| 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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