Nigeria Shareholders Threaten Sanusi

Don’t tamper with our investments!

Central Bank of Nigeria Governor; Sanusi Lamido Sanusi

Lamido SanusiSmall shareholders in Nigerian banks that recently received funds from the Central Bank of Nigeria have warned the CBN governor not to tamper with their investments or he will be in court for the duration of his tenure. 

Lamido Sanusi declared last week that “the shareholders of the eight banks recently taken over by the Central Bank of Nigeria have automatically lost their investments in the banks” but some small investors have warned they will ‘be in court all their life to recover their money” if the CBN governor carries out the threat. 


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Speaking to on the developments, many voiced their disappointment at Lamido Sanusi’s “emotional outburst”. 

“As a common man who bought shares with my small earnings”, Emeka who claimed to be a shareholder in Afribank said, “Sanusi’s utterances are quite inflammatory and lack diplomacy expected of a high ranking Govt. official…I thought he said he was protecting shareholders and depositors by his intervention, now he is singing a new tune, bull-dozing everyone like a Spanish conquistador”.

The CBN governor, Lamido Sanusi disclosed last Friday in Lagos while speaking at a policy dialogue organised by the Nigerian Economic Summit Group disclosed that the banks – Union Bank of Nigeria Plc, Oceanic Bank Plc, Intercontinental Bank Plc, Afribank Plc, FinBank Plc, Bank PHB plc, Spring Bank Plc and Equatorial Trust Bank Limited – were found to be in a grave condition after the CBN’s audit of the 24 banks in the country, prompting the injection of N620 billion into the affected institutions by the Reserve Bank. 

He pointed out that the result of the audit in the eight banks indicated that the non-performing loans of most of them exceeded their share capital, which resulted in a situation whereby their balance sheets had a negative net worth; “Their shareholders’ funds were eroded from the provisioning for loan losses, leading to an erosion of their investments in the banks,” the governor explained.

But speaking to our reporter, a financial expert says if the government wants to put the troubled bank into “temporary public ownership” in the coming days, this would lead to compensation for shareholders. He argues it is ‘grossly unethical’ for the CBN to divest investors of their shares without compensation.

He said Sanusi and CBN may have been justified on their stance if they got a valuer to certify that the banks are unable to continue as a going concern and is in administration. But the CBN stance would be “grossly unethical” as the banks were still operating as usual owing to the government loans, he concluded.

Lamido Sanusi said the sacked bank executives and shareholders that went to court challenging their removal and alleged take-over of the banks, failed to realise they are no longer shareholders of the banks going by the books of accounts of the institutions.
“It is the government (or rather, the CBN) that has provided the bailout that has a claim on the investments”.

“That is what the aggrieved shareholders and former CEOs don’t seem to understand, which is why they even kicked against our debt recovery efforts that ordinarily will favour them,” he explained.

“As far as I know, the so called key shareholders and bank executives that ruined these banks do not deserve a place again in the institutions but should find their place in jail or even be shot dead,” said Sanusi in an emotionally laden voice.

He pointed out that the shareholders have been affected by the grave situation the banks were plunged into.

But this reasoning has not gone down well with the ordinary shareholders. According to a member of the Nigeria Shareholders Association (NSA), “all shareholders no matter how little should come together so that we proceed to court and challenge these super rich brigands who are actually riding on our little savings and shares, in connivance with bank CEO’s and the central bank governor to deprive us of our sweat which they siphoned to foreign bank accounts”.

Expressing his disgust at the CBN stance, he fumed that “the actions of these crooks will start a major endless war between the rich/govt and the trampled in this country before long. It is a matter of time. No evil empire lasts forever. History remains a big reference point”.

Contacted, a CBN official who craves anonymity says the CBN Governor is right. “Remember that the CBN is now concerned with how to make the banks recover and perform their role of financial intermediation for economic growth and development.”

He pointed out that in that speech, the CBN governor made it clear the bank directors have lost their investments but said “the other set of people with claims on the banks are depositors and creditors, whose interest he said the CBN was doing everything to protect by not allowing the banks to fail. But any other shareholder can emerge after the debts of the banks have been recovered. So in the end, small shareholders might still have claim to their investments, but that could be after the government have recovered their funds”.

Meanwhile a small shareholders’ group is hoping to initiate a class action against the government. The Group has confirmed it has taken legal advice for the eventuality that the shares are rendered worthless.

The action would be targeted at the CBN, the government for their part in the collapse and nationalisation of the eight banks, and the fraudulent bank directors.

On the possibility of such action a legal expert from Dynamic Chambers, Lagos, Nigeria says it could be difficult in practice but the former Bank Chief Executive Officers that were sacked by the Central Bank of Nigeria‘s Governor, Mr. Sanusi Lamido Sanusi, could be sued for what could be negligence. “Even the CBN, NSE and the former Regulators may not be entirely free for neglecting their statutory responsibilities.

“Remember the CEO’s were accused of what was described as gross abuse of office, ranging from fraud and concealment to granting loans without collateral into about N625.95 billion, most of which have become non-performing loans. While other sacked banks were arrested and arraigned by the Economic and Financial Crimes Commission (EFCC)”, being convicted of fraud might to lead to civil action for negligence”, he said.

“This crisis has led to the collapse of many banks and other financial institutions in Nigeria, a crash in the stock market, massive devaluation of share prices and wiping out of their investments”.

He explains that the rules for professional negligence are no different when dealing with a corporate entity such as a bank than when dealing with an individual. Provided that the bank owes its customer a duty of care and has acted negligently, that is unreasonably and not in accordance with acceptable banking standards and loss to the customer has ensued then a compensation claim for professional negligence can be made against the bank.

It will be recalled that on August 14, 2009, Akingbola, then CEO of Intercontinental Bank Plc, alongside other four CEOs of Afribank Plc, Mr. Sebastine Adigwe, Finbank Plc, Mr. Okey Nwosu, Oceanic International Bank Plc, Mrs. Cecilia Ibru and Mr. Barth Ebong of Union Bank Plc were sacked by the Central Bank of Nigeria’s Governor, Mr. Sanusi Lamido Sanusi, for what was described as gross abuse of office, ranging from fraud, concealment to granting loans without collateral into about N625.95 billion, most of which have become non-performing loans.

The apex bank then drew the curtain on its special audit of banks on October 2, with the release of the result of the last 14 banks and subsequently sacked Atuche alongside the managing directors of Equitorial Trust Bank, Ike Oraekwuotu and Spring Bank, Charles Ojo, and their respective executive directors.
Two others – Unity Bank Plc and Wema Bank Plc – were asked to recapitalise by June 2010.