19 February 2011

Nigeria: Many Troubles of Funke Osibodu

analysis

When Olufunke Iyabo Osibodu, former chief executive of Ecobank Nigeria, then a private company, was appointed managing director of 94-year-old Union Bank of Nigeria (UBN) Plc, a member of the then famous big four in Nigeria's banking industry, many believed it was an opportunity to utilise her many years experience in another of the nation's banks.

Expectations were that with the experience of running Ecobank, though a relatively small institution at the time, among others, she would turn around the fortune of the stallion as Union Bank is known. She was required to bring modern management skills along with other members of her management team, four of who were also appointed by the Central Bank of Nigeria (CBN), a few weeks after hers. Together they were to nurse the bank to good health, using the N627 billion largesse shared by the apex bank to the nine rescued banks. UBN got the lion's share of N120 billion. Besides correcting the corporate governance lapses and check the recklessness revealed during the stress test, following which Bartholomew Bassey Ebong, her predecessor, was fired, along with his team of executive directors.

Mrs. Osibodu, just like her counterpart in the other rescued institutions - Nebolisa Arah (Afribank Nigeria), Cyril Chukwuma (Bank PHB), Mrs. Suzanne Iroche (Finbank), Lai Mahmoud Alabi (Intercontinental Bank), John Aboh (Oceanic Bank), Gbolahan Folayan (ETB), and Mrs. Sola Ayodele (Spring Bank) - was expected to, within two years, put the bank in proper shape preparatory to the emergence of new core investors, thereby ensuring adequacy of the banks' capital. All of these were to be accomplished within two years from August 14 and October 2, 2009 when the various executives were appointed.

Indeed, many of the rescued banks initially had teething problems when, like surgeons, they set in to correct the ills in the institutions and nurse them to health. Most of them also had issues with their staff, in the process of fashioning ways to right-size, leading to many accusations, including witch-hunt. As a result of this, the new helmsmen had to engage their workers' unions and the central labour bodies, where such existed in their banks.

Following the perceived ostentatious lifestyles of the new bank chiefs, Sunday Independent of January 17, 2010, had in 'Rescued bank chiefs: midwives or undertakers' noted that some of the appointees may not be better than their predecessors.

The report had noted: "The new management, who would run the banks for two years, are known to have approved generous bonuses for themselves, acquired luxury cars 'befitting of their new status', while dishing out contracts to cronies and companies owned by their spouses, friends and associates at exorbitant costs. "This is despite the presence of internal competences in the bank.

"Our sister publication, Daily Independent, had last year, called attention to the expensive lifestyles of some executives of some of the rescued banks and the fact that they may end as undertakers and not the midwives they were called to perform in the banks."

Recurring troubles

With the exception of Oceanic, whose junior workers disrupted operation once or twice at the head office, Union Bank is one other member of the rescued gang that has been in the news for the wrong reasons more often than its rivals. This disquiet was first noticed sometime last year when workers of the bank in September, embarked on a peaceful protest over salary disparity. The workers complained that their salaries were lower, compared to those of some others who were employed by the new management and placed on the same grade as theirs, even when such new-comers were far less experienced. They also alleged that their leave allowances, which were supposed to be paid in bulk, were being taxed and paid in instalments.

Vice president of the local branch of the Association of Senior Staff of Banks, Insurance and other Financial Institutions (ASSBIFI), Soji Ogundeyi, was quoted at the height of last December's strike action as saying that the protest was a subtle one. The strike was at a time the bank held its annual general meeting (AGM) in Maiduguri, capital of Borno State. The staff reportedly secured an injunction stopping the AGM. But it however held, as the bank said it did not receive notice of any such injunction.

"As at now, the management has responded to our communiqué, at least for the first time. We are not just workers and employees but also stakeholders in the bank, and our holding in the bank is core. We don't want what we have put in the past to go down the drain. The labour of our heroes past shall not be in vain," he was quoted as saying.

They are also unhappy that the management reneged on its promise to review the cases of some staff sacked recently, just as they lament the situation where workers are being over-taxed.

The management, the protesters said, has continued to misrepresent the true state of the bank's financial situation, thereby painting it darker than it really is.

However, a statement by the bank debunked claims of falsification of its financial health situation, maintaining that UBN's board and management always ensure "that information provided is accurate and factual, and also ensures, where possible, that professional third parties validate the information."

According to the statement signed by Francis Barde, its spokesman, the bank said "the allegations that its position is being deliberately falsified are categorically untrue. The accounts of the bank have been audited by reputable audit firms who will, at the AGM, answer questions on their findings, should shareholders require such. The management and board of the bank have always been willing to make available the bank's audited accounts to shareholders and the public at large for scrutiny."

Barde further said the disparity in workers' salaries in UBN predated the Osibodu era, adding that the management was looking into the issue and would soon resolve it.

The National Union of Banks, Insurance and Allied Financial Institutions Employees (NUBIFIE), while condemning what it described as the lopsided salary structure in place in some banks, warned then that it would embark on a nationwide crusade to end what is considered "the perpetual slavery of junior workers".

Secretary-general of NUBIFIE, Ola Elijah Olusegun, while insisting that salary increase or reduction should be the result of collective bargaining, regretted that "the current MDs of most banks are even earning more than the former MDs before the reforms introduced by Sanusi Lamido Sanusi (Central Bank of Nigeria governor)."

After the warning strike and follow-up meetings wherein UBN management allegedly signed agreements which it later reneged, and tired of fruitless negotiations, the workers shut down the bank nationwide on December 14, 2010, to press home their demand for improved welfare. There was, however, no succour for those who would ordinarily draw money from automated teller machines (ATM), as these too were unplugged from the network.

NUBIFIE directed the staff to report to their various duty posts but not to render any service to either customers or management as part of the "struggle to liberate and reposition our bank since August 14, 2009. We took the line of dialogue and entered into discussions/negotiations which agreements have not been fulfilled by the current management of our bank."

The memo to staff added that "several contentious issues as earlier advised are still outstanding and the management has not demonstrated any sincerity in addressing them."

The union said it was calling out its members to embark on strike because, "we are left with no other option than to take our destiny in our hands to demand for our rights. We can no longer fold our arms and watch our future being destroyed/jeopardised."

Representatives of the Nigeria Labour Congress (NLC) and NUBIFIE, for three hours, also barricaded the gates of the bank's headquarters for over three hours over breach of collective bargaining agreement.

The action was also to call for reinstatement of sacked union members of staff, recall of executive members of the union's local chapter transferred to the hinterlands, and the implementation of the 2010 agreement reached and signed with the management.

The latest assault

In what may be more than a mere coincidence, the NLC, led by its president, Abdulwaheed Omar, on Monday February 14, led Labour to picket the bank's head office and branches nationwide over the attempt by management to derecognise the labour unions and the recurring issue of high-handedness, among others. Staff of the bank, who were already at their desks, were holed up, while Labour, armed with two petroleum products tankers and another long vehicle, blocked the entrance of the Marina headquarters, singing and chanting anti-Osibodu songs, while also disturbing neighbouring offices and road users, just as customers were barred from transacting business at branches of the bank nationwide, despite a restraining order from the National Industrial Court (NIC).

The picketing, which was joined by other affiliates of the NLC including the maritime workers, the National Union of Petroleum and Natural Gas Workers (NUPENG) and transport unions, among others, Omar assured, would last until (last) Friday.

He told journalists on Monday: "Our action to picket Union Bank is to justify the fact that the NLC will never allow the rights of workers, let alone any of its affiliates, to be trampled upon with the level of demonstrable impunity and despotism as is being visited on the bank's workers by Osibodu and the management of the bank.

"The criminal action of the management, which includes the initial sack of 13 workers, its ban of trade unions in the bank, the seizure of union offices, dismissal of 13 Labour leaders, and punitive transfers of union officials are fundamental violation of the Constitution, Labour laws and international conventions."

NLC deputy national president, Promise Adelusi, who is also the president, Senior Staff Association of Nigerian Universities (SSANU) was quoted by a national daily as alleging that Osibodu is deliberately trying to undervalue the bank so as to "sell it for peanuts to her cohorts".

The picketing, according to reports also received support from the bank's pensioners on the ground who alleged ill-treatment by the management.

"If a single drop of a worker's blood is spilt in the process of the planned peaceful and legal picketing of the bank, NLC will call out all workers and the Nigerian masses on an indefinite strike," Omar warned.

The workers, just like they did in December, berated the management's poor handling of their pension and gratuity, lamenting a situation where those who retired over five years ago were better compensated than those who exit the bank today.

The reported decision by the staff under the aegis of the Union Bank Association of Senior Staff (UBASS) not to join the strike was, however, thrown over-board on Tuesday, a public holiday declared by the Federal Government to mark the Muslim feast of Id el Maulud, following a text message from their leaders stating that a colleague, David Eshiet, died in Dutse, capital of Jigawa State (where he was recently transferred), earlier that day.

The unionist, while appreciating the commitment of staff to the struggle, noted that "with effect from Wednesday, (February) 16, 2011, the unions hereby direct all staff to embark on total strike."

Continuing, the SMS, which bore no name, directed all staff to "stay away from the office until further notice. It is in your best interest to comply, if we must stop this evil in our bank. It may interest you to know that David Eshiet, who was transferred to Dutse branch, died today, February 15. Who'll be next?"

Among its demands, Labour had sought the reinstatement of the sacked workers of the bank, withdrawal of members of the executive arm of the chapter union who were transferred to interior villages, and withdrawal of its letter stating the non-recognition of UBASS and ASSBIFI, an affiliate of the NLC, as well as the implementation of the 2010 agreement reached and signed with the management.

True to their threat, the bank's workers crippled activities at its Marina head office, as Labour activists joined the staff as they closed the street to vehicular movement, with spill-over effects on the equally busy adjourning Customs Street on which is located the CBN Lagos head office annex and the Nigerian Stock Exchange (NSE) building, among others.

Reactions

Expectedly, the recurrent crisis in the bank has continued to generate reactions from stakeholders, with some tracing the problem to the possibility that Osibodu and her team came to UBN with a mindset that it is too conservative, and the system, evil and in need of wholesale, rather than gradual and careful change.

Writing in a national daily recently on 'Union Bank and its Labour relations', an Industrial Relations practitioner, E.O. Arikibe, noted that by her appointment, the CBN, indeed, reposed a lot of confidence in Osibodu, "who must have been perceived as an Amazon of sorts".

Continuing, he wrote: "From the inception of her appointment, Mrs. Osibodu was perceived as a business-minded individual who, in spite of all odds, was set to turn around the beleaguered bank. But recent happenings seem to cast doubt in many who now strongly feel that she may not be mindful of the implications of her decisions and actions in the running of the bank.

"The raging battle between the management of the bank under her headship and the two domestic Labour unions is a pointer to buttress this assertion. Unequivocally, there seems to be absolute misconception of the principle of social partnership in Labour-management relations in Union Bank Plc.

"I am particularly disturbed at the lingering imbroglio that led to the termination of the appointments of 13 senior and middle level employees of the bank for 'not reneging participation in union activities'. According to report, a circular was on January 13, 2011, issued directing that the senior and the junior unions in the bank should cease to exist forthwith because they were engaging in 'unlawful operations'. However, what constitutes 'unlawful operations' was not stated.

"Perhaps, the management of the Union Bank Plc - an old generation bank for that matter - should be reminded of the entrenchment of the right to peaceful assembly and association in our Constitution. Thus, Section 40 of the nation's law book elucidates that 'Every person shall be entitled to assemble freely and associate with other persons, and, in particular, he may form or belong to any political party, trade union or any other association for the protection of his interest.' In fact, it has become pertinent to ask whether an employer has the power and the right to order the cessation of unionism in a unionised organisation, without genuine reasons. The reasons being adduced here are not weighty enough to warrant the injustice being meted out to these 13.

"Union Bank Plc is a bank that has come a long way and cannot be said to have a dearth of the right calibre personnel who are qualified and experienced, especially in the area of Labour-management relations, to guide management in decision-making. Two things are perceived here: the management is either being misadvised or averse to good advice and opts to remain unnecessarily obstinate."

Arikibe regretted that by the face-off, the parties should have realised that the interest of the banking public is at stake, with depositors being kept in suspense and the Nigerian economy at the risk of being jeopardised, unless "urgent steps are taken to reverse the ugly trend that may trigger off conflagration of uncontrollable dimension. Nigeria cannot afford bank liquidation and its unpalatable consequences at this time."

The battle at UBN, our correspondent learnt, actually began with pensioners, with the management forgetting that the bank was built with the former and existing staff holding 35 per cent. The pensioners, though diverse, are as a group very strong.

"Hardly had she finished with the pensioners than she jumped on the staff, complaining that the unions are drawing the bank back, leading to another crisis. Although she was appointed for tenure of two years, she chose to dabble into areas clearly outside of her core mandate, including the attempt to rebrand the bank's approximately 500 branches across the country," the source added.

The bank, according to unconfirmed reports, is already losing depositors who, as a result of the recurrent strike action, resorted to closing their accounts and transferring their money to competitors. The bank's deposit base, the source noted, had plummeted significantly, as the bank lost huge deposits in the process, adding that every bank needs a sustained flow of deposits which is its life blood. To have these deposits, he continued, any bank requires dedicated workforce who are reasonably satisfied and at peace to effectively serve customers in a friendly environment.

Another source noted that the objective mandate of the bank was clearly defined from the very beginning, including ensuring stability, enthroning corporate governance and managing the bank to relative good health, such that new core investors can inject the much-needed funds and management needed for the bank to remain competitive. From all indications, he lamented, "it is glaring that Union Bank is not stable enough to retain customers and attract new ones, despite the assurance and guarantee given in 2009 by the CBN."

In the beginning

Union Bank came to Nigeria in 1917 as Barclays Bank DCO, UK. It became a wholly-owned subsidiary of Barclays Bank International Limited in 1969, and was listed on the NSE in 1971, with the foreign owners having the majority holding and leaving only 8.33 per cent in the hands of Nigerians.

Following the promulgation of the Nigerian Enterprises Promotions Decree of 1972, the government acquired 51.67 per cent of the bank's shares, while Barclays Bank Plc, London, retained 40 per cent. The foreign shareholders sold their stake to Nigerians, resulting in a name change in 1979 to reflect the new ownership structure. The remaining interest of Barclays Bank was sold in 1989.

There are those who blame the fate of the bank today on the alleged disapproval of the CBN for its plans to raise fresh capital, leading to the emergence of core investors that would direct the affairs. The then CBN governor, Prof. Chukwuma Soludo, was quoted as saying that Nigerian banks are not multinationals, and that foreigners would not be allowed to buy them over. Any bank seeking to operate in Nigeria, Soludo reportedly added, should rather approach the CBN for an operating licence, and that such would be given without stress.

The bank had, at an Extra-ordinary General Meeting (EGM) on September 27, 2007 in Kano, sought to allow a new core investor buy in as part of plans "to raise additional capital through a placing process from strategic investors with multinational banking experience and take all necessary steps in pursuance of the placing process".

The foreign investors would acquire not more than 30 per cent of the aggregate ordinary shares of UBN as at the date of completion of the placing process, "subject, in all respects, to all required regulatory and statutory approvals".

Shareholders had, in anticipation of regulatory approval, increased the bank's authorised share capital from 15 billion to 20 billion shares, amending the Memorandum of Articles of Association to reflect the increase in authorised share capital of the bank.

Once more, the bank has entered into negotiation with a potential core investor to fast-track the recapitalisation process of the bank and re-launch to the path of steady growth.

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