Vanguard (Lagos)

14 October 2009

Nigeria: Bank Ex-MD Gave N236 Billion Loan to Own Firms - Sanusi

Abuja — GOVERNOR of the Central Bank, Mr. Sanusi Lamido Sanusi, yesterday, made some startling revelations on the atrocities committed by the Managing Directors and Executive Directors of the eight troubled banks which led to their removal even as the Senate endorsed the sack and prosecution of the bankers and the current reforms of the apex bank.

Sanusi, who addressed the Annual Conference of the Institute of Chartered Accountants of Nigeria, in Abuja said that Nigerians would be shocked when the sacked bank Managing Directors are confronted with facts of their excesses at the courts. According to him, "one of them gave loans totaling N236 billion to companies related to him."

The apex bank governor lamented that the bank MDs and other directors of the banks who included bankers, accountants, lawyers and other professionals threw away the ethics of their professions to plunder the banks at the detriment of their investors, the banking sector, the economy and the Nigerian public at large.

His words: "I would like to use this opportunity to express some of the concerns I have about the state of professionals in Nigeria. In the past, institutions were well run by professionals and politicians were the ones that were often linked with unwholesome practices.

However, today, the professionals are not better. Some of the things that happened in the banks, if your saw them...the facts are going to come out in court and I tell you, Nigerians will be shocked. We have discovered that one MD gave out loans totaling N236 billion to companies that are linked to him. Just imagine that."

Mr Sanusi equally disclosed to the bewildered audience that one of the affected banks used depositors' funds to purchase 50 per cent of its current shares, a practice, he said, was totally fraudulent in a deal where the share price has since fallen from between N25-30 per share to a mere N3 per share.

"While these were happening, where were the accountants, the auditors? While these were happening, someone was reporting profits, paying dividends out of operations that could not by any standards be said to be profitable. That is why we are where we are", the governor said.

He said there was nothing wrong with running big banks in the country but that every bank must be managed in full compliance with regulations and ethics of the banking profession.

In his response to questions raised by the accountants, Mr Tunde Lemo, a Deputy Governor of the CBN admitted that the apex bank could not absolve itself from blame on the rot of the banks before the governor moved in to sack some of the MDs, but insisted that it could not act beyond the information provided by the banks.

According to him, "We are not 100 per cent blameless. We should also be blamed. We should be blamed on risk concentration, particularly when the banks were putting money into the capital market".

Mr. Lemo said PricewaterhouseCoopers had been engaged to look into the entire issue and that officers found to have compromised in their duties would be sanctioned.

He said that the CBN had learnt some lessons from the development, as according to him, all products of banks must be well-understood and that the regulators must be ahead of operators.

The CBN Deputy Governor then called for change in value among the Nigerian public, saying, "I am worried personally. When I was growing up, virtually all public officers were role models. But today, who do our children have to model themselves after"?

In her address, the President of ICAN, Mrs. Elizabeth Adegite, challenged chartered accountants in the country to play a more critical role in ensuring good corporate governance in the organisations they serve either as staff or external auditors in accordance with the ethics of the profession.

According to her, accountants should also see themselves as members of the larger society who would always be affected by the general fortunes of the nation's economy.

Senate backs CBN

Meanwhile, the Senate yesterday gave its full support for the sack of eight managing directors and chief executive officers of some commercial banks.

The endorsement was heralded by a briefing by the CBN governor, Mr. Sanusi to the Senate during yesterday's sitting.

Spokesman of the Senate, Senator Ayogu Eze, who briefed media men at the National Assembly Complex in Abuja described the findings that led to the sack of the bank chiefs as very worrying.

He however failed to disclose the exact finding, promising that it will be done tomorrow at the conclusion of the governor's briefing.

Beside, Senator Eze also said that the Senate is in full support of the planned deregulation of the downstream oil sector by the Federal Government, but stressed that the Senate will safeguard Nigerians from being exploited by marketers.

He said, "We have invited the governor of the Central Bank to come and brief us on the goings on in the banking sector because as representatives of the people who are affected directly and indirectly by the happenings in the bank we have been inundated with barrage of petitions, phone calls, inquiries, some of them commending the action some condemning it and a lot of them saying all sorts of things.

So, we took up the governor of the Central Bank on some of the things and what I want to say for now is that revelations coming from the briefing given by the Governor of Central Bank is sobering and a lot of our colleagues were really disturbed by the magnitude of the malfeasance and things that have happened in the banking sub-sector.

"However, because the briefing is still continuing, we are meeting with him again on Thursday (tomorrow) because of the sensitive nature of the briefing we want to be as exhaustive as possible because a lot of issues are going to be involved.

But so far, members of the Senate are quite satisfied with the way the governor has done his job and with the way he has handled the assignment up till the briefing today.

"If there are things that will come on Thursday that will suggest that what he did was wrong of course will not hesitate to say it, so far we are very pleased that he had to intervene at the time he intervened to save the country from embarrassment."

Speaking on deregulation he said, "Deregulation does not have to wait for the Petroleum Industry Bill because the issue of regulation is an administrative issue that is purely concerned with the day to day running of the petroleum industry by the operators. The issue of subsidy was not put there by law.

"It was a government policy that brought subsidy to cushion the effect of rising prices of petroleum products on the people and I think that this issue of divestment of government from business also means that those who are involved in everyday economic activities should be allowed to subject themselves to the rigours of market forces."

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