The new CBN governor and management have taken some significant  and unusually radical decisions in regulating the banking industry in  recent times. The decisions according to them are ongoing and part of a  holistic process. This piece is an attempt to  critically  assess the decisions  and actions taken so far.

The decisions themselves are in the context of a process of auditing the  24 banks. We are told 10 of the banks have been audited fully while the  complete audit of the remaining 14 is expected to be complete  by mid  September. As a result of the completed audit of  the first ten, the CBN  says five of them were found to have been so grossly mismanaged that  they are in danger of imminent collapse with all the inherent problems  associated with such disasters. The CEOs and top  management of the  five (Intercontinental, Oceanic, Finbank, Union Bank  and Afribank) were  therefore fired and replaced with a new management appointed by the  CBN. The FG has also injected emergency short term funds to save the  banks.

The second major development was the publishing of the names of the  major bad debtors of the five affected banks and amounts owed, on the  CBN website ( as well as in newspapers. The CBN says  that more of such lists will be published in due course and it is an  ongoing process. In addition, the EFCC has given the named debtors  one week to pay up or face prosecution.

 I will start my commentary with the debtor list.

The publishing of such a list is of course a serious matter that may even  have legal implications since there are such ethical issues as  client/professional  confidentiality involved. The same confidentiality  issues exist in other professions such as law and medicine where the  professional is not  permitted to divulge certain information about his  client publicly. Personally I have some misgivings about whether the  CBN has the legal right to publish such a list, though I must concede  that with  the levels of impunity in Nigeria, the CBN perhaps has an  overriding  moral duty to name and shame financial miscreants. Having  said that, my first impression on reading the list was that for a  document with such serious implications, the quality is rather sloppy.

For example, there is a Company named Aquitane Oil and Gas which is  listed as owing two non-performing debts to two different banks  (Afribank: N2,451,429,489.89 and Finbank: N3,656,502,137.27). The  same Company had different lists of names for its directors with three  names appearing on both lists!. I do not see how this can be legal and it  seems  likely that the CBN has perhaps not checked properly.

 In addition, there were several spelling mistakes, only two of which  have been admitted by the CBN.

Elementary spelling errors in a list of such gravity -and which is on the  world wide web for the whole world to see- calls into question the work  ethic of the CBN itself. Part of justice is that it must not only be done, it  must be seen to be done. A comprehensive audit of 24 major banks is a  serious matter that requires precision, dedication and due diligence,  since above all else, it must be accurate and present a true picture of the  state of affairs. A CBN that  cannot get a simple thing like  spelling  right, will be hard pressed to do an accurate audit of 24 banks which is  a far more painstaking task. The whole world is watching out for the  subsequent debtor lists promised by the CBN. Further spelling mistakes  will  cast more doubts on the very integrity of the whole audit exercise.

The second and more serious problem I found on the list is a structural  one and it smacks either of sloppiness, dishonesty, or perhaps a  mixture of both. It has to do with the fact that some Company names  were published  with the names of the board of directors while many  other Company names were published WITHOUT the names of the  directors. This can be construed as deliberate moral dishonesty where some individuals who are perhaps friends or cronies of the CBN management  are being shielded from public embarrassment,  while those who have no  godfathers in the CBN or who in fact may have enemies in the CBN are  being publicly harassed. Even if this were not the case, at the very least,  it reeks of  sloppiness and negligence which are some of the same  things for which the 5 CEOs have been sacked. If the CBN seeks  equity, it must come with clean hands. Once you  publish names of   directors of some debtor Companies, you must publish them all. For an  organization with so much human and material resources, surely it is  not that difficult to get  the complete list of directors of less than  five  hundred companies, which is a matter of public record at the  CAC.  All  it takes is a little diligence and hard work.

To go  online without diligently carrying out such a basic clerical task   publicly calls into question the capacity of the CBN to do a thorough  professional audit of  24 banks with accuracy. I  would suggest that for fairness and to protect its own credibility as an  impartial regulator, the CBN management should as a matter of urgency,  direct relevant staff to complete the said first list by appending the  names of the directors of ALL listed debtor companies. It should not take that much to get the required information at the CAC if  there is a  will to do so. The same should be done for all subsequent debtor lists as  a  minimum standard of due diligence.

My last reservation about the list has to do with the matter of  completeness. The CBN tells us that five out of the first ten audited  banks passed their audit (Diamond, First Bank, Guaranty Trust, UBA,  Sterling). There is skepticism by some about this especially since  the new CBN governor previously worked in two of the  banks that  passed , i.e. First Bank and UBA.  Perhaps such skepticism is far fetched. Still, I am certain they also have some bad debtors like the five failing  banks who have had the names of their bad debtors published. In my  opinion, the names of the bad debtors of ALL the banks should be  published irrespective of whether the bank passes the CBN audit or not,  since all bad debtors have put the economy in jeopardy. All bad debtors, irrespective of bank should also be prosecuted by EFCC if found  criminally culpable. This is one way to avoid reasonable accusations that  some banks are being fingered in a biased witch-hunt or even worse, in an  underhanded takeover scheme by certain interest groups. A bad debtor is a financial saboteur irrespective of his bank and what is good for the goose must also be good for the gander.

In concluding, some of the named debtors have already started coming  out to denounce the debt figures ascribed to them. Of those that have done so, I must confess their arguments -some complete with relevant documents- seem very reasonable to me. In view of these developments, one cannot again stress too much, the need for due diligence and impeccable accuracy by the CBN.

On the other hand, also significant  are the many more -both  individuals and Companies- on the debtor list that  HAVE NOT SAID  ANYTHING so far. In my opinion, their silence implicates them, and with  the degree of impunity in our society, it is good that they have been  named and shamed. The EFCC should ensure that where they are found culpable, they should be made to face the full  wrath of the law as  publicly as their names have been published on the world wide web.

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