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 Daily
Independent Online.
* Wednesday, June 30, 2004.
CBN’s EFCC option for errant bank chiefs
By Mojeed Jamiu
Finance Editor
The new
governor of the Central Bank of Nigeria (CBN), Prof. Charles Soludo, left
no one in doubt last week about the direction the apex regulatory body
was going in its bid to sanitise the banking system in the country.
The Central Bank vowed
to henceforth, report banks, which indulge in any form of unethical
behaviours and such actions that fall short of good ethical conduct or
that could be classified as a financial crime to the Economic and
Financial Crimes Commission (EFCC) for proper sanction.
The CBN Deputy Governor in charge
of financial sector surveillance, Mr. Tunde Lemo, who stood in for the
Soludo, warned that issues of unethical behaviours and un-professionalism
that have characterised activities in the industry for some time would no
longer be treated with kid gloves.
He said the apex bank had realised
that for the battle against unethical activities to be won, there must be
stricter measures.
The governor, who
delivered a keynote address at the 2004 conference on Financial and
Economic Crimes, organised by the Chartered Institute of Bankers of
Nigeria (CIBN), stated that money laundering was a manifestation of
‘‘mis-governance.’’
While giving CBN a pass
mark for its fight against the scourge of money laundering over the years,
he recalled that the apex bank in 2002 directed banks to appoint
compliance officers and also that the chief compliance officer of each
bank was to be a staff of no less than the grade of a general manager, to
effectively enforce compliance in the bank.
Aside other agencies,
which he said had also been involved in the fight against the scourge, he
stated that the apex bank upgraded its ‘‘Know Your Customer (KYC)’’
directive of November 2001 to a comprehensive KYC manual to guide banks
in their dealings.
In the same vein, CBN is set to
wield the big stick against erring bank chief executives and other top
management staff found wanting, especially in the areas of insider
borrowing and free funds.
A source at the apex
bank told our correspondent in Lagos on Monday that the apex regulatory
body frowns at chief executives of banks still holding on to the dual
post of chairman and chief executive in the financial system.
The Central Bank had on
several occasions cautioned against such development, noting that it
gives a lot of room for insider abuse and unethical practices especially,
the ones relating to corporate governance.
It was gathered that
two bank chiefs, one with interest in a telecommunications firm and another
with huge investments in property and real estates, might be advised to
resign their appointments before the end of the third quarter of the year.
It was also learnt that
the apex regulatory body, as part of the moves to reform the financial
system in the country, might likely review the penalties and sanctions
against the 22 banks, which contravened foreign exchange rules about two
years ago.
The CBN source noted
that the removal of the former chairman of UBA Plc, Mr. Akeem
Bello-Osagie, for an offence he committed in 1999 was part of the moves
by the CBN to alert bankers on the need to maintain banking ethics.
In the same vein, the
exit of the chairman and chief executive officer of FSB International
Bank, Mallam Mohammed Hayatudeen, two weeks ago, was not unconnected with
the apex bank�s decision to cleanse the system and ensure that banking
business in the country is done according to the law.
As a matter of fact,
CBN in living up to its responsibility as the apex financial regulatory
body in the country, noted earlier in the year that the banking system
would be sanitised and made as responsive as it is practicable.
Though all the banks
and their principal officers involved in the May 2000 free fund deals
were generally pardoned, bankers are now quite apprehensive of the
decision to look into books even as far back as 1998.
CBN also earlier in the year
descended on the operators of financial houses and mortgage institutions
in the country that contravene the provisions of the Banks and Other
Financial Institutions Act (BOFIA).
A source at the apex
regulatory body told our correspondent that the development arose as a
result of the activities of some financial institutions operating in
remote areas of the country, which consistently flout its regulations
especially on returns to the apex bank.
The source disclosed
that operatives from the banking supervision department of the Central
Bank were already closing down the offices of errant financial houses and
mortgage houses outside Lagos and Abuja.
The Central Bank had in
a recent public notice addressed to all financial institutions and titled
intent to revoke the licenses of some other financial institutions for
non-rendition of returns to the Central Bank of Nigeria, stressed that
based on the verification exercise carried out by the Other Financial
Institutions Department (OFID) of the Central Bank of Nigerian in 2003,
it was observed that some of the Other Financial Institutions have closed
their offices for the past six (6) months or more.
As the CBN boss urged
all stakeholders to collaborate and effectively fight the scourge, he
said the crusade would be aimed at checkmating criminals and terrorists
whose activities constitute a threat to national security, as well as
compromise the stability, transparency and efficiency of financial
systems worldwide, thus, undermining economic progress and political
stability.
Noting that the
economy, society and ultimately the security of countries used as money
laundering bases are all imperiled, he said illicit financial flows
adversely affect the economy and also have a far-reaching effects on the
financial institutions that are used as conduits.
Apart from the fact
that such funds are highly volatile, he said a financial institution’s
reputation and integrity could be marred through its involvement in money
laundering or financing terrorism.
All the moves are in
tandem with the Federal Government's move to effect major changes in the
Central Bank of Nigeria Act under Decree No. 41 of 1999 as well as the
Banks and Other Financial Institutions Act (BOFIA).
It was learnt that the
need to effect a reform in the guidelines regulating the activities of
the apex bank and the other banks in the country stemmed from the desire
to give fillip to the activities of the operators of the financial system
in the country.
The CBN source
disclosed that government was concerned that CBN Act (1991) has outlived
its relevance, adding that a review committee comprising of tested hands
would be constituted before the end of the month to fine-tune the
existing Act and the BOFIA to reflect new trends in banking.
The President, Chief
Olusegun Obasanjo, had in justifying the need for a change of guards at
the apex bank noted that vision for a development driven CBN informed the
decision to name the former economic adviser, Soludo, as the new boss at
the regulatory body.
According to him, ‘‘we
need a Central Bank that is development oriented and not just a matter of
monetary policies alone. The Nigerian economy as it were today, needs a
CBN that will drive it especially in its developmental needs and I see
that Soludo can do just that, I have worked with him before, and even now
and I am convinced that he can do the job very well.’’
The Act setting up the CBN makes provisions
for the continuance of the Central Bank of Nigeria with a Board of
Directors consisting of the governor, deputy governors and five
directors, and charges the apex bank with the over-all control and
administration of the monetary and banking policies of the Federal
Government both within and outside Nigeria.
The new Act, according
to him, would aim at a synergy of monetary and fiscal policies with the
sole aim of achieving the economic reform objectives of the present
administration.
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