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Nationalized Banks: CBN, SEC and AMCON Boss, Others to Face Full Wrath of the Law

By on July 20, 2012

The Ibrahim el-Sudi led Committee on the near Collapse of the Capital Markets has called for the prosecution of Central Bank Governor, Lamido Sanusi, for failure to provide key documents to the panel amongst other violations.

The other allegations against Sanusi include potential forgery, unethical practices, abuse of office, and various unacceptable bad corporate governance precedents in the Nationalization of the ‘failed’ banks.

Some of the committee’s recommendations on AMCON, CBN and SEC:

•That consequently, with respect to the missing N8 Billion arising from the Union Bank Plc public offer, a case of fraudulent diversion having been established, the past board and management of Union Bank Pic, the CEO of the Issuing House/Financial Adviser to the Offer, the present members of the Board and Management, including the Managing Director of Union Bank Plc, Mrs. F. Osibodu, should be investigated by the Economic and Financial Crimes Commission, EFCC with a view to establishing and recovering the missing amount. The management of AMCON and SEC, including their respective CEO’s (Mustafa Ch Ike-Obi and Ms Arunma Oteh), should be investigated by the EFCC considering their roles in attempting to conceal the fraudulent diversion and missing fund.

•That the Nationalization of AfriBank Plc, Bank PHB, and Spring Bank, and their subsequent change of names to Mainstreet Bank, Keystone Bank, and Enterprise Bank respectively, is a Violation of the AMCON Act, NDIC Act and Section 44 of the 1999 Constitution of the Federal Republic of Nigeria as the processes of transfer were fraught with potential forgery, unethical practices, abuse of office, and various unacceptable bad corporate governance precedents; the transaction should be reviewed and investigation be carried out on the following by the EFCC and other Security Agencies –

i. Umaru Ibrahim, Managing Director/CEO of NDIC

ii. Mustafa Chike-Obi, Managing Director, AMCON;

iii. Sanusi Lamido Sanusi, Governor, Central Bank of Nigeria;

iv. All those who were used or offered themselves to be used in the various misrepresentations leading to the corporate registration of the nationalized banks,

v. Bello Mahmud, Registrar General, Corporate Affairs Commission;

vi. All the faceless “lawyers”; Directors’ of Mainstreet Bank Ltd, Keystone Bank Ltd, Enterprise Bank Ltd should be unearthed and made to face the wrath of the law.

•That the Governor of Central Bank of Nigeria, Sanusi Lamido Sanusi, as the Chief Executive Officer and Chairman of the CBN Board is hereby cited for contempt of the House of Representatives having refused to produce after demand the special Examination Report upon which the intervention in the 8 Banks in August 2009 was based.

•That the CBN’s action in disbursing N620Billion bailout funds and other intervention funds afterwards did not follow due process of law and the Constitution of the Federal Republic of Nigeria, 1999, as the  source of funds and the appropriate authority did not approve.

•It is further recommended “that in future any bailout plan for the Capital market or financial sector should receive appropriate authorization and should be done after a comprehensive and transparent determination and location of the beneficiaries, borrowers, lenders and relevant collateral provided.

•That the CBN and SEC should produce clear guidelines on margin facilities and related transactions without further delay.

•That to restore investor confidence, SEC should overhaul its regulatory framework, and build requisite technical capacity to enable it tighten regulation on malpractices by market operators.

•That considering the high dependence of the Nigerian Capital Market on foreign investors, and in view of the fact that they were able to pull $15 Billion out of the Nigerian Capital Market, the CBN, SEC, the Debt Management Office, Federal Ministry of Finance, the Federal Ministry of Trade and Investments are hereby requested to produce guidelines and a national policy that should govern the entry, operation and exit of foreign portfolio investments in Nigeria.

•That in view of the need to reduce the cost of doing business in the Nigerian Capital Market to increase its competitiveness, it is hereby recommended that the SEC and the NSE should be directed to ensure that transaction Fees do not exceed 6% down from the current high level of 12% and that brokerage commissions should not be more than 35% of the Transaction Fees, currently at above 50per cent.

•That CBN and the Federal Ministry, of Finance should henceforth, ensure the harmonization of Nigeria’s monetary and fiscal policy. An accountability framework to hold the CBN responsible for financial system’s instability should be put in place by relevant authorities.

•That SEC is hereby requested to conclude disciplinary actions on all outstanding market infractions that has remained so for more than two months; and report back to the House within 30days of the adoption of this report.

•That the Securities and Exchange Commission should take appropriate steps within its statutory relationship with the NSE to increase product variety in other to boost liquidity, encourage’ listing incentives, and desist from delisting of companies without thorough scrutiny.

•That engagement of Access Bank staff by SEC on Secondment to SEC which regulates the Bank is unethical and may erode investor confidence and they should immediately be disengaged.

•That to further restore investor confidence, SEC should immediately disengage from its intervention in the Council of NSE, and remove its nominees on the NSE Council.

•That Project 50 activities of SEC which appears to lack transparency and accountability be further investigated by EFCC and ICPC to determine whether infractions and possible fraud had taken place.

•That in view of the breakdown of corporate governance in SEC, leading to total collapse of cooperation and coordination within its Board and top management and since the tenure of thefBoard has expired, top management of SEC should be relieved of theirs duties so as to give the capital market an opportunity of credible regulation through appointment of a neutral Board and top management that will regain the confidence of investors.

•That the following persons be further investigated by the House on account of their role in the banking sector crisis that led the CBN to intervene in 8 Banks in August, 2009:

i.        Charles Chukwuma Soludo; Fomer Governor, CBN;

ii.       Ignatius Imala; Former Director, Banking Supervision, CBN

iii.      Tunde” Lemo, Deputy Governor in charge bf Banking Supervision.

•That the appointment of Ms Arunma Oteh be terminated forthwith as DG of SEC as her appointment is in violation of Section 3(2) a and Section 38 (1) (b), 2 and 3; Section 315 of the ISA 2007 in that she did not have 15 years experience in the Nigerian Capital Market as required; she has shown incompetence in the management of human and material resources at her disposal in SEC; lack of transparency in managing project 50, regulatory failure in some of the recent mergers, acquisitions and approvals of transactions by SEC and general inability to carry along her staff, Board, and Management in decision making in SEC, and questionable staff recruitment policies.

•That the Governor of the CBN, the Deputy Governors of the CBN, Directors of the CBN, the DG, SEC, Commissioners, Board members of both CBN and SEC should be subject to a code of conduct which has appropriate penalties for regulatory failures, while officials should be rewarded for outstanding performance.