Daily Corruption News: Nigeria’s “culture of corruption” contributed to the crisis which led to a $4 billion bank bailout earlier this year, with bank chiefs too cosy with powerful politicians, central bank chief Lamido Sanusi said on Thursday; U.K. Fraud Office Arrests Six in Alleged Commercial Loan Fraud; A trial accusing Silvio Berlusconi, the Italian prime minister, of bribing a British lawyer to give false evidence on his business dealings has resumed.
Sanusi sent a shockwave through the corporate establishment in August and October when he injected funds into nine banks and sacked the top managers of eight of them, saying lax governance had left them so weakly capitalised they posed a systemic risk.
Nigeria should extend its investigation of the banking industry to include the country’s stock exchange, central bank and Securities and Exchange Commission, Central Bank of Nigeria Governor Lamido Sanusi said at a conference in the nation’s capital, Abuja, today.
The investigation should also include the Federal Executive Coucil which comprises ministers and government aides, and political parties, he said.
Corporate governance can’t be effective without the issue of corruption being addressed, he said.
Your Daily Corruption News team– Friday 4 December 2009
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Financial Times (TI mention)
Italy:Berlusconi corruption trial resumes
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United Kingdom: UK Fraud Office arrests six in alleged commercial loan fraud
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— News from the TI movement
Nigeria’s anti-corruption police have filed charges ranging from recklessly granting loans to share price manipulation against many of the executives, including members of a business aristocracy which had long been seen as untouchable.
“You cannot be a good regulator if you are hob-nobbing with the operators. Bank MDs (managing directors) were always in the (presidential) villa,” Sanusi told an African stock exchange conference in the capital Abuja.
“How many regulators can discipline the CEOs of banks who were friends to the president? Bank CEOs were sponsoring politicians and political parties. So we have to address the culture of corruption,” he said.
“I’ve been very fortunate to have a president who supports what I’m doing.”
The 1.14 trillion naira ($7.6 billion) in bad loans run up by the first five banks bailed out alone is roughly equivalent to the combined annual income of the poorest 20 million people in Africa’s most populous nation, who live on around $1 a day.
Yet the bailout shocked Nigeria not for the amounts of money involved but because after only two months in the job, Sanusi had taken on some of its most powerful business figures, with interests ranging from shipping and hotels to oil and media.
“He’s always been a radical and his speeches and essays show this,” said Kayode Akindele, a director at Lagos-based financial advisory firm Greengate Strategic Partners.
WINNING POWERFUL ENEMIES?
Sanusi’s readiness to take on powerful vested interests in a country ranked among the most corrupt in the world has won him praise from international investors, but even his supporters in Nigeria fear it may win him powerful enemies at home.
Sanusi is a related to the Emir of Kano, one of the most powerful traditional rulers in Nigeria, and his royal lineage is seen as helping him to cut through the turbulence and in-fighting of Nigerian politics.
Analysts say he stands out as one of relatively few serving public office holders willing to speak their mind.
“If we say there’s no problem in Nigeria then we would be dishonest,” he told the Abuja conference.
“It’s not only in banking. In Ghana, for instance, a sitting president was defeated with 40,000 votes and he left office. This will never happen in Nigeria. In Nigeria, a president that has left office will be dictating to a sitting president.”
Ghana won praise from foreign powers including the United States for electing President John Atta Mills in a peaceful, transparent vote a year ago that defied the stereotype of a region blighted by conflict, coups and crisis.
The Ghanaian vote was a marked contrast to Nigeria’s last national elections in 2007, which were so marred by ballot-stuffing and voter intimidation that they were deemed not to be credible by foreign observers.
Nigeria has seen vocal reformists like Sanusi before, such as former finance minister Ngozi Okonjo-Iweala and former anti-corruption chief Nuhu Ribadu, but they fell out of favour when the political wind changed.
Some analysts fear Sanusi risks the same fate.
“Although there are one or two good things going on in Nigeria at the moment — the banks, the oil reform bill — there is no overarching sense of a reform programme and I think Sanusi in some sense is trying to compensate for this,” one Nigeria analyst said, asking not to be named.
“It would be a real shame, but also a silly mistake, for the banking reforms to fail because he can’t stay on his own turf.”
U.K. Fraud Office Arrests Six in Alleged Commercial Loan Fraud
U.K. prosecutors arrested six people and searched 19 properties in an investigation into suspected advance-fee fraud and rent fraud in the commercial property market.
The Serious Fraud Office is investigating a company operating as Gresham Ltd. and Gresham Finance (London) Ltd. that offered commercial loans of as much as 250 million pounds ($416 million), the London-based agency said today in a statement. The companies charged applicants up to 50,000 pounds for voluntary background investigations and a payment of as much as 5 percent of the face value of the loan, the SFO said. Suspected losses are at least 12 million pounds, SFO spokesman Sam Jaffa said.
After Gresham had taken the payments, it allegedly didn’t deliver the loans, according to Jaffa. The suspects are also alleged to have committed rent fraud by asking for incentive fees or a year of free rent from landlords in exchange for renting their property. The suspects then subletted the property, kept the payment and never delivered rent, the SFO spokesman said.
A phone number for Gresham was disconnected and the company couldn’t be reached for comment. The company is in liquidation, the SFO said.
Gresham Finance (London) Ltd. has no relation to Gresham Finance Ltd., which isn’t under investigation, the SFO said.
Prosecutors executed search warrants at 19 commercial and residential properties in London, Surrey, Cheshire and Derbyshire, England, yesterday, Jaffe said. Three of the six apprehended are due to appear at the City of London Magistrates Court today, the SFO said.
Berlusconi corruption trial resumes
A trial accusing Silvio Berlusconi, the Italian prime minister, of bribing a British lawyer to give false evidence on his business dealings has resumed.
The case follows a decision by an Italian court to strip the prime minister, who is not expected to attend Friday’s hearing, of immunity from prosecution.
The 73-year-old is charged with bribing David Mills with $600,000 in 1997 and is also accused of tax fraud and false accounting in the acquisition of media rights by Mediaset, his broadcasting empire.
But Berlusconi says biased courts are making false accusations to try to bring down the 19-month-old government, his third since 1994, and attack Mediaset.
Berlusconi’s trial has been suspended due to a law he passed which gave him immunity from prosecution.
But this was then ruled unconstitutional, meaning two pending trials against him could resume.
Mills was convicted of taking a bribe in February this year, receiving a four-and-a-half-year jail sentence, pending appeal.
The prime minister, in a separate court hearing, has also been accused by a former mobster of making a political deal with the Mafia in the 1990s.
Gaspare Spatuzza, a Mafia gangster-turned-witness told a court in Turin that his boss in the Italian criminal organisation claimed to praised Berlusconi in aiding the mob.
Spatuzza said Giuseppe Graviano had told him in 1994 that the Sicilian Mafia had “the country in their hands” thanks to the help they received and that “everyone was profiting including those who are in prison”.
According to the witness, Graviano said he “got everything thanks to the reliability of these people,” before giving the names of the premier
But Berlusconi has denounced press reports of his alleged links to the powerful criminal network as “the most unbelievable, vile attack” he had suffered in recent years.
His spokesman, Paolo Bonaiulti, said: “It is completely logical the Mafia would use its members to make statements against the prime minister of a government that has acted in a determined and concrete way against organised crime”.
The case is part of an appeal by Marcello Dell’Utri, a Sicilian business and political associate of Berlusconi, who was linked to a bombing campaign in 1993.
Dell’Utri, a senator in Berlusconi’s People of Freedom Party, is appealing against his conviction of association with the Mafia. He has been sentenced to nine years in prison.