December 5, 2008
The developments in the banking industry has always been intriguing and has assumed a more worrisome dimension from 2005 till date. I believe that Nigerian banks and Bankers are sitting on a can of worms. And if the truth must be told, almost all of Soludo’s mega banks are sick
Let the Central Bank of Nigeria (CBN) not over-look it. There is need for real soul searching amongst its rank and file because for some of us who are keen observers of happenings in that sector – the banks and CBN itself lack credibility in their figures, are very corrupt and if EFCC is to beam its searchlight and scrutinize their books with the help of foreign Consultants, (and willing insiders), they will discover that the banks are corrupt, inept and deceitful. They deceive the banking and investing public with figures from their heads and not from their books (or real performance).
Their antics are not detected because of the culture of silence and cooperation among top bankers. And anytime one of them (directors) cries out, it is because he is being cheated out of their common loot and stealing that banking has become in Nigeria.
I will attempt to address how banks deceive the public and make themselves look good:
The first thing banks do is to get a “robust system”. Make no mistake, the robust system does not only mean a very efficient, capable and modern system. It means all the ones from growing economies that are good for fraud perpetration and with the touch of a digit can make a bank that is down and out look very good and performing – at least for a few more years, till the bubble burst, by which time the Directors would have made enough money to look elsewhere.
It is an open secret that Nigerian banks have many servers and like other Nigerian companies, many figures – one for CBN/NDIC, and other external examiners, another for the organization and the real one for only the MD and directors. Even when CBN made reporting on-line through e-FASS, etc. a more Nigerian way to sidetrack and continue the frauds were devised.
Anytime there would be NDIC or CBN audit, the systems must be down in our banks. This is to ensure that all the figures “jive”.
The Financial Control Department has the best “egg heads” in the industry. Make no mistake, it does not contain Noble Laurettes, Ph.Ds, etc but fraudsters, cooks in ties and suits. This department in every bank has “accomplished performers” and they are also routinely pouched from other banks. They are the ones who can make a N3m profit to become N300m just at the touch of the button. And before Audit, all the sensitive departments (Risk Management, Legal, Banking Operations, Internal Control and Financial Control) meet to iron out and smoothen rough edges and present figures that are baseless and false as true – through figure/system manipulation and deceit.
Whether CBN and others admit it or not, the gospel truth is that figures turned out by Nigerian banks are very far off the mark, highly inflated and blatantly false, whether it is profit, deposit or whatever. The staff of the regulatory authorities are heavily compromised (some are on the payroll of these banks) to look the other way.
The CBN and NDIC must bury their heads in shame that they are lacking men of integrity and goodwill (people say they are Nigerians!). Bank examiners are compromised at will. Several times, these examiners have an axe to grind with their employer (especially CBN) that they are ready to collect anything and pass an unhealthy bank as being healthy. For instance, the Verification Exercise of Bank’s recapitalization (in 2005) coincided with the time of a restructuring in CBN; staff were not sure of their continued employment, so those who were sent to examine banks were routinely compromised. No wonder, we now know that we have BUBBLE CAPITAL across our “mega banks.”
Also, CBN did not set out to exterminate people with questionable integrity from the banking system. For instance, a particular standard bank throughout its years of existence was always involved in one infraction or another, with qualified accounts. Yet, the bank was allowed to be united” with another bigger bank and the CEO was allowed to head the new “mega bank.”. Analysts say his bank was going down with terrible non-performing loans and he could only look for a bigger bank to merge with. Should CBN have allowed this man to head a bank given all that they know which are always in their published reports. So many examples of this abound!!! That same CEO is now a “star” amongst Nigerian bankers. What a shame!
Not a few were deceived by the speed at which so many banks met the N25b capital requirement. Banks that did not have N2b or more than N3b for eight, ten years, suddenly have N25b or N50b. I was shocked and conducted special investigation and came up with the following ways and means of how our banks met this requirement:
fraudulent conversion of customers deposits. This included APG funds.
Passing of fictitious entries purportedly being proceeds of shares purchased.
Granting of million Naira facilities to customers to purchase shares. Staff share loans are still being paid till date. Meanwhile, they also form part of the “N25b share capital”.
Conversion of foreign loans to capital. So many engaged in the frenzy of collecting loans from foreign banks (they are still doing so now with the intent to use it to raise their N100b or above from NSE), convert these loans to equity and then trade them on the floor of the Stock Exchange. Proceeds of these will repay the loan. No wonder banks stocks are the most active. I am not deceived. We, Nigerians are ingenious!
Not a few Analysts believe that banks contributed a lot to the downturn now in the Stock market. They have suddenly invaded the place with all their deception and false figures.
I want any Bank CEO to stand up and beat his chest that all that I have outlined above are not true.
Where do all these leave us? We are faced with a situation where, contrary to Soludo’s claims that we have 25 (24 now) healthy banks, we probably (apart from about 3 foreign banks and maybe 2 or 3 others), do not really have healthy banks but walking corpses, an assemblage of pretenders and fraudsters. And since banks have devised a means of beating CBN (and CBN too does not want to be perceived as a failure), most of the banks have since returned to the market to raise more billions now – no more N25b but N100b and above. This coming just after raising “N25b” is suspicious. And guess what, they have all been coming back over-subscribed.” Maybe Nigerians have so much money and we are only crying wolf where there is none. However, an adage says “2 people do not miss out on a lie. If the person being told lies does not know, the lier obviously knows he is lying.” I know bankers are lying with their figures. I run away from their stock.
If CBN and others care to know, targets to staff have been increased. Female staff have largely been drawn into Marketing units. It is worse now than it used to be. Staff are routinely laid off for not meeting ridiculous targets. If banks have N100b or more in deposit liability, why would they want to ”kill” their staff with ridiculous targets and make their female staff practically sleep with male depositors to ward off other adventurous female deposit poachers? I challenge all journalists to do an investigative report on all these. They will be shocked at their findings.
We all still remember the Springbank saga and the complicity of Soludo (not yet refuted with incontrovertible facts) in the whole Consolidation mess. Now, we have Wema Bank in the list. CBN has not made public their findings and the complicity (or otherwise) of their Deputy Governor-Tunde Lemo, yet the Managing Director of Wema Bank was sacked! We must watch too much powers for this Soludo o! Still brewing again, is the rumored takeover of Springbank now by Bank PHB. Where did Bank PHB get the money to buy over Springbank from? Depositors funds? Who approved it? Any due process followed? Corporate Governance breached or not? Court orders not obeyed? Have the issues that led to the suspension of Springbank’s shares been resolved before they were allowed back to the floor?
I have always been of the view that like the political class where they never expose themselves no matter the level of disaffection against each other, Bank CEOs in Nigeria too have an “oath of secrecy”. I pray somebody breaks the ranks.
Please let EFCC and ICPC (or better still a Commission of Inquiry) do a more thorough investigation of Nigerian Banks, CBN and NDIC so that we do not have walking skeletons passing off as banks and ripping off the unsuspecting public.
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