Revelations have emerged that certain powerful individuals and states of Northern extraction are behind the sack of the five affected bank chief executives.’
Bank chiefs’ ordeal: How powerful mafia used Sanusi
• Northern Govs, Atedo Peterside, others linked • Banks gear up for Islamic banking
By BENNI OBI JNR. with additional reports by FEMI ONAYEMI and DOMINIC UZU
THE recent shake up initiated in the banking sector by Central Bank of Nigeria (CBN) Governor, Malam Sanusi Lamido Sanusi, has continued to be discredited as a sham – an incredible exercise undertaken at the behest of a power mafia constituted by discredited former bank moguls and some tribal zealots including some governors from the Northern part of the country. Sanusi has however continued to deny this.
The former bank Chief Executives Officers (CEOs) ran out of reckoning in 2006 when former CBN Governor, Professor Chukwuma Soludo embarked on an extensive re-organisation of the banking sector through the widely applauded consolidation policy.
These CEOs complained perniciously that the consolidation exercise rubbished their seemingly illuminating careers and their investments in some of the banks that went under. Some influential elements from the North who have been worried that the banking sector is dominated by people from the Southern part of the country were said to have firmly succeeded in convincing Sanusi to “do something about this marginalization of the North” before the situation becomes irretrievable.
National Daily sources revealed that this influential Northern Elements started to mount pressure on President Umaru Musa Yar’Adua not to renew the appointment of the then CBN Governor, Prof. Soludo barely few months of the President’s inauguration into office. They advised him to replace Soludo with a Northerner who will immediately redress the alleged imbalance between the North and the South in the banking sector.
The pressure on Yar’Adua, sources said, was sustained by the former bank CEOs who allegedly wrote several petitions to the Presidency on the presumed dangers inherent in Soludo’s consolidation policy. This submission coming from the disgruntled former CEOs who are mostly from the Southern part of the country availed the President the weapon with which to give official accent to Sanusi’s so-called reform initiative.
National Daily learned that the choice of Sanusi as Central Bank Governor was deliberate. The Presidency was very much aware of his aversion to Soludo’s consolidation policy and his background as a Northern irredentist despite that he tries to masterfully present himself as an ideologically driven pragmatist and patriot.
Sources said that Sanusi’s appointment was actually influenced by powerful Northern religious leaders and politicians. The traditional rulers including the Emir of Katsina, Abdulmumini Kabir Usman, were alleged to have convinced the President that Sanusi is the right man for the job.
Before the official pronouncement on his appointment, sources said that Sanusi during one of the critical security checks on him, was subtly told to “quickly review” the policies initiated by his predecessor, Chukwuma Soludo. It will be recalled that during his widely televised screening by the Senate, Sanusi when asked to comment on Soludo’s handling of the economy and the banking sector, said that every step his predecessor took was the right step to have been taking. But events of recent weeks now prove otherwise.
National Daily Intelligence revealed that the so-called banking sector reform under Sanusi is nothing but a decoy, a smokescreen to snatch the controlling power of the big five banks in the country from their Southern owners and thereafter hand them over to wealthy investors from the North. Sources said before he unleashed the landslide in the banking sector, Sanusi had held several secret meetings with some multi-millionaires from the North urging them to be prepared to invest substantially in the big five banks when he eventually announces the removal of their Managing Directors and the temporary acquisition of the banks by the CBN.
Sources disclosed that part of Sanusi’s mandate from the powerful Northern politicians and religious leaders was also to use the so-called reform programme as an opportunity to introduce Islamic banking in the country, which they believe is long overdue.
According to sources in the presidency, the clamour for Islamic banking started under the former President Olusegun Obasanjo. Specifically, the source revealed, the Islamic banking policy which is still not clearly explained by the apex bank to the larger percentage of bankers in the country was supposed to be introduced simultaneously with the Sharia Law adopted by almost all the states in the north. But Obasanjo was said to back Soludo against the policy.
Many analysts have argued that the North has been desperately looking for ways to advance the course of Islam in the political and economic life of Nigeria. “Northern leaders have been ruing the controversy caused by Nigeria’s attempt under President Ibrahim Babangida, to register the country as an official member of the Organization of Islamic Countries (OIC). The Northern leaders reasoned that since the North no longer enjoy the monopoly of political power in Nigeria, it is profitable to turn to the economy as alternate source of power” an informed source said.
National Daily learned that some powerful Islamic foreign Nations like Saudi Arabia, Iran and Libya had advised former Nigerian Heads of State who are Muslims to work on how to make Nigeria an official Islamic Nation on the grounds that Muslims particularly the North have the highest population in the country and also controls the Armed Forces.
The Foreign Islamic Nations sources said sent emissaries to President Yar’Adua imploring him to always “protect the interest of his Religion, Islam, in the policy and actions of his administration.” These foreigners, sources said, also influenced the appointment of a Northerner as CBN Governor and the proposed Islamic banking policy of the Yar’Adua administration.
Piecing together Nigerians reactions on the economic melt-down and the welcome decision to revitalize the ailing banks in the country, revelations have emerged that certain powerful individuals and states of Northern extraction, it appeared, got wind of the operation “some weeks before the sack of the five affected bank chief executives.’’
National Daily Intelligence revealed that huge sums of monies, running into several billions of Naira, which belonged to some state governments “were moved from the five affected banks thereby deepening their liquidity woes before the clampdown.’’
One of such States is Kebbi, where Governor Saidu Dakingari actually succeeded in withdrawing “huge sums of government funds from the five banks.’’
Sources said they strongly believed that other Northern Governors “may have taken a cue from Dakingari’’ by withdrawing their governments funds from the troubled banks.
Financial experts are of the opinion that the withdrawal of such huge monies, in the circumstances, from the five banks, at such crucial times might have aggravated their woes.
Speaking during an interview with National Daily in Kaduna, Dakingari, who was only harping on his financial management expertise, said:
“We are very lucky our money is not in any of the five banks, whose Chief Executive Officers {CEOs) were sacked by the CBN.
“We moved our money away from those banks about three weeks before the clampdown.’’
CBN said the Clearing House will inject N400 billion into the five banks in the country following the decision to remove the CEOs and executive directors of the affected banks. The affected institutions are Intercontinental Bank Plc, Union Bank of Nigeria Plc, Oceanic International Bank Plc, Finbank Plc and Afribank Plc.
The CEOs that have been sacked by the CBN and are (except Erastus Akingbola, Intercontinental Bank) still being held by the Economic and Financial Crimes Commission (EFCC) are Okey Nwosu (Finbank); Sebastian Adigwe (Afribank); Mrs Cecelia Ibru (Oceanic Bank); and Bartholomew Ebong (Union Bank).
But in a pre-emptive move, Erastus Akingbola, MD/CEO of Intercontinental Bank according to sources got wind of his impending removal and was said to have called his Executive Directors to inform them of their certain sack by the CBN.
However, the CBN governor, who announced the decision at the Emergency Bankers’ Committee meeting convened by the CBN in Lagos, explained that the decision was being taken to safeguard the financial sector from systemic collapse.
Sanusi reportedly said that following the audit exercise conducted by CBN’s examiners (a report the sacked bank executives neither saw nor even have the opportunity to explain itself) it was discovered that five of the banks had accumulated margin loans of N500 billion, among other loans, that had gone bad and eroded their shareholders’ funds.
“Some of these banks are quite large institutions and they have been mismanaged, so we had to move in to send a strong signal that such recklessness on the part of bank executives will no longer be tolerated,” Sanusi said.
He said the CBN had obtained the approval of the President to inject N400 billion into the affected banks in order to shore up their tier 2 capital to minimum acceptable levels. Sanusi added that the funds being injected by the CBN was just temporary and does not translate to the government taking a stake in the five banks, as the interim management will be given a period to recapitalise the affected institutions, following which the N400 billion will be paid back to the CBN.
On how the CBN will prevent a run on the banks and create panic in the economy, Sanusi said the CBN intends to make it clear that the money being injected by the reserve bank as well as the decision to guarantee interbank placement should allay depositors’ concerns.
The CBN, he stated, stands ready to ensure that no bank collapses in the country, but will encourage them to seek for funds to raise fresh capital and merge with stronger banks. He said an interim management and board for the affected banks will be put in place to run the institutions until they are taken over by new management teams and owners.
Since the sack of the CEOs of the five banks, the CBN Governor, Sanusi Lamido Sanusi, has repeatedly denied any tribal sentiments behind his actions.
Another action fueling latest insinuations of perceived Northern Agenda in the whole banking saga, is the alleged plans “to return the Arabic inscriptions on the Naira notes..’’
The inscriptions were removed during the tenure of Sanusi’s predecessor, Professor Soludo. There is huge concern not just about the distortion of progress such policy inconsistency would cause, but also the huge financial cost to return to the jettisoned regime as sources say if the reform is genuine, all wasteful ventures then need be aborted.
Also, the speculation that the CBN might be proposing “to sell the five trouble banks to some favourable foreign firms,’’ is another perturbing issue, even though feelers from the international community, especially Europe and America do not favour any interest in the affected banks or any Nigerian bank. What National Daily however discovered was the fact that the foreign governments have actually warned their would-be investors to keep off the Nigerian banking sector for now. Reason: the perceived policy summersault of the Nigerian government regarding the banking sub-sector.
Consequently, Sanusi is eyeing investors from Asia, the Middle East and Libya.
Dakingari celebrated his own financial sagacity concerning the movement of the Kebbi State government funds from the five banks, saying, “We all have our own threats. We all have different characters. Once it is moulded, it is very difficult to change.’’
“We are very lucky, our money is not in any of these banks that their CEO were sacked by the CBN, we moved our money away from those banks about three weeks ago (before the shake-up),” the governor said.
The dust and discord raised in the banking sector and among depositors by the apparently phased reform plan of the CBN are yet to settle. But then, Nigerian remains united and committed to the desire for creating a healthy banking system that could re-float the battered economy.
The bombshell in the banking industry did not only leak to some influential Nigerians including some states in the North but also to newshounds five months before it was officially announced.
For instance, the VANGUARD in its March 23, 2009 edition, published in its front page a story captioned: “Group Plots to Take Over of Five Banks.”
The report hinted that “Anti-consolidation forces have regrouped with the hope of dismantling the structures and forcing a takeover of the top five banks in the country, Vanguard can now reveal. The grand plan by the group is to cause panic and uncertainty in the industry and make the target banks look unsafe for depositors.”
VANGUARD further reported that: “the aim of the anti-consolidation forces is to cause loss of public confidence in the banking industry and compel the Federal Government to move in by injecting funds. Further they ultimately plan to instigate government to take equity holding in the targeted banks.”
The report continued: “Part of the plans hatched by the group is to ensure that the incumbent Governor of the Central Bank, Professor Chukwuma Soludo, does not get a second term. The plan is also to ensure that whatever gains consolidation recorded are discredited.
This, it was learnt, was meant to force the President to act quickly in the matter of appointment of a successor to Soludo as they anticipate that the president’s slow move may scuttle their dreams and cause the renewal of Soludo’s re-appointment for a second term.
The group’s second game plan is to make Nigerian banks look unsafe in the eye of the banking public. Part of the game is to spread rumours that some banks are unsound and are on the verge of collapse.. They sent out text messages to individuals and account holders passing wrong information on their target banks. At the moment, the group’s target is one of the high-flying new generation banks where they have sent out several messages.”
This newspaper has it on good authority that the so-called reform began by the new CBN Governor started and ended with the removal of the five Managing Directors and the subsequent takeover of the five major banks. The Central Bank true to predictions of National Daily chickened out from continuing its blitzkrieg on the banking sector because according our sources; it was fait accompli after the five banks. Why many are wondering why the apex bank has refused to publish the names of debtor and non performing loans in the remaining banks which they hurriedly gave a pass mark in spite of information to the contrary. Unsurprising though, the so called cleansing of the Aegean stable from information available to us is a cover up for an agenda that was hatched in 2006 when a group of very powerful and politically connected people felt that they have lost out of the industry due to the consolidation exercise carried out by the Central Bank under Prof. Chukwuma Soludo. These groups many of whom today have access to the commanding heights of this political dispensation set out modalities to stage a comeback by any means necessary. Some of them tried to buy back through the public offers and private placements that some banks carried out to shore up their capital but this was not enough to give them the level of control they wanted. We have it on record that the initial bubble witnessed by the capital market especially with bank’s stocks which led to the rush that eventually crashed the market was not as a result of institutional investments as speculated by the authorities but by the anti-consolidation group.
Moreso, the said de-marketing that was rampant at the twilight of Soludo’s era at the apex bank was the handiwork of this group, some of whom are still active within the financial sector of the economy. Their principal aim is to cause panic and uncertainty and to make the banks look unsafe for depositors. A veteran banker who would not like to be mentioned told National Daily that the problems Prof. Soludo had with the issue of the Africa Finance Corporation was spearheaded by this group. It was then they started working on a ‘credible’ candidate -pending the presidential nod- who will not only do their bidding but also have personal misgivings about Soludo’s banking consolidation exercise.
Our source further said that when Vanguard newspaper broke the news on March 23 this year about the plan by this group to take over five of the nation’s big banks, characteristically Nigerian, no one gave it a thought. Moreso, Prof Soludo, our ex-banker friend told us got wind of this plan necessitating the decision that foreign investors will not be allowed to take commanding interests in Nigeria’s top ten banks, this was because of a security report made available to him though sketchy that there is a plan by some powerful Nigerians to use foreign interests as fronts to buy over some of the big banks. That pronouncement, it could be recalled got a lot of media attention because it sent the group back to the drawing board prompting them to work out a plan B.. As at that time they had not fully secured the green light from Aso Rock on Soludo’s second tenure and this also was a setback to the groups plan. That was why those who are in the know nodded in agreement when Mr. Sanusi pounced on the issue of foreign ownership even before his clearance from the Senate saying foreigners can buy Nigerian banks if they so wish. Moreso, in his first media interview which he gave to Financial Times of London, he used that occasion to reiterate that foreign investors are welcome. With that, the second huddle was how to prepare the grounds for this plan to work.
The same way the earlier story published by Vanguard Newspaper on this issue was ignored is how another one published by LEADERSHIP on Sunday, June 28, 2009, that immediately President Umaru Musa Yar’Adua named Malam Sanusi Lamido Sanusi governor of the Central Bank of Nigeria (CBN) there had been some disquiet in the top hierarchy of some banks. The paper alleged that the banks involved are those whose CEOs were against Sanusi becoming CBN governor. The report had it that five managing directors were said to have expressed their reservations to Sanusi’s appointment as the governor of the CBN.. What is however, yet to be resolved is, to what extent was these five managing directors aware of the grand plan to take over their banks necessitating their opposition to Sanusi’s appointment or did the CBN truly carry out a special examination on them and found them wanting in all respect deserving a bailout and takeover? A CBN source had at different occasion informed this newspaper that what took place was not a special examination but an Ad Hoc test contrary to the apex bank’s official line. Thus according to our veteran banker source, it is not a mere coincidence that the apex bank decided to sack only the managing directors of five banks despite the non completion of the examination on the others, which many have argued may never happen.
According to information available to us, there were underground plans by some people who were officially informed of the ill wind that was about to befell the five banks to buy off some of the branches of both Oceanic Bank Plc and Intercontinental Bank Plc . This newspaper was reliably informed that the chairman of Stanbic IBTC Nigeria Mr. Atedo Peterside who is believed to be a very close ally of the CBN governor reportedly contacted Oceanic Bank CEO Mrs. Cecilia Ibru requesting to buy 80 of the bank’s branches. We also learnt he made similar overtures to Dr. Erastus Akingbola of Intercontinental Bank Plc requesting for about 100 of his branches. Mrs. Ibru was said to have requested to know why he wanted to buy the branches and he was quoted as saying that since they were posting fantastic profits. Mr. Peterside was said to be confronted by one of the bankers on why he would prefer to buy existing branches rather than open up new ones for his bank of which he could not give an answer to.
National Daily was also informed that the same week the CBN hand-picked management came into Oceanic Bank Plc, the first thing they did was to kick out Mckinsey, an international financial services consulting firm contracted by the bank to help reposition it on a solid footing as part of its global agenda. The initial contract was for 30 months which would have expired in December 2009, while they would have one year to monitor and sustain the implementation of the programme.
The actual debt burden of the affected banks unconfirmed reports say is farfetched from the published figures. This is much so with fresh facts emerging that the whooping N420 billion the CBN pumped into the banks was after all unnecessary as the banks needed only N100 billion with the largest amount – N50 billion –– going to Oceanic Bank while Intercontinental Bank could have been N32 billion and Union Bank N16 billion.
Investigations also revealed that the affected banks also had assets that could have been disposed off and more than the funds injected by the CBN realized. Secondly, shareholders could have brought in more funds or outright new investors brought in by the decision of shareholders of the bank.
As part of the game the Central Bank hurriedly organised a road show at the heart of London’s financial centre, Liverpool Street, to try to package the five banks for sale to foreign investors, this however balked as some of the investors approached by the apex bank to take equity stake in the five banks have all stayed away mainly because of the unfolding drama within the Nigerian Banking sector. A commercial attaché at one EU embassy told National Daily that his embassy has already sent warning light to investors in their home country to stay clear of Nigerian banks until the dust raised by the sacking of the five Managing Directors settle. “From the look of things this action will take Nigerian banking sector back to the days of Abacha’s failed banks saga,” the man who said he was in Nigeria first in 1994 as an advisor to one of the major oil companies said.
Worried by the lack of interest by western investors, the Central Bank is said to be talking to the Chinese, the governor according information available to us will use the opportunity of this year’s World Economic Forum in Dalian, China, to meet potential investors over the banks. The need to get investors at the WEF in China to express interest in the five banks according a source at the CBN is of immense importance. This is to checkmate the negative perception created by the withdrawal of the two investors who would have taken over Intercontinental Bank Plc and Afribank Plc, the foot-dragging by those short-listed for Oceanic, FinBank and Union Bank who are pleading for time to study the situation as the scepticism over the real issues behind the sacking of the bank chiefs mount by the day. There are unconfirmed reports that contrary to the apex bank’s denial that it has no immediate plan to sell the affected banks to either local or foreign investors, one of the foreign investors is quoted as saying that a pre-selection of the foreign investors for the banks was done by the CBN in July even before the announcement of August 14. And to read from the media the apex banks denial of some of these facts he said is even the more reason many are sceptical to bank on the CBN because it is an indication that something is fishy somewhere, he said.
However, National Daily reliably gathered from a serving Senator of the Federal Republic who would not want his name in print that what is going on at present is falling into the plan B which is, if foreign investors fail to show interest then local investors will take over, and who are the local investors, if I may ask, the same people that raised the commotion in the first place. And the so called foreign investors will not take interest because the body language of the CBN is not what they can depend on.. As part of the game plan visible efforts will be made to get foreigners interested but underground activities will be going on to frustrate them. The next stage according to our source is to pave way for the powerful master minders of the crisis to take over the banks. All these actions have had their cumulative toll on the economy, Standard and Poors recently downgraded Nigeria’s BB foreign currency rating to B+, citing the potential for “reduced fiscal flexibility, moreso, Nigerian banks are finding it had to get their correspondent banks to honour their letters of credits anymore a development that is capable of having negative fiscal impact on the economy.
Many prominent Nigerians have called for caution in the way the apex bank is carrying out its decisions, Chief Olu Falae is among those who have expressed deep worry over the use of language, style and approach and confessed that the way Sanusi carried out his first official function upset him. He warned that the CBN and the banks have no business taking debtors to court but agreed with those who claimed that Sanusi has an agenda. According to Falae, the combative nature of Sanusi created the impression that his agenda may be personal or he might be acting out a group objective. Others say they are sitting back as the consequences of Sanusi’s hasty action unfold. In spite of CBN’s claim that it acted within the bounds of law many have questioned the rationale behind the removal of the boards and management of financial institutions without meeting them and informing them of the infractions they had committed, be it under the Banks and Other Financial Institutions Act (BOFIA) or the CBN Act.
The rule of thumb is that they must be informed and are always instructed to rectify the infractions (including recapitalising the banks, where necessary), failing which the CBN can decide to impose whatever sanctions it deems necessary. Moreover, the apex bank’s inability to conclude the said examination of the remaining banks, making the results public and the sidelining of the shareholders of the affected banks smacks of crass hypocrisy which does no one any good.