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