended the last administration and the banks for the foresight in
recapitalising our banks. But if Nigerian
banks fail now, the explanation may simply be that finally, the
Economic Meltdown has caught up with our banking industry. How? Larger
economies like USA, UK and Japan, most of
whom have begun to look inwards for
economic salvation, have forced their indigenes to reverse capital
flight back home.
On the other hand, if this exercise was designed to please Mrs.
Hillary Clinton, then we must point out that she has no way incited us
against the rule of law. Like her, we all want an anti-corruption
crusade, which we complained had become lukewarm and stale. But in
hunting down these bankers, government has pointed the gun against
wrong persons.
The CBN exercise is diversionary; it is insensitive; it is hasty,
making respectable bankers and shareholders to become scapegoats
unjustly. This is unacceptable.
Moreover, have we weighed the implications that this will have on our
Re-Branding Project? Virtually, it has smeared the
cr�me
de
cr�me
of our economy - the Cecilia Ibrus, the
Isyaku Umars,
the Hyacinth Enuhas, the Raymond
Obieris, the Chris
Alabis, the Erastus
Akingbolas, the Barth
Ebongs and many more. This move indicts
not just these bankers, but the public, the government, the
shareholders, event he CBN. It tells the
international community that even the best of us is a crook and a
thief. And this is far from true.
Suffice to say that although some of these
controverted loans are inexcusable, a lot
of them would have performed if only government had delivered on key
economic issues, including,
stabilising the Naira, providing
electricity supply, pushing through the amnesty deal to secure a
viable bridgehead for profitable oil business in the Niger Delta,
enhancing Nigerian's buying power by providing employment, ensuring
good road networks, fighting corruption, resolving the crisis in the
education sector, especially the ASUU strike and succeeding with the
seven-point agenda.
On the part of the CBN, what needs its immediate attention are indices
that will make the banking industry more attractive, more proactive
and more productive, such as outlawing the use of young girls for
marketing, taming the legal and administrative charges that usually
balloon loans, establishing a regulatory framework for interests and
stabilising the exchange rate.
In the present circumstances, the coercive organs of State should act
independent of the CBN, which is wearing the toga of the aggrieved
party. They way Sanusi speaks of
confiscating assets, jailing people, etc, makes him the complainant,
the investigator, the Judge and the enforcer. Such autocratic methods
are strange to our democratic constitution.
The National Assembly, should as a matter of urgency, pass a motion
requiring Sanusi to ensure that existing
shareholders are given an opportunity to
recapitalise the five banks within a
timeframe of not less than 180 days. These banks are public companies
owned by several Nigerians. They must not suffer double jeopardy.
Their reemptive rights as existing
shareholders, which is duly recognised by
Companies and Allied Matters Act, Banks and Other Financial
Institutions Act, Central Bank of Nigeria Act and the records of CBN
must be protected and respected.
The National Assembly should pass a motion requiring
Sanusi to follow due process and
immediately revoke the removal order on any of the Executives who are
not personally culpable. It is wrong to punish people who have not
committed any offence. It is repugnant to equity, natural justice and
good conscience to dismiss over 30 officers in one stroke without
establishing individual responsibilities.
The National Assembly should compel
Sanusi to exercise due care in all
subsequent actions. The unnecessary drama and bravado accompanying the
"reform" has caused a downgrade in Nigeria's credit rating and slowed
down economic activity. We have seen other economies, which recently
handle more complex and larger interventions in their banks in a more
mature manner, without unnecessary costs on their economies.
Conclusion
In conclusion, let us remember
that many of these bankers are well known locally and internationally
by many institutions and many of them are advisors and consultants to
nations and world financial establishments. Nigeria needs them for her
own good. They may have made some erroneous
judgements, but they do not deserve to be
so summarily destroyed; for one experienced horse rider who falls is
more valuable than a tenderfoot just learning the ropes. Consequently,
we detest the rubbishing of these first-class bankers and we demand
their immediate release.
If politicians have been allowed to learn from their own mistakes,
bankers and the managers of our economy should not be crucified for
making sincere errors in corporate governance.
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