‘Culpable Bank executives should be in jail or even be shot dead’ – Sanusi
This will shock you. Make you angry. Leave you at a boiling point and leave you thoroughly mentally and spiritually exhausted.
It is the story of how the former governor of Nigeria’s Central Bank, Chukwuma Soludo connived with the Bank executives to ruin the Nigeria Banking System and destroyed families and people’s investment and left Sanusi Lamido Sanusi to clear the rot.
In the end, the story will help you to know you don’t have to envy all those fools looting Nigeria blind and throwing their evil wealth around. Their end is nigh.
Starting with this Part one, we will tell the story through the mouth of observant experts over the following days. We will leave you to your conclusion as to whether it is right that the ordinary Nigerian shareholders and depositors should be punished for the criminal negligence, fraud, corruption, ineptitude and dereliction of duty of one individual, while Chukwuma Soludo will be rewarded with the governorship of Anambra state.
At the The Nigeria Economic Summit Group (NESG) policy dialogue held in Lagos, October 23, in an emotionally laden voice, Sanusi declared:
“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.”
Amen! We cheer…but the same consequence should befall the corrupt CBN governor that allowed them to get away with it!
The Sanusi Banking Revolution part 1
Background by Dayo Coker
The Soludo Era
Proffesor Chukwuma Soludo
After the banking consolidation exercise reduced the number of Nigerian banks to 25, Professor Charles Soludo became a national hero. He was hailed as a practical genius who translated abstruse economic phenomena into reality, a man who easily vanquished the stodgy and connected grey eminences that had tried to resist his reformist agenda. As the masses sang his praises, the canny bank chiefs who had succeeded in saving their institutions knew that they had to embrace him in order to protect their empires. To seduce him, they levied themselves 2million naira each and hosted him a superlative 50 million naira “dinner”.
He was initiated into the luxury life. Soludo, the hyper-intelligent economist soon morphed into a dapper dresser who wore Savile Row suits and expensive Rolex watches. He became very close to a privileged group of bankers who became the de facto rulers of Nigeria’s financial sector. The tough talking regulator lost his sense of impartiality.
The Stock Market Boom
General Olusegun Obasanjo’s decision to work with Bretton Woods economists combined with soaring oil prices to draw foreign investors to the Nigerian financial sector. In addition to hedge fund managers who invested a small fraction of their portfolios in the growing market, ordinary Nigerians joined the fray when they realized that banking sector reforms had transformed the stock market into a veritable cash machine. Growing investor confidence quickly led to a sharp rise in stocks and attracted the hoi polloi. Small investors rushed to the stock market in droves and sank their money in “high growth stocks”. The snake oil bankers quickly read the situation and drew up plans to further increase their capital base.
In order to achieve abnormal returns, they enlisted the support of stockbrokers who brazenly manipulated stock prices with the tacit support of the leadership of the Securities and Exchange Commission and the Nigerian Stock Exchange. A rash of public offers soon followed, leading to an exponential increase in stock market indices. Some states even compelled civil servants to buy shares, forcibly deducting the value from their salaries.
Clergymen told their congregations about the “miraculous wonders” of the stock market. As the unsophisticated sheep emptied their nest eggs into the Nigerian Stock Exchange, the bankers and their sidekicks got richer. Mid-level managers earned millions in bonuses as reward for bringing in ensnaring ignorant investors. The stock market became part of the national conversation. And there was no stopping the bubble as the new financial elite was born.
Greed and Recklessness
As the money rolled in, the banks immediately went on a spending spree. South African brand consultants were paid huge sums to design new logos, Indians got millions for software and overpaid managers were poached from rival banks. In little time, the banking tsars became delusional and started a turf war. They commissioned ostentatious offices and hired buxom bimbos to reinforce their
These happiness officers were given huge allowances for miniskirts, contraceptives and expensive baubles. The battle assumed a personal dimension as nouveau riche bankers fought for prime real estate in Ikoyi and Victoria Garden City. Others rented Banana Island flats and joined expensive boat clubs where they flaunted their expensive curios.
The gnomish Jim Ovia took over an entire street in highbrow Victoria Island where he built an imposing edifice and commissioned a flashy ATM galleria. His amazing architects delivered The Civic Centre, a ship-inspired building that came to define his expensive taste. He became a trusted confidante to Aliko Dangote and Femi Otedola, Nigeria’s richest men. Aig Imoukhuede, one half of the now infamous United Alliance, built a fortress complete with angry mobile policemen. Jeremiah Omoyeni, the banker cum politician, got a 450 million naira housing allowance for his short stay at the helm of the crisis-ridden Wema Bank.
Anthony Elumelu, Cecilia Ibru, Jim Ovia and Tayo Aderinokun commissioned private jets to take them around the world while Akingbola curiously started an FM radio station and announced that he would treat himself to a Rolls Royce on his 60th birthday.
Prince Nduka Obaigbena, This Day’s flamboyant chairman became the cheerleader-in-chief as banks picked up the tabs for visiting global dignitaries at the newspaper’s exquisite town hall meetings.
Vanguard raked in billions from its annual Bankers Awards. Foreign praise singers also realized that there was money to be made and set off a craze for dubious awards. African Business, Business Initiative Directions, The Banker and EMEA Finance came calling, dishing out awards in exchange for cash. Renaissance Capital, led by the mercurial Stephen Jennings staked its claim and exchanged ratings for securities contracts.
As oil prices continued to spike, savvy local entrepreneurs became potential oil and gas traders. They drew up grandiose business plans and convinced bank chiefs to advance huge loans for the purchase of tank farms and refined crude. The bankers obliged and shared the “upfront” interest. Oil and Gas became the most important phrase in the lexicon of the Nigerian banker. Some of the oil traders were not satisfied with their bulging bank accounts.
Since real estate is the Nigerian’s true barometer of wealth, they went back to the bankers and drew up plans for an African Dubai. The bankers obliged and doled out more cash. Deals were sealed in posh country clubs as huge loans were given with utter disregard of risk management processes. Foreign credit lines and unnecessary forays into the capital market meant there was just too much money to spend. Banks soon decided to have a taste of the apple and incorporated subsidiaries to market luxury estates. Lekki, Ikoyi and Abuja became the new Hamptons . Even foreigners began to complain about the skyrocketing prices of Nigerian real estate. “Expatriate Only” signs soon became de rigueur.
The Early Signs
When the subprime mortgage crisis ballooned into a full scale economic meltdown, the foreign bankers knew they had to run. After all, the global banking system was on the brink of collapse. Indy Mac had disappeared and fabled Wall Street institutions such as Bear Stearns and Lehman Brothers had imploded.
The Nigerian banks had no chief economists and were blissfully ignorant of the implications of the crisis. Akingbola, Okereke-Onyiuke and Soludo all publicly declared that the country’s financial system was isolated from the rest of the world.
Most Nigerians continued to buy stocks not knowing that Peter Ololo and his fellow stockbrokers were using cheap money to prop up the stock market. This made it easier for foreign operators to exit the market at a premium. Firms such as Actis, the private equity fund, dumped its shares in UAC for 50 naira. By the time, the stock market went into a tailspin, it was too late.
Deconstructing the Fallen Five
Some staffers of Intercontinental Bank have accused me of bias, claiming that I have personal scores to settle with Dr Erastus Akingbola. This is untrue. I have always believed that Erastus Akingbola was a crook and I owed the Nigerian public a duty to expose him. It is now clear that he was an exceptionally talented huckster who used his avuncular mien to shamelessly manipulate the public.
He frittered away the bank’s money on questionable CSR schemes designed to influence politicians and lay the groundwork for a future political career. In the week before the August 14 temblor, he instituted a 50 million naira scholarship scheme for Katsina natives in a clear attempt to lobby the president through Ibrahim Shema, the governor of the president’s home state.
Akingbola also instituted a similar scheme in his home state, Ondo, where he was rewarded with the chancellorship of the state-owned university in a clear case of quid pro quo. As part of his national save me from Sanusi tour, Dr Akingbola finally ended up in Sokoto where his attempts to lobby an unsmiling Sultan fell flat. He didn’t show up for the historic August 14 meeting. Three days later, he had vanished into thin air. Nobody can underestimate the danger still posed by the highly influential Akingbola, who has been in the industry for thirty years. His case is not just an error in judgement. In any serious country, he would be the subject of an international manhunt.
Long before the stock market correction and the rapid fall in global oil prices, Cecilia Ibru had inexplicably shackled Oceanic Bank to a bilateral 175 million dollar five year loan from Merrill Lynch. This transaction was packaged by Osaze Osifo, a financial consultant and business partner of Andrew Alli, a CBN debtor who is currently at the helm of the controversial African Financial Corporation. A former chief executive of Oando, Osifo had made a killing in Nigeria’s GSM licence auction before joining the Oando triumvirate of Jite Okoloko, Wale Tinubu and Mofe Boyo.
The Slick Osifo had cultivated a friendship with Oboden Ibru, Mrs Ibru’s son and heir apparent, who doubled as the bank’s executive director and chief executive of Oceanic Capital. Osifo, Alli and four other principals needed additional capital for their investment boutique and through Oboden, Osifo’s company Travant Capital Partners was selected as the financial consultants for the transaction.
Oceanic Bank mismanaged this loan. In addition to heavily betting on real estate and petroleum marketing, the bank lent vast sums to the Delta State Government and other firms with ties to the powerful James Ibori. The bank also perfected numerous ways of diverting money through imaginary companies.
One of such transactions involved lending millions of dollars to Meggitto Clothing for the purpose of exporting fabrics. This money vanished into thin air. We now know that there were other shady transactions such as the incomprehensible 19 billion naira loan
extended to Nigeria’s most famous nanny.
Insiders say that the dim witted Cecilia Ibru was hopelessly out of her depth at the helm of the bank. Surrounded by lackeys and relatives, she signed documents without reading them and gave loans based on her personal judgement. She relished being a mother figure and even though her staffers have kind words to say about her, they acknowledge that there was too much laxity with respect to management issues.
When it became apparent that Oceanic Bank was tottering, Mrs Ibru embarked on a number of questionable projects to raise money for her bank. These included an unethical 400 million dollar football reality program and a shady raffle in partnership with the Suru Group. It is a pity that the United Nations Global Compact did not do a thorough investigation before they named her to its committee on corporate governance.
To be continued