NigeriansTalk

A review by Arin

Since the break­ing news on what has been dubbed ‘The Fri­day Bank Mas­sacre’ by one Niger­ian news­pa­per, many Nige­ri­ans and friends of Nige­ria have, judg­ing by the num­ber of arti­cle com­ments and the thread lengths on dis­cus­sion forums, devoured every piece of avail­able infor­ma­tion on the even as at now still emerg­ing story.

The break­ing news head­line ‘CBN sacks CEOs and man­age­ment of five Niger­ian banks’, aka the Mas­sacre on the web­site of Next News on August 14th, starting

‘The Cen­tral Bank of Nige­ria (CBN) has dis­missed the Chief Exec­u­tive Offi­cers and other top man­age­ment of five major Niger­ian Banks . The banks are Inter­con­ti­nen­tal Bank, Union Bank, Afrib­ank, Oceanic Bank and Fin­Bank.’

was the first of many arti­cles on the news story. The story was quickly taken up, with a fol­low up arti­cle by This­day News­pa­per jour­nal­ist, Ijeoma Nwog­wugwu on the injec­tion of 400 Bil­lion naira into the five affected banks, which was quickly raised to a sum of 420 Bil­lion Naira, as one of the banks, Oceanic Plc was reported to require more funds than had pre­vi­ously been thought.

The names and bios of the replace­ments for the sacked CEOs -

” Sanusi announced the imme­di­ate replace­ment of the sacked CEOs with serv­ing and for­mer top bank exec­u­tives, two of whom are for­mer interim MD/CEO of Wema Bank, John Aboh and Mah­mud Lai Alabi. Aboh and Alabi have been named interim chief exec­u­tives of Oceanic Bank and Inter­con­ti­nen­tal Bank respec­tively, while Nebolisa Arah, found­ing MD/CEO of Fidelity Bank (then Fidelity Union Mer­chant Bank) takes charge of Afrib­ank Nige­ria. Mrs. Suzanne Iroche, exec­u­tive direc­tor, United Bank for Africa, was named MD/CEO of Fin­bank; and Mrs. Funke Osi­bodu, for­mer MD/CEO of Ecobank Nige­ria, will now over­see Union Bank”

as well as a link to the full text of the speech of the CBN governor  -

"Hav­ing reviewed all the reports of the exam­in­ers and the com­ments of the direc­tors and deputy gov­er­nors, I am sat­is­fied that these five insti­tu­tions are in a grave sit­u­a­tion and that their man­age­ment have acted in a man­ner detri­men­tal to the inter­est of their depos­i­tors and cred­i­tors. There­fore, in exer­cise of my pow­ers as con­tained in Sec­tions 33 and 35 of the Banks and Other Finan­cial Insti­tu­tions Act 1991, as amended, and after secur­ing the con­sent of the Board of Direc­tors of the CBN, I hereby remove the Man­ag­ing Direc­tors and Exec­u­tive Direc­tors of the fol­low­ing banks from office with effect from Fri­day, August 14, 2009.….….”

were quickly pub­lished by Van­guard News­pa­pers and Next News respec­tively. The Time­line of Next reports on the ail­ing finan­cial sec­tor shows that there was already an inkling of prob­lems in the sec­tor by insid­ers since as far back as Jan­u­ary 2009.

Lagos-based blog­ger and finan­cial ana­lyst,  Dayo Coker  on the Insider noted in his arti­cle The Fall of Eras­tus Aking­bola that

’ The chick­ens have come home to roost. After years of bad man­age­ment and dubi­ous finan­cial prac­tices, the head hon­cho of Inter­con­ti­nen­tal Bank Plc has been sacked. This should not come as a sur­prise to read­ers of my blog. Five months ago, I pointed out Inter­con­ti­nen­tal Bank’s pre­car­i­ous state in a series of arti­cles ques­tion­ing the com­pe­tence of its chief exec­u­tive, Dr Eras­tus Aking­bola. In these arti­cles, I asked the bank to reveal its true finan­cial state in the spirit of full disclosure.….……’

In his blog­post  ‘Inter­con­ti­nen­tal Bank in Trou­ble dated March 21st, Dayo had stated that

’ .…..The bank’s pre­car­i­ous sit­u­a­tion is due to its huge expo­sure to toxic loans to stock­bro­kers and importers of petro­leum products.……’

In The Big Bank Rot on the 18th of August, accu­sa­tions of fraud are detailed, and Femi Babafemi, the EFCC spokesman was quoted as hav­ing told NEXT that he was not aware that the mat­ter is before the agency yet.

“There are other gov­ern­ment agen­cies like the SEC and NDIC that super­vise these issues. It is not impos­si­ble that some of these things have been reported to them already” he said, adding that “If the NDIC is han­dling the mat­ter, you can­not expect us to just walk in and push them out and take over the mat­ter. It is not in all cases that you take over the jobs of other agen­cies. In most cases, when these agen­cies get stuck, for exam­ple, they need tech­ni­cal sup­port, then we can come in.”

On the same day, This­day news­pa­pers reported amongst other things that the Niger­ian Stock Exchange (NSE) had halted trad­ing in the shares of the affected banks. The same news­pa­per also reported that Aking­bola was chal­leng­ing the actions of the CBN in court.

Over the next few days after the break­ing news, var­i­ous new sto­ries came up includ­ing the appoint­ment of new CBN board mem­bers, the dra­matic ulti­ma­tum issued the Eco­nomic and Finan­cial Crimes Com­mis­sion (EFCC), and the ulti­mate arrests of bank­ing exec­u­tives, after the com­mis­sion was asked by the Cen­tral Bank  to inves­ti­gate pre­vi­ous trans­ac­tions by the five banks whose top man­age­ment were sacked last week. Lawyers for two the sacked CEOs, Cecil­lia Ibru and Eras­tus Aking­bola were reported to have filed law­suits against the CBN, which was curi­ous espe­cially in the case of Dr Aking­bola, it had been pre­vi­ously reported here that

‘.…..Eras­tus Aking­bola, for­merly of Inter­con­ti­nen­tal Bank, was absent at the meet­ing. Mr. Aking­bola was said to be absent because he had handed in a res­ig­na­tion let­ter to the chair­man of his bank early on Fri­day morn­ing and was there­fore a “resigned CEO” as at the time today’s meet­ing with all bank chiefs.’

Eras­tus Aking­bola and Cecil­lia Ibru were declared wanted by the EFCC after they refused to show up for ques­tion­ing. News on the 25th August that the for­mer nanny of Cecil­lia Ibru, erst­while CEO of Oceanic bank had ben­e­fited from a 13 bil­lion loan from Oceanic bank was fol­lowed by news of Mrs Ibru hav­ing turned her­self in. Mean­while, it was reported that Eras­tus Aking­bola, for­mer CEO of Inter­con­ti­nen­tal Bank had man­aged to flee Nige­ria via one of the neig­bour­ing countries.

The ‘list of debtors’, appar­ently includ­ing Aliyu Dan­gote and sev­eral gov­ern­ment agen­cies, pub­lished as an adver­to­r­ial on the CBN web­site on the 18th of August served to fur­ther com­pli­cate mat­ters, espe­cially when it was found that said list was not up to date and was from 31st May 2009. Sev­eral of the listed debtors, promi­nent among them Mr Jimoh Ibrahim, came out to con­test either the amounts listed or the fact  that their loans were non-performing in the first place. Many ques­tioned the appro­pri­ate­ness of the CBNs pub­lish­ing such a list in the first place. It was widely agreed that the EFCC col­lect­ing money from the so called debtors was prob­a­bly inap­pro­pri­ate. This nev­er­the­less did not slow the rate of debt col­lec­tion as it was reported by last week­end that a total of $170 mil­lion in bad debt had been recov­ered. The sup­posed role of for­mer Delta state gov­er­nor James Ibori who has been a con­tro­ver­sial fix­ture on Nigeria’s polit­i­cal land­scape in recent times was also reported on under the loud head­line: Ibori’s brain and the great bank heist.

A quick perusal of the ini­tial com­ments on the orig­i­nal break­ing news story exposes the dis­be­lief of many read­ers in what has quickly become the big news of the year from Nige­ria. Many expressed doubts that the CBN gov­er­nor has the author­ity to sack CEOs of pri­vately owned banks. The curi­ous fact of the CBN hav­ing acted before the audits in all 25 banks were com­plete was repeated many times by var­i­ous com­men­ta­tors. Many read­ers expressed a shock at the fact that ‘big-men’ were being tar­geted, and accord­ing to a Reuters arti­cle,

‘Some Niger­ian com­men­ta­tors have argued that the cull by Sanusi, a north­erner, tar­geted south­ern bank exec­u­tives and that it was a retal­i­a­tion for con­sol­i­da­tion four years ago which saw some north­ern banks absorbed by their south­ern peers. But the foren­sic pre­ci­sion of Sanusi’s pub­lic state­ments left the num­bers to speak for themselves.

A review of var­i­ous com­ments has revealed two schools of opin­ion, one, that Sanusi was fol­low­ing a script by the Hausa Fulani axis, who felt short­changed by the con­sol­i­da­tion exer­cise under­taken by the for­mer CBN chief Charles Soludo. The con­spir­acy the­o­rists point to an arti­cle in the Van­guard to butress their point of view. Accord­ing to the arti­cle titled “Group plans takeover of five top banks”, which was pub­lished in the Van­guard news­pa­per on the 23rd of March,

A CBN offi­cial who spoke on con­di­tion of anonymity said that it is unfor­tu­nate that top five banks are the tar­get. The banks, he said, are sound. The CBN had mis­taken in the past the ongo­ing move as de-marketing by com­peti­tors in the bank­ing indus­try, say­ing it is unhealthy competition.

The anti-conspiracy the­o­rists argue that the exer­cise was long over­due and had no eth­nic over­tones. The pre­dic­tion in the same Reuters arti­cle that was men­tioned above -

“When the dust set­tles, one of the most shock­ing aspects of this cri­sis is going to be the mag­ni­tude of the gap between the rot in the sys­tem and what its lead­ers wanted us to believe,” said one Niger­ian ana­lyst, who declined to be named.…..

-seems to be proved right by every new rev­e­la­tion and is per­haps the rea­son why many Niger­ian blog­gers have not yet blogged on the topic, seem­ingly either shocked into silence by the depth of the rot, or decid­ing to wait until all the major rev­e­la­tions have been made.

The preva­lent opin­ion seems to be, quot­ing Fur­tune on Nige­ria Gen­eral dis­cus­sion blog website,

” We believe that the pro­ce­dures now begun should run their full course with the reg­u­la­tory, super­vi­sory and law enforce­ment author­i­ties and con­tain the hypocrisy of the work in the finan­cial sec­tor. The impli­ca­tions of non-conclusion of these ini­tia­tives are hor­ren­dous. Mr. Sanusi point­edly told the nation that the process is far from over as many more banks’ books are still under exam­i­na­tion. Nige­ri­ans await his find­ings. Due process and fair hear­ing must how­ever be adhered to.”

TO BE CONTINUED