The Nation Newspaper

Tag: abuse

  • ‘Address abuse of expatriate quota’

    Worried by the high rate of unemployment in the country, the Organised Labour has urged the Federal Government to protect Nigerian youths through the re-appraisal of the existing law guiding expatriate quota. The workers under the aegis of the National Union of Civil Engineering Construction Furniture and Wood Workers (NUCECFWW) lamented the flagrant abuse of expatriate quota by foreign firms operating in the country.

    The union, in a communique jointly signed by the President General, Comrade Amechi Asugwuni and the General Secretary, Comrade Babatunde Liadi, noted that many foreigners, especially Asians and Chinese are in Nigeria on the excuse of being experts on the jobs that can be performed by Nigerians. They argued that this is against the Nigerian Content Development (NCD) Act.

    “Therefore the National Executive Council (NEC-in-session) call on the necessary organ of government to review the process of granting expatriate permit through proper synchronization as well as ensuring that expatriate quota are not abused”, the statement read. The union’s NEC demanded for a properly reconstituted inter-ministerial department and agency committee that will co-opt labour unions in recommending and approving expatriate registration.

    The Union re-affirmed workers inalienable rights to belong to the union of their choice in accordance with the laws of the land and ILO Conventions, which had already been domesticated in Nigeria. As such it charged the Federal Ministry of Labour and Productivity  not to allow employers to scuttle processes and ensure prompt implementation of award against the employers.

    The statement commended the alertness of the Union in monitoring of employers’ compliance with best industrial relations practices in the industry, noting that it has helped to reduce friction between the union and employers, put management on their toes, facilitate alertness and make both the Government and employers to appreciate the need to be proactive in nipping issues in the bud.

    The Union, which condemned the state of casualisation and contract staffing in the country, also resolved that any employment model or policy that is found to be deceptively exploitative with the tendency to degrade jobs or weaken the union will be strongly resisted.

  • Abuse of impeachment under 1999 Constitution

     A lawyer Solomon Kehinde, in this article examines the abuse of the impeachment clause in the Constitution.

    Every democratic society has mechanisms that checkmate its leaders from becoming autocratic. This is in consonance with the words of Lord Acton that “Power corrupts, and absolute power corrupts absolutely”.

    Nigeria, like most democratic societies, has one of such mechanisms and this is known as ‘’impeachment’’. Unfortunately, this mechanism almost broke the slender body of Nigeria’s burgeoning democracy between 2005 and 2007, when the process of impeachment was grossly abused.

    Where did the country get it wrong? Was it that Nigeria did not get it right from her colonial masters or from the country she copied the 1999 Constitution? Was it that the country’s political class had a sheer disregard for constitutional provisions?

    Between 2005 and 2007, five governors were impeached by their  State Houses of Assembly. The only unifying factor of these impeachments was that none could be said to have followed due process. They were all removed without having regard to constitutional provisions.

    The United Kingdom that colonised Nigeria utilised the impeachment process until 1795 when Warren Hastings was impeached. Since that time, the impeachment process has no longer been in practice and the country has developed what is known as “passing a vote of no confidence” on any public officer who has committed an offence serious to warrant such a fundamental decision. These processes mentioned above have been sparingly used by the United Kingdom; it only resorted to them when it was absolutely necessary.

    Another interesting country is the United States. This is so because of the political and constitutional nexus that exists between Nigeria and America. In this country, impeachment is not only limited to the president and his vice, governors and their deputies but to all civil officers – they could be senators and judges as experience has shown.

    Since 1787 when the United States Constitution became operative, only thirteen officers have so far been impeached. This underscores how Americans guard this provision jealously to avoid political instability. It is only resorted to when other avenues have become practically impossible.

    Coming back to Nigeria’s constitutional provisions as regards impeachment, though the 1999 Constitution does not expressly use the term “impeachment”, the process and procedure employed are synonymous to impeachment as we have under the American Constitution.

    Section 143 of the 1999 Constitution provides for the impeachment of both the President and the Vice President. Section 188 of the same Constitution provides for the removal of governors and their deputies. This latter section is a replica of section 170 of the extant 1979 Constitution under which Alhaji Balarabe Musa of the defunct People’s Redemption Party (PRP) of the old Kaduna State was impeached by a House dominated by the also defunct National Party of Nigeria (NPN). He was the only executive Governor removed under that constitution.

    Both the 1979 Constitution and 1999 Constitution do not provide grounds for impeachment. This is in contrast to the American constitution which highlights the grounds for impeaching a public officer. The 1999 Constitution only provides that above mentioned elected officers shall be removed from office if they are found guilty of “gross misconduct”. The definition of “gross misconduct” in Section 188 (11) is not explicit enough.

    Therefore, reckless legislatures have harped on this inadequacy to impeach on frivolous grounds. The case of Mr. Peter Obi of Anambra State is an evidence of this rascality. Therefore, the constitution has put the executive at the mercy of the legislature because the latter can in its own opinion manufacture what amounts to “gross misconduct”.

     

     

     

     

  • Medical doctor decries child sex abuse

    A consultant at the Lagos University Teaching Hospital, (LUTH) Dr Chidinma Ajayi, has decried child sex abuse, saying children are more vulnerable to abuse in the society.

    She said it has become a social norm, which is underreported as the affected ones are not ready to expose the culprit as a result of social stigma.

    Dr Ajayi, spoke at the African Child Day celebration organised by the National Council of Child Right Advocates of Nigeria,(NACCRAN) Lagos State.

    The event held at the media centre, National Stadium, Surulere, Lagos was themed: ‘Sexual abuse and the community’.

    Child sexual abuse, Ajayi said, could either have a long or short term effect on the child as they psychologically live a traumatised life.

    She added that victims are most times violated by someone close to them. She, therefore, advised pupils to be more self conscious and report any abnormal actions from people, who disguise themselves as neighbours, elders, relations or family friends.

    She admonished parents to desist from all forms of child abuse and teach their children sex education.

    State coordinator, NACCRAN, Mrs Olaitan Oshodi, said the society’s greatest asset is the children, which without, is doomed for destruction

    “A child-friendly quality, free and compulsory education should be given to every African child. Education to the child should not be treated as a privilege that the society grants, but a duty that the society fulfils towards all her children,” she said.

  • Curbing abuse of herbal medicine

    SIR: The proliferation and influx of herbal medicine from within and outside the shores of Nigeria, particularly from China should be a source of anxiety for the citizens as its development has led to an upsurge in various categories of healers.

    Globally, people develop unique indigenous healing tradition adapted and defined by their culture, beliefs and environment which satisfies the health needs of their communities over centuries. The increasing widespread use of herbal medicine has prompted the World Health Organisation to promote the integration of Herbal Medicine and Complementary and Alternative Medicine into the National Health care System.

    But despite the widespread use of herbal medicine worldwide and their reported efficacies, they are not completely harmless. The rate at which Nigerians, both rural and lately urban dwellers, develop chronic kidney diseases and subsequently kidney failure due largely to the consumption of these herbs call much for concern. Worse culprits are the artisans and commercial bus drivers, who consume these products arbitrarily, mostly in form of alcoholic  herbal mixtures to treat ailments such as pile, weak erection, premature ejaculation, back pains and low libido because they have many wives and concubines and will want to satisfy all parties. Some of these mixtures are supposedly used in the treatment of a wide range of diseases at the consumption of a single dose.

    In as much as these herbs are effective, the multifarious side effects, which most times outweigh the benefits, particularly if consumed in excess, should not be over looked. Therefore, government at all levels should enlighten the public on the potential danger of consuming these herbs, especially in their raw forms due to the high toxicity.

    A body to be saddled with the responsibility of evaluating the safety efficacy and quality of herbal medicines and their products should be constituted to carry out random clinical trial studies for these drugs before consumption. Also, the Federal Government should check the influx of sub standard imported herbal mixtures mostly from India and China, and standardize the local ones by re-branding them in form of tablets and capsules.

     

    •Bilikis Bakare

    Ministry of Information & Strategy, Alausa-Ikeja

  • How users abuse digital data exchange

    Aside breaking the barriers in voice communication, data is another frontier being explored by operators to shore up dwindling revenue as average revenue per user (ARPU) dips. LUCAS AJANAKU reports that unguarded exchange of intimate digital content is wreaking havoc on homes.

    MR Hughes (not real name) got married about two years ago. About 45 years old, he married a 28-year-old graduate of the College of Education, Ikere, Ekiti State. The wedding, which took place in Ibadan, the Oyo State capital, was colourful.

    Wedding over, the wife joined her husband in Lagos. Wedding pictures were lavishly posted on the internet. The pictures were shared among friends on virtually all the available social media platforms.

    Before the wedding, each of them had willingly shared their personal data on one social media platform or the other. So, when the wedding pictures came flying, it was easy to identify who was married to whom.

    Life appeared beautiful until the serenity of the marriage was shaken by a flurry of anonymous calls, text messages, threatening posts on social media platforms and sometimes, voice calls. All these were emanating from the man’s ex-girlfriends.

    “I am tired of these calls. Unknown persons decided to open a new Facebook account where they hurled abuses at me. Sometimes, callers would hide their numbers and call me at very odd hours of the night and tell me my husband jilted them and promise to ensure that I know no peace,” the woman lamented.

    She said her major worry was that her husband gives away information about her to the callers. She has forgotten that at the point of signing on to any of the social media platforms, she had ignorantly parted with her personal details, such as mobile phone numbers and residential address.

    If the woman was troubled, Mr Hughes was not. He confessed to his pastor that he also receives such anonymous calls but absolved the wife of any wrongdoing.

    “The pastor settled the matter through counselling. He advised that if we could not change our phone numbers, we should be weary of answering calls from unknown persons. On our accounts on social media platforms, he advised that we remove our pictures if we could and stay away from the maddening crowd surrounding social media platforms,” he said.

    Mr Hughes is not a lone victim of unguarded data exposures. There are several victims courtesy of the development of science and technology. Many homes have been broken while age-long family ties ruptured through the click of a button.

    According to a new study by security software giants, McAfee, almost 50 per cent of adults exchange intimate digital content with their partners–but few  take the necessary precautions while doing so.

    The study, titled 2014 Love, Relationships and Technology, examined over 1,500 customers and how they share and store intimate data on mobile devices, with current or former ‘significant others’.

    According to McAfee, almost half of all smartphone users surveyed had sent or recieved intimate photos or text messages using unsecured digital devices, increasing the risk of having private lives blown up on the internet.

    According to a wholly tech online platform, MyBroadband Newsletter, McAfee’s study highlighted how sharing personal content such as suggestive texts, nude photos, suggestive video and passcodes on devices could potentially lead to cyber-stalking and while risking exposure of private content leaking online.

    The report discovered that while 69 per cent of smartphone users were securing their devices with a password or passcode, more than 64 per cent of adults were sharing these details with other people.

    It noted that in addition to sharing passwords, 50 per cent of the individuals examined in the study share mobile phone content and 48 per cent share email accounts.

    On the study, Vice President MacAfee Consumer Business, Gary Davis, was quoted as having said: “With all the stories we’ve heard about intimate photos being leaked, it’s hard to believe people are still sharing their passwords.

    “Ultimately, they’re increasing the risks of these photos becoming public and possibly jeopardising their identity and reputation.”

     Highlights

    It was discovered that 61 per cent of men are more likely to use their mobile devices to send and receive intimate contents as against 48 per cent of women while 45 per cent of adults involved in the study said they stored intimate contents that they have received, in comparison to 40 per cent who store suggestive photos, videos or messages they have sent.

    According to the report, of those who have sent intimate, 77 per cent have sent this content to their ‘significant other’, while 10 per cent of individuals in the study noted that they had sent similar content to people they have never met before.

    In the survey involving adults, 96 per cent of them confessed that they trust their ‘significant other’s’ intimate content or otherwise private information they have sent, and only 32 per cent have asked their partner to delete the information when ending the relationship.

    Balancing Act reported that 25 per cent of respondents indicated that they have taken their partner’s mobile device to see other content stored on it, including messages and photos.

    According to McAfee Security Expert, Robert Siciliano, people who choose to engage in the sharing of such content should take precautions “before something adverse happens that will expose you in ways you never wanted”.

     Need for caution

    MacAfee counsels players in the digital village not share passwords with anyone, irrespective of the intimacy of the relationship. It warned that should there be any reason to share password with anyone, a new one should be created and should be changed immediately after it had been used if there is any suspicion of its being interfered with.

     Create PIN for your devices

    Create a personal identification number (PIN) or passcode on your smartphone and other mobile devices. This will prevent unauthorised persons from gaining access to your data should your devices be lost or stolen. In the event your device gets lost or stolen, what the boys in Computer Village, Ikeja would do would be to ‘flash’ the device. All the data will get lost in the process and nobody will be able to publish your personal data online.

     Place your fingers always on your delete button

    Endeavour to delete personal or intimate messages as soon as they have been sent. Unauthorised persons may get access to your device and use such information against you. It could also save your relationship from crumbling. The reputation you have built over the years should also be prevented from being damaged just through the dial of a button.

     Once shared, it’s public knowledge

    You must bear in mind that before you press the send button, post, tweet, chat or do other things online,  that once a  private information is shared, especially online, it  immediately gets out of your control and go viral. Therefore, the protection of your personal information is your responsibility.

    Director, Public Affairs, the Nigerian Communications Commission (NCC), Tony Ojobo, said the internet is not regulated and may never be regulated. He advised people to be careful what they share online because some people are waiting in the wings to use such personal data.

  • How users abuse digital data exchange

    Aside breaking the barriers in voice communication, data is another frontier being explored by operators to shore up dwindling revenue as average revenue per user (ARPU) dips. LUCAS AJANAKU reports that unguarded exchange of intimate digital content is wreaking havoc on homes.

    MR Hughes (not real name) got married about two years ago. About 45 years old, he married a 28-year-old graduate of the College of Education, Ikere, Ekiti State. The wedding, which took place in Ibadan, the Oyo State capital, was colourful.

    Wedding over, the wife joined her husband in Lagos. Wedding pictures were lavishly posted on the internet. The pictures were shared among friends on virtually all the available social media platforms.

    Before the wedding, each of them had willingly shared their personal data on one social media platform or the other. So, when the wedding pictures came flying, it was easy to identify who was married to whom.

    Life appeared beautiful until the serenity of the marriage was shaken by a flurry of anonymous calls, text messages, threatening posts on social media platforms and sometimes, voice calls. All these were emanating from the man’s ex-girlfriends.

    “I am tired of these calls. Unknown persons decided to open a new Facebook account where they hurled abuses at me. Sometimes, callers would hide their numbers and call me at very odd hours of the night and tell me my husband jilted them and promise to ensure that I know no peace,” the woman lamented.

    She said her major worry was that her husband gives away information about her to the callers. She has forgotten that at the point of signing on to any of the social media platforms, she had ignorantly parted with her personal details, such as mobile phone numbers and residential address.

    If the woman was troubled, Mr Hughes was not. He confessed to his pastor that he also receives such anonymous calls but absolved the wife of any wrongdoing.

    “The pastor settled the matter through counselling. He advised that if we could not change our phone numbers, we should be weary of answering calls from unknown persons. On our accounts on social media platforms, he advised that we remove our pictures if we could and stay away from the maddening crowd surrounding social media platforms,” he said.

    Mr Hughes is not a lone victim of unguarded data exposures. There are several victims courtesy of the development of science and technology. Many homes have been broken while age-long family ties ruptured through the click of a button.

    According to a new study by security software giants, McAfee, almost 50 per cent of adults exchange intimate digital content with their partners–but few take the necessary precautions while doing so.

    The study, titled 2014 Love, Relationships and Technology, examined over 1,500 customers and how they share and store intimate data on mobile devices, with current or former ‘significant others’.

    According to McAfee, almost half of all smartphone users surveyed had sent or recieved intimate photos or text messages using unsecured digital devices, increasing the risk of having private lives blown up on the internet.

    According to a wholly tech online platform, MyBroadband Newsletter, McAfee’s study highlighted how sharing personal content such as suggestive texts, nude photos, suggestive video and passcodes on devices could potentially lead to cyber-stalking and while risking exposure of private content leaking online.

    The report discovered that while 69 per cent of smartphone users were securing their devices with a password or passcode, more than 64 per cent of adults were sharing these details with other people.

    It noted that in addition to sharing passwords, 50 per cent of the individuals examined in the study share mobile phone content and 48 per cent share email accounts.

    On the study, Vice President MacAfee Consumer Business, Gary Davis, was quoted as having said: “With all the stories we’ve heard about intimate photos being leaked, it’s hard to believe people are still sharing their passwords.

    “Ultimately, they’re increasing the risks of these photos becoming public and possibly jeopardising their identity and reputation.”

    Highlights

    It was discovered that 61 per cent of men are more likely to use their mobile devices to send and receive intimate contents as against 48 per cent of women while 45 per cent of adults involved in the study said they stored intimate contents that they have received, in comparison to 40 per cent who store suggestive photos, videos or messages they have sent.

    According to the report, of those who have sent intimate, 77 per cent have sent this content to their ‘significant other’, while 10 per cent of individuals in the study noted that they had sent similar content to people they have never met before.

    In the survey involving adults, 96 per cent of them confessed that they trust their ‘significant other’s’ intimate content or otherwise private information they have sent, and only 32 per cent have asked their partner to delete the information when ending the relationship.

    Balancing Act reported that 25 per cent of respondents indicated that they have taken their partner’s mobile device to see other content stored on it, including messages and photos.

    According to McAfee Security Expert, Robert Siciliano, people who choose to engage in the sharing of such content should take precautions “before something adverse happens that will expose you in ways you never wanted”.

    Need for caution

    MacAfee counsels players in the digital village not share passwords with anyone, irrespective of the intimacy of the relationship. It warned that should there be any reason to share password with anyone, a new one should be created and should be changed immediately after it had been used if there is any suspicion of its being interfered with.

     Create PIN for your devices

    Create a personal identification number (PIN) or passcode on your smartphone and other mobile devices. This will prevent unauthorised persons from gaining access to your data should your devices be lost or stolen. In the event your device gets lost or stolen, what the boys in Computer Village, Ikeja would do would be to ‘flash’ the device. All the data will get lost in the process and nobody will be able to publish your personal data online.

    Place your fingers always on your delete button

    Endeavour to delete personal or intimate messages as soon as they have been sent. Unauthorised persons may get access to your device and use such information against you. It could also save your relationship from crumbling. The reputation you have built over the years should also be prevented from being damaged just through the dial of a button.

    Once shared, it’s public knowledge

    You must bear in mind that before you press the send button, post, tweet, chat or do other things online, that once a private information is shared, especially online, it immediately gets out of your control and go viral. Therefore, the protection of your personal information is your responsibility.

    Director, Public Affairs, the Nigerian Communications Commission (NCC), Tony Ojobo, said the internet is not regulated and may never be regulated. He advised people to be careful what they share online because some people are waiting in the wings to use such personal data.

  • When leaders abuse the place of worship

    SIR: The stampede at the Holy Ghost Adoration Ministry, Uke, in Idemili North local government area of Anambra State is one incident that should not be allowed to fizzle out just like others. Trust our leaders, already, politicians and security agencies have all come out threatening fire and brimstone to fish out those behind the ‘dastardly and inhuman act’. Our leaders, just like most Nigerians are very reactionary in nature. We derive unquantifiable pleasure in exhausting energy, time and resources on issues we all know we cannot record any success. Innocent worshippers have been made to die for no justifiable reasons. Dreams shattered, hopes dashed and potential leaders had their journey to stardom truncated. All these happened in just a night, under the watchful eyes of the clergy, politicians and helpless ordinary worshippers.

    The organizer of the crusade, Rev. Fr. Emmanuel Obinma, where thousands from across Nigeria throng to for prayers, healing and spiritual retreat obviously had no slightest knowledge of the fact that politicians had plans to hijack the gathering for that day. I am very sure, if he had known, the crusade would have been called off at the 11th hour. But like human that he is, he couldn’t have known everything. Regrettably, instead of harvesting souls for God, dead bodies were harvested while several other worshippers sustained varying degree of injuries.

    Expectedly, politicians across different party platforms in the state have since pointed accusing fingers at Governor Obi and his team for being responsible for the attacks and subsequent deaths recorded. Report in some section of the media quoted eye witnesses as saying the stampede occurred when Obi started campaigning for his party candidate and there were shouts of disapproval, causing his security aides to fire tear gas into the crowd. According to the governor, this allegation is a product of mischief and vain attempt to calumnise him and his party, APGA.

    I personally see some sense in the allegation that Governor Obi seized the opportunity of speaking at the programme to canvass support for the candidate of the All Progressive Grand Alliance, Chief Willie Obiano ahead of the November 16 governorship election. Trust our politicians; they know how best to kill 20 birds with just a stone. A Nigerian politician is not an opportunity waster. They know when and how to use every opportunity that presents itself to floor their opponents and possibly sell themselves.

    Our clergymen are notoriously becoming insensitive to growing concern about the fact that undeserving personalities are given front rows in our Mosques and Churches. Aside giving them the regular opportunity to brazenly flaunt their ill-gotten wealth, religious leaders often present them as good examples for our teeming youth population. We desire to see men and women of God who could summon the courage to look straight into the eyes of a thief and ask him to take his ill-gotten wealth elsewhere!

    Would the organizers of the Uke Adoration Ground crusade have also allowed candidates of other parties to mount their rostrum and address their congregation? It is high time our clergymen are told in clear terms that people of questionable character shouldn’t be celebrated or given special recognition in our places of worship.

     

    • Abdullahi Yunusa

    Imane, Kogi State

  • NOA seeks sanction for  abuse of national symbols

    The Director-General, National Orientation Agency (NOA), Mike Omeri, has  urged the National Assembly to expedite action on the Ordinance Act expected to proffer stiffer punishment for wrong users of Nigerian national symbols.

    The bill have scaled through First Reading at the floor of National Assembly.

    The Act, if signed into law, will also encourage all Nigerians to imbibe the culture of celebrating Nigerian uniqueness, identity and accomplishments.

    Omeri made this call at the a Patriots’ Assembly to commemorate the second Edition of the National Symbols Day in Abuja.

    He described Nigeria’s symbols as antidotes  for unity and peaceful coexistence.

    Last year, NOA set aside September 16 of every year, as the day for Nigeria to honour Nigerians National Symbols with a view to engraving the consciousness of their citizens’ correct features of their various national symbols and to engender love, acceptance and respect for those symbols.

    According to him, the day was set aside as a result of wide spread of misunderstanding and misrepresentation of our various National Symbols, gross disregard, disrespect, abuse and misuse of the symbols to create awareness and to demonstrate our love of country and nationalistic re-awaken spirit.

    He said: “We believe that the positive values embodied by our National symbols can naturally evoke certain attitudes and emotions toward our nation. We believe our National core values as enumerated in section 2, sub-section 23 of the 1999 Constitution of Nigeria are expressed in our National symbols and should further find practical expression in the manifestation of those values by Nigerians through the inspiration they draw from our National symbols,” he said.

    “The NOA is seeking the amendment of ordinance of the act to make wrong display of National symbols, defacing of other wrong treatment of our National symbols attract greater sanction.

    NOA boss revealed that the Nigerian National Flag was established by the flag and coat of Arms Ordinance act NO. 48 of September 16, 1960. The green-white-green was raised for the first time on October 1, 1960. The flag brings to mind memories of sacrifice thereby inspiring unity and innovation. Since assumption of office last year, we have embarked on a series of activities to promote these virtues.

    Omeri disclosed that Nigeria symbols includes: the National Flag, the coat of Arms, the National Anthem, the Naira, National identity card, Nigerian International Passport and National orders are symbols to unite people by creating visual and verbal and iconic representation of our heritage, values and goals.

    He further urged the Nigerians to focus their attention on Nigeria symbols as a way of bringing unity to the country adding that it is imperative to reverse the trend which has put a dent on a country’s nationalism.

  • Gaidam warns parents against child abuse

    Yobe State Governor Ibrahim Gaidam has urged parents to stop sending their children to the street for hawking and other dangerous errands.

    The governor said there is need to secure a better future for children through good education and sound moral upbringing.

    He said these should not be jettisoned for mere economic gains of the family.

    Gaidam spoke through the Commissioner for Youths, Aji Bularafa.

    The governor also warned parents to monitor their children to know the company they keep, adding that such close watch will prevent them from indulging in vices, such as cultism, alcoholism and smoking of dangerous substances.

     

  • Protecting depositors’ funds from abuse

    The Central Bank of Nigeria (CBN) is taking extra measures to protect depositors’ funds in banks with Holding Company (HoldCo) structure. COLLINS NWEZE writes that the banking watchdog sees insider-related loan abuse as likely threat to the arrangement.

     

    SINCE the 2009 reform, there have been lots of activities in the banking sector. The activities include the

    overhaul of the risk management structures; adoption of 10-year tenure for bank chief executive officers; repeal of universal banking and the adoption of Holding Company (HoldCo) structure.

    HoldCo, a conglomerate formed for the purpose of holding controlling interest in several companies, enables a corporation to diversify its investments, manage other firms, and contribute to the growth of its subsidiaries in other sectors. Five banks have keyed into the HoldCo structure with four completing the process in November, last year. The banks that have adopted the HoldCo structure include FirstBank of Nigeria, Stanbic IBTC Bank, United Bank for Africa and First City Monument Bank. Union Bank is yet to complete the process.

    To curb excesses and insider abuses, the Central Bank of Nigeria (CBN) is watching closely the HoldCo structure. The CBN took the step to ensure that the lenders do not abuse lending privileges presented by the structure, which was introduced after the CBN set aside the universal banking regime in 2010 and gave banks the option to either divest all their non-banking subsidiaries and become pure commercial banks or form a HoldCo.

    The banks’compliance with CBN’s regulation on the Scope of Banking Activities & Ancillary Matters, No. 3, 2010 requiring the separation of commercial banking business from other financial services businesses led to the establishment of HoldCo.

    CBN Governor Sanusi Lamido confirmed during this year’s Renaissance Capital Investors’ Forum in Lagos that banks are restricted from lending to their HoldCos to protect shareholders’ funds from insider abuse. Any bank that violates the rule, he said, would have the loaned funds deducted from its shareholders’ funds as return capital.

    The thinking is that although the regulator has under the Bank and Other Financial Institutions Act (BOFIA) mandated the banks to adopt the structure, there is also need to monitor their operations to forestall abuse. The HoldCo structure allows commercial banks to be properly ring-fenced from the other non-commercial banking activities.

    CBN Director, Banking Supervision Mrs. Tokunbo Martins said should the HoldCos breach single obligor limits without the prior approval of the CBN, such loans would be regarded as impairment to capital, or deducted from the lender’s capital base.

    She said for the purpose of credit transactions, the rule covers banks’ related parties, listed as financial holding company (FHC), and other subsidiaries within the HoldCo structure.

    Also, credit transactions by the bank within the group would be treated as FHC lending to a bank within its group. Also, the bank should treat the loan as a liability, but credit by a bank to its FHC would be regarded as a return of capital and deducted from the capital of the bank in computing its capital adequacy.

    However, bank lending to subsidiaries within its group, especially where the credit is fully secured, would be assigned a risk weight of 100 per cent, otherwise it would be deducted from the capital when computing capital adequacy.

     

    What HoldCo entails

    The HoldCo, which will have a separate board, will own the bank and its subsidiaries as separate and independent entities, reporting directly to the board of the HoldCo. While some banks opted out of this structure for reasons favourable to them, few others believe it is the best way to go in their business while adding value to new and existing shareholders.

    According to the CBN, the review of risk weights assigned to some identified exposures is without prejudice to the risk management control functions put in place by banks to mitigate credit concentration risks. It is also in line with its risk-based supervisory agenda.

    Martins said the recent crisis in the banking industry highlighted several weaknesses in the system, key of which was the excessive concentration of credit in the asset portfolios of banks.

     

    Challenges before HoldCos

    The HoldCo structure adopted by some banks will face adverse tax implications, especially, excess dividend tax, tax experts have warned. Taiwo Oyedele, a chartered accountant, said based on the tax law, where the dividend paid by a company is higher than its taxable profit, the excess dividend will be subjected to 30 per cent tax.

    He explained that should a HoldCo receive dividend from its bank subsidiary, and then redistributes the dividend, it will be subjected to 30 per cent excess dividend tax, not withstanding that the subsidiary that earned the profit had paid 30 per cent income tax. Also, withholding tax at 10 per cent is always deducted before distributing the profit to the HoldCo. He said banks had previously faced the similar challenges under the universal banking model on their exempt income.

    “Where tax exempt income has been excluded from the determination of taxable profit, but forms part of the distributable profit available for dividend, this will result in the dividend paid being higher than the taxable profit,” he said. Oyedele said the problem will become more pronounced under the HoldCo structure since there will be at least one company between the bank and the shareholders.

    Also, the Managing Director, Partnership Investment Company Plc, Victor Ogiemwonyi, said banks that have adopted the HoldCo structure will have to contend with the burden of double taxation.

    Ogiemwonyi, who is also a Member of Council, the Nigeria Stock Exchange (NSE), said subsidiaries of banks that adopted the structure have to pay taxes as well as the quoted company. He said aside the challenge of taxation, the structure is in the interest of stakeholders. He said the HoldCo structure will increase earnings for investors and is also in line with the CBN’s policy boost transparency and accountability.

    But the management of FBN Holdings Plc has said the tax challenge has been handled. Its Chief Executive Officer, Mr Bello Maccido, said the HoldCos, at inception, faced a major concern over possible interpretation of tax statutes that would lead to the double taxation of dividends. There was also concern about the magnitude of transaction costs that would be incurred by the banks in responding to the change in regulations.

    “It was, therefore, necessary for HoldCos to seek mitigation of some of these costs through waivers and concessions from the regulatory authorities. It was very clear that without government’s intervention, the companies would have faced possible challenges in this regard,” he said.

    Maccido said the Financial Services Regulation Coordinating Committee (FSRCC) has created the platform for the HoldCos to table their tax and transaction costs problems to regulators and supported the idea of creating an industry working group.

    He said the Coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala, in concert with the Federal Inland Revenue Service (FIRS) team was instrumental to ensuring that the tax issues were heard and resolved in good time to meet the CBN deadline.

    He noted that the Securities & Exchange Commission, NSE and Central Securities Clearing System (CSCS) were receptive to discussions on ‘reduction of transaction costs’ for bank holding companies.

    Experts said the tax statutes, as at 2010, did not contain specific provisions for taxation of pure non-operating holding companies as envisaged by CBN. The tax issues that came up for discussion include: Avoidance of Double Taxation on Dividends Received by the companies, Minimum Tax, and Administration of Withholding Tax (WHT).

    However, a Council Member of Chartered Institute of Taxation of Nigeria (CITN), Ayodele Otitoju, said any tax resolution that does not involve the institute is not backed by law. He said taxation is legal and any action taken against its statutes will not stand.

    “The CITN should be party to that resolution. Any tax deduction not backed by law remains an illegal deduction and can be addressed in court. Any change to tax law should pass through the legislative process,” he said.

    However, Chukwuemeka Eze, a tax expert and lawyer, said taxing dividend from HoldCos amounts to overkill. He said it is only when the dividend is reinvested or transmitted into further ventures that it should be taxed. “The dividend can only be taxed if it is reinvested at a second venture; otherwise, it amounts to double taxation. The position of the law is that it is only when the money is reinvested, that it should be subjected to further taxation,” he said.

    Besides the taxation, analysts said managers in HoldCos also face other challenges. A banking analyst, Equity Research, at Renaissance Capital (RenCap), Adesoji Solanke, said as expected under this type of evolution, there is a lot of value moving around. However, he said it was too early to determine the extent to which value would be lost or created under this new structure, or the degree to which the need for new capital becomes more apparent or diminished post-deal.

    He said there were some challenges expected as the banks adopted new structures. For instance, since the HoldCo likely has a controlling interest in several corporations, he said management might have limited knowledge in the industry, operations and investment decisions of the controlled company. Such limitations, he said, might result in ineffective decision-making.

    Sylvester Okafor, a business Executive at Rockview Financial Services Limited, said there could also be a problem with a change of control. He said: “With a new reporting structure in place, former management reports to a larger group of shareholders and new board of directors even as it protects the interests of the subsidiary’s shareholders. Therefore, competing interests between management might result in contention and poor decision-making, which can negatively affect share prices,” he said.

    Okafor said minority shareholders might also face challenges with HoldCos, because while the HoldCos pay taxes on profits from their subsidiary companies, shareholders pay taxes on dividends received from them.

    He explained that with a new controlling shareholder, minority shareholders must pay more to maintain their previous shareholding and replace the directors. This change of control may cause contention between the shareholders and the HoldCos.

    “Additionally, many of the holding company’s investments may have unprofitable assets or business lines. If the holding company engages in similar industry sectors, management may face systemic risk, or conversely if the company is engaged in different industry sectors, the holding company may fall susceptible to several volatile market changes that make it difficult to mitigate risk. This can result in residual losses that the holding company may not have envisioned before purchasing the corporations,” he said.

     

    Which banks are involved?

    Already, five banks have keyed into HoldCo structure with four completing the restructuring as at last November. Already, FirstBank of Nigeria, Stanbic IBTC Bank, United Bank for Africa and First City Monument Bank have adopted the HoldCo sructure. But Union Bank is yet to complete the process.

    FBN Holdings has been listed on the NSE after delisting FirstBank of Nigeria Plc, transferring its shares to FBN Holdings. FBN Holdings comprises FirstBank of Nigeria Limited, FBN Capital Limited, FBN Life Assurance Limited, FBN Insurance Brokers Limited and FBN Microfinance Bank. FBN Holdings, the new entity, is organised along four major business groups, including commercial banking, investment banking and asset management, insurance and other financial services.

    The Managing Director, FirstBank of Nigeria Limited, Bisi Onasanya, said the new structure will present a better deal for its shareholders, especially as they got equal proportion of their shares in the FBN Holdings. He said the bank has off-loaded First Registrars and some other subsidiaries, while existing subsidiaries, including FirstBank, have become a subsidiary of the FirstBank of Nigeria Holdings (FBNH).

    Onasanya said the new structure would enhance its competitiveness, streamline operations across non-bank financial services and exploit opportunities for synergies among the subsidiaries.

    According to him, there is also the need to align and cluster similar or overlapping businesses under four broad business groups namely Commercial Banking, Investment Banking & Asset Management (IBAM), Insurance and Other Financial Services.

    Onasanya said under the new structure, existing shareholders of FirstBank have been migrated to FBN Holdings via a share-for-share exchange between the shareholders of FirstBank and FBN Holdings.

    Also, FirstBank’s shareholdings in each of the HoldCo subsidiaries and the associated investments have been transferred to FBN Holdings while FirstBank’s shareholdings in each of the IBAM subsidiaries have been transferred to FBN Capital Limited, also owned by FBN Holdings. However, the restructuring will not alter the beneficial shareholding structure of the FBN Group, but it would enable it to grow its franchise both within and outside its borders.

    The Stanbic IBTC Bank has also completed its transformation into a HoldCo structure with the delisting of the bank’s shares and listing of the shares of the newly formed Stanbic IBTC Holdings Plc on the NSE.

    Before this decision, Stanbic IBTC Bank had struggled all through this year, its worst in recent times. The bank opened with year-to-date negative return of 11.45 per cent as at November 22, 2012. Although Stanbic IBTC Holdings’ listing market capitalisation of N130.3 billion fell short of Stanbic IBTC Bank’s closing value of N137.81 billion, the HoldCo structure could form a major springboard for significant capital appreciation in the period ahead.

    Analysts said subsequent capital gains could impact on underlying values of shareholders, who had benefitted through the share restructuring process. Chief Executive Officer, Stanbic IBTC Holdings, Mrs. Sola David-Borha, said the HoldCo would consolidate the strengths and expertise of different business unit and enhance the group’s ability to drive future growth.

    “The HoldCo would guarantee significant benefits to shareholders, employees and customers. Under the new structure, Stanbic IBTC will be averaging the global network of Standard Bank Group, Africa’s biggest banking group in terms of assets and earnings, to which Stanbic IBTC belongs,” she said.

    David-Borha also said HoldCo structure is consistent with the group-wide approach of the Standard Bank Group, which would allow the various subsidiaries to call on the group-wide expertise of the parent model.

    She noted that the HoldCo would ensure that the commercial banks retail depositors were not exposed to the risks associated with the non-banking activities of others in the group, and that customers of Stanbic IBTC and its subsidiaries would continue to enjoy the services provided through the other subsidiaries by keeping existing lines of business, “and so the employee base would not be affected adversely.”

    The Managing Director, United Bank for Africa, Phillips Oduoza, said given the bank’s exponential growth and investments across Africa, it was beginning to derive significant values from these investments hence the decision to have a HoldCo. That decision, he said, would keep its entire bank and non-bank subsidiaries in the group.

    Under the new structure, a non-operating company to be listed and known as UBA Holdings Plc, would become the parent company of three intermediate holding companies namely; United Bank for Africa Plc, UBA Africa Holdings Limited and UBA Capital Holdings Limited.

    The UBA, holds the Nigerian commercial banking businesses, including the bank’s branch in New York, UBA Pensions Custodian and UBA FX Mart; UBA Africa Holdings Limited holds and oversees all the African commercial banking businesses, excluding Nigeria, while UBA Capital Holdings Limited holds all the group’s investments in non-commercial banking businesses.

    Chairman, FCMB, Jonathan Long, said the decision to form a holding company was in line with CBN’s directive to banks to separate the non-banking subsidiaries from commercial banking. He added that the bank decided to adpot this arrangement, so that the non-banking businesses within a holding company would deliver and unlock value to the shareholders.

    He said the new arrangement would see the migration of shareholders of FCMB to the Holdco, via a share for share exchange, sale of other disposable subsidiaries and transfer of permissible non-banking subsidiaries and investments from the bank to the Holdco.

    According to him, the companies that would be transferred to HoldCo include: FCMB Capital Markets Limited, CSL Stockbrokers Limited, CSL Trustee Limited, First City Assets Management Limited, Legacy Pension Managers Limited and the bank’s investments in Samba and Kili Private Equity funds (managed by Helios Investment Partners).

    The Group Managing Director, FCMB, Ladi Balogun, said the arrangement was done in such a way that it would benefit the shareholders, stating that they should continue to support the bank in its efforts to deliver high returns.

     

     

    Shareholders’ views

    The Co-ordinator, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, said the HoldCo structure remains a good arrangement, especially it is what the CBN wants. He said the shareholders have no choice because they cannot go against the will of the regulator, but can only watch to see how the structure pays off.

    “I don’t have any problem with the structure once there is food on my table. We have embraced the structure provided our dividends are paid and corporate governance is adhered to,” he said. He said in running the HoldCos, banks are not expected to go against the Bank and Other Financial Institutions (BOFIA) Act.

    The National Co-ordinator of Nigerian Shareholders Solidarity Association (NSSA) Sir Sunny Nwosu said the structure will protect shareholders’ value and lead to increased capital market valuations.

    Also, Farouk Umar, president, Association for the Advancement of the Rights of Nigerian Shareholders (AARN), said the restructuring will result in greater value and provide each entity with easier access to long term capital to finance growth.