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Sanusi: One-Man Demolition Squad...The Unfolding Agenda...

By Franklin Otorofani, Esq. (
Published September 2nd, 2009

Note: Below is my commentary on Dele Momodu's article titled “The Hunter and His Antelope”, published in the online August 29th, edition of This Day newspaper in which he lamented the negative reactions of his readers to his previous article questioning the actions of the CBN governor in the summary dismissal of the five bank CEOs, and the seemingly sadistic disposition of some Nigerians to the plight of the bank CEOs. Dele Momodu, as many know, is the publisher of the "Ovation" magazine based in London and his piece provided a veritable launchpad for me to address the actions of the CBN governor in a more comprehensive fashion. However, as at the time of sending this in, it has yet to be published by the columnist and I have the honor of sharing it with the distinguished readership of this blogsite, albeit a little retouched. Read on...

"Dele, I must confess that I did not read your referenced article that caused the “hoopla” among your readers, but I could surmise from the tone of this one, that it was somewhat critical of Sanusi's deployment of the sledgehammer against the five bank CEOs. And if I'm right, then you've got company, and I might add, plenty of it too! To put it bluntly, let it be known that there are many discerning Nigerians out there like you, including yours truly, who are not in the least taken in by Sanusi's barely concealed diabolical designs on the five banks now targeted for illegal acquisition or even outright liquidation. And Sanusi was not even ashamed to call his illegal bank takeover “reform.” What reform? Anyone who calls the firing of bank CEOs and debt collection by EFCC “banking reform” is, ipso facto, a fraud, by definition. Pray, what is reformative about firing bank CEOs and collecting debts from bank borrowers, unsolicited?

Sanusi's gratuitous actions are not only imprudent and patently illegal, but ultimately destructive of the fledgling Nigerian economy in general and the financial sector in particular. The corrosive effects of his actions are already beginning to manifest in the panic that has gripped the financial sector leading to panic withdrawals of funds by depositors, and the willful degradation of the status of the otherwise robust Nigerian banking sector in the international financial arena. The house that Solubo built is being savagely pulled down by his successor seemingly drafted in to do a demolition job of sorts, and without a doubt in furtherance of a hidden agenda. Sanusi's questionable intervention in the targeted banks can be readily faulted at several levels:

Banks all over the world are in the business of giving credits to individuals and businesses alike. And it's these credits that translate into real economic activities ultimately leading to economic growth and development in any economy. Credit is the lifeblood of any modern economy and only a dead economy can do without credit. Concomittantly, the freer the credit flow in an economy the more robust and flexible the economy becomes. Therefore financial regulations must not be fashioned in such a way as to stiffle free flow of credit. It's therefore ludicrous and counterproductive to criminalize bank lending and borrowing under the guise of reform. As already noted above, no modern economy grows without credits. As such banks are duty bound to extend credits to deserving individuals, businesses, and organizations, using their own risk management parameters. But the fact of the matter is bank credits are inherently risky by nature, the higher the risks the higher the returns. Naturally then bank credits would tend to gravitate toward profit centers, albeit with higher risks. And that means necessarily that these loans would not always perform. Some do some don't regardless of due diligence or risk analysis made prior to the credits. That is simply the nature of the territory, which Sanusi himself cannot feign ignorance as a former bank CEO. Again, loan defaults is a permanent feature of the financial industry. And I repeat, it goes with the territory and cannot therefore be decreed out of existence nor penalized by the dictatorial whim of any central bank governor.

As we have seen in the case of United States banks, the housing boom in the US was fueled by highly profitable the sub-prime mortgages, which were instruments devised by the banks that converted traditional mortgages into securities, just like shares, which were then packaged and sold to willing investors all over the world, and resold in similar packages to other layers of investors. Banks and international investors outside of the US got in the act to make quick money. As long as the mortgagees serviced their housing loans, it was all fine and dandy, and everyone on Wall Streets, including, fund managers, et all, smiled their way to the banks. Like a sophisticated pyramid scheme, as the US housing markets soared so were the profits of the investors in the sub-prime markets. But sophisticated as it was, it would only take a few borrowers' default to puncture the balloon. And sure enough it did not take long for borrowers to start defaulting on their loan repayments and with that the US house of cards came crashing! And it's still crashing today even as I send in this piece. Since the financial melt-down began close to two years ago, hundreds of banks have gone under in the United states alone. The question is: what was the US government's reaction to the crisis.

What did the United States government to do? Did President George Walker Bush and Chairman of the Federal Reserve Bank, Prof. Ben Bernanke, fire the CEOs of the failing banks? Or, for that matter, was the FBI invited to arrest, detain, and prosecute the CEOs of Fani Mae, Freddie Mac, Leyman Brothers, AIG, Washington Mutual, and all the CEOs of the failed financial institutions who indulged their institutions in unbridled risk taking with their so-called sub-prime mortgage financial engineering? No! Not a chance in hell! Not a single person was even invited by the FBI let alone detained. The same was the case in Europe. The authorities in the United States and Europe were too responsible, matured, calculated, and cool-headed to take such rash, unproductive decisions that would do more harm than good to a battered economy and a humbled financial sector. Rather, President Bush, an avowed capitalist and Bernanke, went to Congress cap in hand to ask for and got $787 billion to bail out the banks and that sum came in the name of Troubled Assets Recovery Program (TARP), duly authorized by the United States Congress. That is DUE PROCESS in action. That is how mature leaders react to crisis in a democratic dispensation; not the Sanusi's one-man demolition squad in the name of reform. President Barrack Obama has followed in the same footsteps not only by retaining Bernanke for the sake of continuity and stability, but has equally indicated his re-appointment for a second term, unlike Yar'Adua who couldn't wait to see the back of Professor Charles Solubo to bring in Sanusi for the execution of the evil agenda now unfolding before our own eyes.

Did I say 'evil agenda'? That's right! Sanusi's gratuitous actions betray a hidden agenda that will unfold in the days to come no matter the official spin and gloss put on it to hoodwink unsuspecting Nigerians. It's not the beginning but the end of this saga that will reveal his true agenda. Yet the signs are already there for the discerning and they point unmistakeably to a predetermined plan for the acquisition of the targeted banks. They are there in his undue haste and gratuitous bailouts. They are there in his arrest and detention of the bank CEOs in cohort with EFCC without as much as giving them a hearing. They're revealed in the uncharacteristic gusto and missionary zeal suddenly being exhibited by the hitherto comatoseYar'Adua administration. Yes they're there in the frantic and frenetic bid to demonize the bank chiefs before the public. Oh, the signs of a hidden agenda are written over the faces of Sanusi and Madam EFCC! And I would not be surprised if it turns out that potential buyers have already been pre-positioned to take over the banks after the sack of their CEOs and government back-door takeover. And that would explain the rush for the illegal firing and detention of the bank CEOs even before the audit exercise being carried out by the CBN itself was completed. Or what is the London Road Show supposed to mean, if not designed to meet with pre-positioned investors? What do you need a roadshow in London for? How many road shows were organized by other countries' bank chiefs who took steps to reposition their banks in the face of the global financial crisis? Why does everything done neatly and professionally in other countries always end up messed up in Nigeria? And by the way, how many road shows is Sanusi planning? Is there one for New York, Paris, Montreal, or Johannesburg? If not, why not? Why must it start and end in London? I would hazard a guess. It's because the London connection is part of the hidden agenda. In fact, I would go so far as to posit that the sole purpose for the CBN's so-called bank audit exercise was to produce a report that would indict the management of the targeted banks in order to provide a basis for their illegal takeover. And once Sanusi got the predictable audit report of the targeted banks, he struck like a bolt from the blue, not waiting for the audit report of the remaining banks including the one he once headed to be turned in! Quite an interesting scenario. Isn't it? The man was simply working to an answer! How else would anyone interpret the lightening speed with which Sanusi acted without even confronting the bank CEOs with the audit reports of the banks before he struck, and quickly following that up with their detention with Madam EFCC on hand as the undertaker-in-chief with a campaign of calumny and disinformation against the CEOs?

The more fundamental level of Sanuis infractions, however, could be found in the illegal disclosures of the bank/customer relationships, which are protected by law in all civilized jurisdictions save in criminal proceedings. This strikes at the core of banking relationships. Remember, this publication of names of alleged bank loan defaulters was made even before EFCC came into the picture and not in the course of any criminal proceedings. By proceeding to publish the names of bank debtors whose only crime was to obtain legitimate loans from their banking institutions for legitimate businesses, even including in some cases, the execution of governmental projects now put in jeopardy, Sanusi has breached the civil laws of the land and destroyed bank/customer relationship needlessly. This is utterly insane. When a regulatory agency like the CBN throws both law and caution to the wind in its actions, then there is cause for grave concerns as to the direction the country is moving. Lawlessness is never a substitute for due process. The bank CEOs are answerable ultimately, not to the government, but to their respective shareholders, and therefore, the government cannot dictate to the banks how they should be run and who to grant or deny loans as the case may be. It can set broad rules but not micro-manage their day to day affairs. That is not the role of the CBN, or the government for that matter. Nigeria is not a command economy but a free economy, that is government by market forces. The principles of free market impose on regulatory authorities respect for due process, cautious and responsible interventions in the affairs of private commercial enterprises. If the banks have liquidity problems the CBN could ask them to raise their capital base or help them do so just like Solubo did long before the US and other countries were compelled by their own crisis to follow suit without unnecessary kill-and go-bravado as though Nigeria were a banana republic. Only a dysfunctional nation could have produced a dictatorial and summary character like Sanusi. And only a people weaned in military dictatorship could have so joyously hailed his summary and dictatorial actions including the misappropriation of public funds.

Is this an endorsement of possible credit and other financial abuses on the part of the bank CEOs as alleged? Far from it! Nothing prevented Sanusi from confronting them with such abuses and have them defend their actions. But to proceed summarily to dismiss them on the basis of some secretive audit report not shown to them amounts to a violent abuse of power. What is more, alleged abuses by bank CEOs is no excuse for Sanusi to indulge in his own flagrant abuses of the law and due process. Therefore, the CBN Governor owes the country the following explanations: Why did he choose to blow this into the open when the CBN bank audit was yet to be concluded? He was the CEO of First Bank. He should tell the world the status of the bank he headed or is he implying that he was above board in the management of First Bank? He should explain to us why he didn't confront the targeted bank CEOs with the audit report and nudge them to recover their non-performing loans through the extant legal processes without these unnecessary destructive theatrics? Under the laws of the land the banks can and should on their own recover their loans and they do not need an overbearing CBN with Madam EFCC in tow to do so in a civilized society where due process and rule of law is the norm. The banks were not even allowed to reconcile their accounts with their debtors in order to truly ascertain their debt profiles. for crying out loud! This situation has led to unsubstantiated claims by the CBN as was the case with Alhaji Dangote, for instance. And since when has the government become debt collector?

Isn't it laughable that a government that cannot meet its financial obligations to its workers and owes contractors billions of dollars is giving bank debtors a seven-day ultimatum to pay up or go to jail? And isn't it curious also that Madam EFCC who was thoroughly embarrassed by US Secretary of State, Mrs. Hilary Clinton's damning verdict on EFCC, has suddenly jumped into this with an unprecedented gusto and alacrity never before exhibited by this moribund administration and has suddenly turned EFCC into a Debt Collection Agency while readily abandoning the anti-graft war which is her primary and only responsibility? She is now chasing bank loans! The smell of money has proven irresistible to her. Debt collection is a whole lot more profitable than chasing corrupt government officials. Only heavens know what will happen to the billions of naira Nigeria's newest government's Debt Collection Agency has muscled from the hands of bank debtors through intimidation and threats of imprisonment. This is nothing short of jungle justice. Rule of law and Due Process have callously been replaced with official banditry. Is the country now being run by Area Boys and Girls who have no respect for rule of law even as they shout it from the rooftops? This is the rule of the jungle that must not be allowed to take root in a democracy.

Finally, Sanusi must explain to us who authorized him to put our public funds into private banks without the imprimatur of the National Assembly? Whose money is Sanusi gratuitously doling out just like that with reckless abandon like a drunken sailor without recourse to the National Assembly? Nigerians are asking: whose money, Sanusi's or ours? And they want answers, not later but now. And the answers should be forthcoming with the same lightening speed as the illegal firing of the bank CEOs. Yes, someone has some explaining to do to the Nigerian people through their representatives in the National Assembly, if the press would not do their part to get the answers from Sanusi, after all the crude bravado. This is a test case for our lawmakers whose exclusive jurisdiction to appropriate public funds has been so flagrantly infringed upon by the governor of Central Bank unchallenged. Four hundred billion naira is no small potato. It's our collective wealth, and no single individual has the right to give it a way as charitable donation to banks that might soon be equally given away as charitable donations to handpicked individual investors who, in all probability, are already lined up with our money eventually ending up in private pockets in the official round tripping.

I challenge the Nigerian press to go beyond armchair reporting of the “official” releases by the authorities and dig deep down into the matter to expose the sinister motives behind Sanusi actions. It's called investigative journalism, not armchair reporting! I challenge our lawmakers to rise up to the ocassion and speedily halt the illegal and unconstitutional encroachment of their legislative territory by the CBN governor.

My country will not be reduced to a banana republic under my watch. I rest my case for now while I watch the unfolding events like an eagle from the sidelines.

God bless Nigeria!

Franklin Otorofani, Esq.

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