Failed bank tribunals: Abacha was right
- Details
- Category: Comments
- Written by Usman Hadi Abubakar
- Hits: 1001
When late Gen. Sani Abacha’s military regime introduced the failed bank tribunals, many critics had argued that it was too harsh to deal with a simple problem of the banking system, which is self-regulating. They forgot, however, that rules are only effective when those operating them obey them. Despite Gen. Abacha’s well-meaning policy to protect innocent depositors against the excesses of Bank executives that by passed existing regulations and guidelines, his enemies were not ready to give him credit for such effort. With the disturbing reality in our banking system today, despite the so-called consolidation carried out by former CBN Governor, Professor Charles Soludo, it appears our banking executives are going back to their vomit like ravenous dogs!
Many bank executives were sentenced to long prison sentences while others escaped abroad and thousands of innocent depositors are yet to recover their monies, despite the sale of the banks assets. Eleven years after Abacha’s death, the nation is once again faced with the inevitable choice of taking tough action against reckless banking practices, which endanger the security of depositors’ monies.
According to CBN Governor, Sanusi Lamido Sanusi, the affected banks gave margin loans amounting to N456 billion while loans to oil and gas sectors was put at N487 billion. Worse still, the affected banks were found to have non-performing loans of N1.143 trillion. Sadly, with the stock market crash, the margin loans have gone with wind! The tragedy is that the bank executives are playing ducks and drakes with depositors’ funds.
In fact, the most disturbing aspect of this situation is that the existing guidelines on lending limits to individuals or corporate bodies were simply and arrogantly ignored. For example, one of the banks granted seven billion naira loan to a single person without collateral under the cover of oil and gas investment. Rather than using the money for the purpose intended, the fellow simply bought choices houses in Maitama, Asokoro and Dubai in addition to acquiring the latest state-of-the-art cars and Jeeps to impress his fellow citizens of his “success”
Some Nigerians have argued that the CBN’s action was too harsh and suggested, instead, that they should be warned quietly and advised to sin no more. But such sentimental arguments overlook the implications of N1.143 non-performing loans. How can any sensible bank executive risk customers’ money to that extent? As a consequence of such reckless lending, which deliberately ignored the rules, the CBN is now forced to bail out the five affected banks with N409 billion temporary life line, which is intended to cushion the effects on the innocent customers.
When the bank customers noticed that withdrawal limits were being imposed on them in addition to curious new charges, they began to smell a rat. But former CBN Governor, Professor Charles Soludo, reassured the nation that all was well with the banking sector, despite the symptoms of imminent crisis. We now know better; Professor Soludo was simply being economical with the truth. Unfortunately, even former President Olusegun Obasanjo was gullibly convinced by Soludo’s specious defense of the banks.
The recent tough action of the CBN against reckless banks executives is a vindication of the late Gen. Sani Abacha’s policy of introducing the failed banks tribunals to bring faster justice to bank executives that abused customer confidence by taking inimical decisions on their deposits. When bank chiefs lose their conscience and forget that banking business is founded on trust and integrity, the law must be allowed to take its course against them.
Gen. Abacha had demonstrated that he was a responsible and responsive leader that cared about the security of depositors’ monies. Today, successive Nigerian governments are being forced to go back to Abacha’s methods of tough action against bank executives that endanger the security of their customers’ monies through reckless lending practices.
It is not enough, however, to remove reckless chief executives of banks without severe sanction to serve as a warning to others. They should be prosecuted along with their collaborators for patently disregarding the rules and banking practices. Letting them off the hook with a slap on the wrist is not enough determent unless it is matched with tougher action. Let us not forget that if the CBN had not acted at the time it did, the banks would have ultimately collapsed, leading to the loss of depositors’ money. From the experience of Gen. Abacha, it is evident that Nigerians need an iron hand. In a country where people have no conscience and can do anything to protect their narrow interests at the expense of others, draconian measures are needed to deal with the freshly emerging picture of distressed banks.
Abubakar, a retired banker, resides at Block 51, Badarawa, Kaduna
Articles
Failed bank tribunals: Abacha was right
Category: Comments Written by Usman Hadi Abubakar Hits: 1001
When late Gen. Sani Abacha’s military regime introduced the failed bank tribunals, many critics had argued that it was too harsh to deal with a simple problem of the banking system, which is self-regulating. They forgot, however, that rules are only effective when those operating them obey them. Despite Gen. Abacha’s well-meaning policy to protect innocent depositors against the excesses of Bank executives that by passed existing regulations and guidelines, his enemies were not ready to give him credit for such effort. With the disturbing reality in our banking system today, despite the so-called consolidation carried out by former CBN Governor, Professor Charles Soludo, it appears our banking executives are going back to their vomit like ravenous dogs!
Many bank executives were sentenced to long prison sentences while others escaped abroad and thousands of innocent depositors are yet to recover their monies, despite the sale of the banks assets. Eleven years after Abacha’s death, the nation is once again faced with the inevitable choice of taking tough action against reckless banking practices, which endanger the security of depositors’ monies.
According to CBN Governor, Sanusi Lamido Sanusi, the affected banks gave margin loans amounting to N456 billion while loans to oil and gas sectors was put at N487 billion. Worse still, the affected banks were found to have non-performing loans of N1.143 trillion. Sadly, with the stock market crash, the margin loans have gone with wind! The tragedy is that the bank executives are playing ducks and drakes with depositors’ funds.
In fact, the most disturbing aspect of this situation is that the existing guidelines on lending limits to individuals or corporate bodies were simply and arrogantly ignored. For example, one of the banks granted seven billion naira loan to a single person without collateral under the cover of oil and gas investment. Rather than using the money for the purpose intended, the fellow simply bought choices houses in Maitama, Asokoro and Dubai in addition to acquiring the latest state-of-the-art cars and Jeeps to impress his fellow citizens of his “success”
Some Nigerians have argued that the CBN’s action was too harsh and suggested, instead, that they should be warned quietly and advised to sin no more. But such sentimental arguments overlook the implications of N1.143 non-performing loans. How can any sensible bank executive risk customers’ money to that extent? As a consequence of such reckless lending, which deliberately ignored the rules, the CBN is now forced to bail out the five affected banks with N409 billion temporary life line, which is intended to cushion the effects on the innocent customers.
When the bank customers noticed that withdrawal limits were being imposed on them in addition to curious new charges, they began to smell a rat. But former CBN Governor, Professor Charles Soludo, reassured the nation that all was well with the banking sector, despite the symptoms of imminent crisis. We now know better; Professor Soludo was simply being economical with the truth. Unfortunately, even former President Olusegun Obasanjo was gullibly convinced by Soludo’s specious defense of the banks.
The recent tough action of the CBN against reckless banks executives is a vindication of the late Gen. Sani Abacha’s policy of introducing the failed banks tribunals to bring faster justice to bank executives that abused customer confidence by taking inimical decisions on their deposits. When bank chiefs lose their conscience and forget that banking business is founded on trust and integrity, the law must be allowed to take its course against them.
Gen. Abacha had demonstrated that he was a responsible and responsive leader that cared about the security of depositors’ monies. Today, successive Nigerian governments are being forced to go back to Abacha’s methods of tough action against bank executives that endanger the security of their customers’ monies through reckless lending practices.
It is not enough, however, to remove reckless chief executives of banks without severe sanction to serve as a warning to others. They should be prosecuted along with their collaborators for patently disregarding the rules and banking practices. Letting them off the hook with a slap on the wrist is not enough determent unless it is matched with tougher action. Let us not forget that if the CBN had not acted at the time it did, the banks would have ultimately collapsed, leading to the loss of depositors’ money. From the experience of Gen. Abacha, it is evident that Nigerians need an iron hand. In a country where people have no conscience and can do anything to protect their narrow interests at the expense of others, draconian measures are needed to deal with the freshly emerging picture of distressed banks.
Abubakar, a retired banker, resides at Block 51, Badarawa, Kaduna