Time to probe regulators’ role in economic woes

Last week, the anti-corruption crusade in the financial sector scored a big one as Cecilia Ibru, former chief executive of Oceanic Bank International crumbled under the fire power of Central Bank and the Economic and Financial Crimes Commission and pleaded guilty to numerous allegations of bank fraud levelled against her. She has been sentenced to 18 months in prison in addition to losing hundreds of billions of naira. Several weeks ago, the crusade berthed at the Nigerian Stock Exchange (NSE), sweeping its former director-general, Prof Ndi Okereke-Onyiuke, erstwhile council president, Alhaji Aliko Dangote and ninety-five officers of the NSE out of office. Before the storm hit the NSE, it had swept through the banking industry like a tornado, which left in its wake, the sacking of eight bank managing directors amid sordid revelations of corruption and unbelievable mismanagement of shareholders’ funds and bank deposits running into hundreds of billions of naira. Currently, the Securities and Exchange Commission (SEC) is probing stock broking firms over allegations of infractions ranging from minor misdemeanours to share price manipulation. Also, the SEC Director-General, Ms Arunma Oteh, announced a couple of weeks ago that the apex capital market regulator would revoke the licences of 164 stock broking firms.

All these actions are necessary, laudable and, in fact long overdue. It is heartening that those who purloin public funds held in their trust are being brought to book. The noose is, at present, tightening on Prof Ndi Okereke-Onyiuke as SEC released its audit which has indicted her administration of wrongdoing. Kudos must be given to Malam Sanusi Lamido and Farida Waziri. The crusade should continue. All other corrupt bank chiefs including those who are still roaming free should be brought to book.

However, it is becoming all too obvious that the anti-corruption crusade in the financial sector has concentrated mainly on operators in the various sectors, while the regulators are being overlooked. There is an implied vote of confidence on the regulatory bodies, which are made to look like saints in an ungodly environment. But it is highly uncertain that this is the true picture.

It has, for instance, been argued that the identified corrupt practices in the financial services sector could not have been possible if the supervising, regulatory bodies were not negligent, complicit or both. What the activities of Central Bank Governor, Malam Sanusi Lamido, have proven is the fact that there were serious regulatory lapses that created an environment where the kind of corruption we have witnessed in the banks and the capital market found it easy to thrive. With forthright, diligent and eagle-eyed regulatory bodies, it would not have been difficult to prevent or expose the kinds of massive fraud that are being alleged to have taken place in the banks.

That brings to question the competence, sincerity and integrity of the regulatory bodies which have suddenly turned crusading organisations, donning holier-than-thou togas. What happened to all the audits carried out by the CBN at Oceanic Bank for example? Who were the CBN officials that approved all the reports on Oceanic Bank and other rescued banks and gave them clean bills of health whereas they were rotten? What could have informed the wholesale approval of such results that have now been discovered to be false? Was it incompetence? Was it a case of collusion? Who created the enabling environment for such massive corruption? There are still lots of unanswered questions. The same scenario exists at SEC, NDIC and others which allowed the scandals at the different sub-sectors of the economy. And as long as these questions remain unanswered, there will be a serious dent on the current interventions.

The wonder is that not even a single official has been indicted of covering up for the vilified banks and operators of the capital market. No Central Bank resident examiner has been indicted since all the sound and fury of the reform filled our consciousness. There has, similarly, been no shake-up at SEC, where officials oversaw all the rot that happened at the capital market. At least, no mention of any such disciplinary action has been recorded on the pages of newspapers where the celebrated actions of Lamido Sanusi and Arunma Oteh and their revolutionary zeal have enjoyed generous mention. Does it mean that the regulators and all their officials have been free of blame in this whole mess?

Come to think of it, the regulatory bodies are so strategic that if corrupt officials and conniving black legs are left to roam free, whatever gains the reforms are expected to realize will again be frittered away because the gatekeepers are unreliable and cannot be depended on. It, therefore, goes without saying that if genuine reforms are to be carried out, the places to begin are the regulatory bodies. The best way to ensure that the reforms are sustained is to make sure that those prone to compromise are removed from the system and benchmarks set to maintain high regulatory standards.

It, therefore, becomes imperative that the committees of the National Assembly with oversight functions on the financial services sector compel the CBN, SEC, NDIC, NAICOM and other regulators to explain why they have done little or nothing to purge their own houses of the rot and decay that have manifested in the different industries they oversee. We should begin to zero in on the regulators. They are too important to our economic well being to be overlooked. We will be doing that to our peril.

The recent allegations by sacked managing director of Intercontinental Bank, Chief Erastus Akingbola and shareholders of Finbank that the Central Bank appointed chief executive officers are manipulating the sale of the concerned banks in favour of vested interests call for a closer look at the regulator. The allegations call for concern, especially as they imply that senior officials of the apex bank are complicit in the alleged schemes.

Moreover, there is a need to review the modes of operation of the regulators and the economic team if there is any serious coordinated work going on in the team. For some time now, the Presidency has rallied behind the Central Bank, giving it the needed political backing for the onerous task ahead of it. This is important to encourage the regulators and to present a united front to the nation. But this is not enough to assuage the agony occasioned by the worsening economy. In fact, the mere fact that the handlers of the economy have failed to achieve any success in their attempt to rein in the evils of liquidity squeeze, credit crunch, unemployment and investor apathy in the system for more than a year makes it imperative to probe their activities and take decisive actions where needed. Unless this is done, the economy will continue in its aimless, downward spiral and the current government stands the risk of being condemned by posterity for failing to demonstrate political will and courage when it was most necessary.

Written by
Benjamin Tialobi
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