In another bad sign that the Nigerian banking sector is a den of pen and briefcase robbers, operatives of the Economic and Financial Crimes Commission (EFCC) last week, arrested the Managing Director of Access Bank, Herbert Wigwe, in Lagos. Earlier, the Commission’s agents visited the offices of Sterling Bank in Lagos, during which the bank’s Managing Director, Yemi Adeola, was picked up for questioning. All this came hard on the heels of the arrest of Fidelity Bank’s Managing Director, Nnamdi Okonkwo amid disquieting allegations of his involvement in the money laundering activities of former Petroleum Resources Minister, Diezani Alison-Madueke to the tune of a jaw-dropping $115 million. The grapevine has it that the EFCC will finger the former Managing Director of Firstbank, Bisi Onasanya in connection with sharp practices involving Jide Omokore. In times past, bankers were people of high integrity and moral rectitude; their words were their bonds. Nigerians can only bemoan the good old days when bankers not only managed money; they managed people’s money.
The reasons for the raft of arrests remain unknown and it remains unclear if the bank executives were being questioned as part of the wider investigation in which the EFCC claims to have recovered up to N6.5 billion in cash and properties from former Jonathan administration officials in the last two weeks.
Aside from the cash and assets recovered, the EFCC is focused on $115 million from a transaction between Madueke and Fidelity bank whose managing director and head of operations are currently in EFCC custody. According to the EFCC, $115 million was routed through Fidelity when the bank’s MD was summoned by Madueke to her house and told that four companies would deposit money into his bank. Madueke deposited $26 million of the $115 million. Rather than fill out the suspicious transaction form and forward it to the Nigeria Financial Intelligence Unit (NFIU), as is expected for transactions involving such huge amounts, Nnamdi Okonkwo kept quiet and went ahead and distributed the money as he was instructed by Madueke. The embattled Fidelity Bank, in a statement, denied any wrongdoing, saying it is cooperating with the EFCC to resolve the issues.
As investigations continue and more discoveries are being made, the standing view is that Nigerian bankers have aided and abetted criminal activity, especially money laundering by government officials. In recent times, Nigerian banks and their top officials have been accused of promoting corruption, using their banks to aid advanced free fraud (aka 419), or stealing customers’ deposits or aiding politicians to fleece the public treasury. Despite banking laws designed to flag the movement of large sums of money by private individuals and public officials, their families and close associates, Nigerian banks ignored several atrocities of the clique to become accomplice in undermining the country’s economic growth.
Among other ills plaguing the banking sector, the lack of ethical standards is a serious drawback that undermines the fight against corruption. Despite the credibility crisis engendered by the immoral aspect and pernicious effects of corruption in the banking sector, bankers are driven by greed and self-interest and will continue to collude with those stealing the country blind because a lot of this dirty money has kept the banks alive. Nigerian bankers prefer to aid and abet money laundering as corruption has taught many Nigerian bankers a dangerous and wrong lesson that it does not pay to be honest, hardworking and law-abiding. The Nigerian banking sector is still filled with unethical practices including insider abuse, fraudulent dealings, fraudulent rendition of statutory returns, window-dressing of accounts, poor corporate governance and other ills that have made nonsense of the banking reforms of 2009.
In 2008, then CBN governor, Lamido Sanusi booted seven bank managing directors and their entire management teams out of office over corruption and mismanagement, while some top bank executives were put on trial for running down their banks. Going forward, the CBN said Nigerian Banks will undergo a series of stress testing to measure whether the institutions have adequate capital or assets to respond effectively to various adverse scenarios. It would be recalled that the first stress testing carried out by the CBN with the help of the International Monetary Fund, IMF in 2009 led to the bail out of eight of the country’s 24 banks, after Non-Performing Loans (NPLs) hit over a third of total loans across the banking system and also led to the removal of the executive management team of the failed banks.
At that time, the Assets Management Corporation of Nigeria (AMCON) said the Nigerian banking crisis, which peaked in 2009, should be considered resolved because the ratio of non-performing loans to all bank loans had fallen from about 50% to within the CBN target of 5%. AMCON’s feat, of course, came at the hefty price of about N5.7 trillion, which the corporation procured by issuing five series of zero-coupon bonds. CBN data shows the ratio of bad debts to total bank loans dropped to 5% level which banks could easily absorb because, apparently drawing on the Banking Sector Sinking Fund, AMCON purchased toxic assets worth N76 billion. This 5% ratio target is unattainable in the prevailing unfriendly economic environment. Hence, if AMCON stops further purchases of toxic assets from banks, the ratio is bound to rise with borderline banks becoming distressed. For the touted policy not to allow any bank to go under to be sustained, the sinking fund should give way to a prompt review of the extant fiscal and monetary measures, which fuel high inflation that props up high lending rates, the main predisposing factor to escalating non-performing bank loans.
Regrettably, it turned out that CBN has been involved in the cash-and-carry business. The CBN shirked its own responsibility as a regulator to become an active participant in illegal activity of allowing hard currency to be freighted from its vaults into the homes of politicians and their cronies. What a shame! The Global Integrity report released in 2015 shows that Nigeria is culpable in illicit financial flows as the 10th country on the list, with an estimated US$15.7 billion of illicit funds going through the Nigerian banking system annually, despite several protocols on illicit financial flows, money laundering, and terrorism financing to which Nigeria is a signatory. Losing such a staggering amount to illegal acts, in a country blighted by underdevelopment, huge infrastructural deficit, dehumanizing conditions of living, rising poverty and youth unemployment, among other socio-economic malaise, is criminal.
It is also a damaging comment on the abysmal failure of the CBN to regulate the banking sector that the Nigeria Deposit Insurance Corporation (NDIC), came out to publicly decry that unethical deals have rendered Nigerian banks sick. A special examination conducted on the 24 banks in Nigeria by the CBN and NDIC revealed that 10 of the 24 banks were critically distressed as a result of weak ethical standards and poor corporate governance amongst other factors. While Nigeria labors for breath under political corruption, and a shaky economy, the country is now being asphyxiated by crooked bankers even as law officers look the other way as banks have become real conduit pipes for money laundering.
All in all, the banks have continued to perpetrate moral hazard lending for projects that are sure to fail while the bank loan defaulters have been handed financial feather beds. This phenomenon does not only stifle economic growth and development, it is also a potential source of political instability and insecurity. It is against this background that if urgent steps are not taken to rein in these bankers and reverse the trend, Nigeria may be digging itself into a development quagmire.
