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Tag: debtors

  • Mr. President, tell them debtors must eat

    Mr. President, tell them debtors must eat

    • By Victor Izekor

    In his brutal Frankness, President Bola Tinubu made it clear to Nigerians and beyond that his administration will not barter the destiny of the nation in the name of debt servicing. According to the President, Nigeria will not sustain a failed economic theory that sees to the wastage of 90 per cent of its scarce revenue to debt servicing amidst innumerable challenges facing the country.

    Speaking in Abuja recently at the opening session of the 63rd Annual General Conference of the Nigerian Bar Association (NBA), President Tinubu asked, “Can we continue to service external debts with 90 percent of our revenue? It is a path to destruction. It is not sustainable. We must make very difficult changes that are necessary for our country to get up from slumber and be respected among the great nations of the world.

    Elaborating on the theme of the Conference, “Getting it Right: Charting the Course for Nigeria’s Nation Building”, the President pointed out that hard decisions must be made to get the nation out of the woods for onward growth trajectory despite the initial pains and discomfort as a result of inevitable reforms. “We cannot have the country we desire without the reforms we have initiated. It is painful at the beginning, in the short and medium term, but we do what we have to do to take this nation to its great destiny. It is not about you, it is not about me. It is about our generations yet unborn, for whom we must bequeath a great and prosperous country”.

    In his characteristic of bluntness or saying the bitter home truth, to Nigerians as well the nation’s creditors, President Tinubu made it crystal clear that it would be suicidal for his administration to expend 90 per cent of it scarce revenue on debt servicing when the nation is already suffocating amid many development challenges. With the legacy of hyper inflation chasing the nation, rising unemployment rate, divindling naira value, nationwide insecurity, corruption on a large scale, misapplication and misappropriation of the nation’s resources, huge debt burden and other challenges bequeathed to President Tinubu’s administration by Buhari’s government, the former (Tinubu) is compelled to bolster through the debris of catastrophe. In short, in both socio-economic and security sectors, the legacy of Buhari’s administration to Tinubu’s government is that of unfinished business.

    Read Also:Tinubu, Biden, G20 leaders condemn terrorism, money laundering

    There is no short-cut to it. President Tinubu must make it abundantly clear to our creditors both at home and abroad that Nigeria needs breathing space and time to put the house in order if she must honour her obligations both at home and beyond including debts repayment which is becoming concerous as it has eaten deep into the marrow of the nation. Thus, his Abuja declaration on this is a message or handwriting on the will that is clearly understood by the concerned especially, our creditors, that Nigeria, the debt riddon nation needs time to re-capitalise and invest further for her survival as well being in position to honour the nation’s obligations both financial and otherwise to the concerned.

    The position taken by the Federal Government must be viewed wholistically and realistically from objective and not subjective or sentimental position taken into consideration the current prevailing factors.

    This readily brings to mind, the reactions of Brazil and Ghana to their creditors years back when confronted or harassed to honour their loan obligations. Brazil made it clear that she needed time to honour the loan terms and must not be coercised as the money so borrowed has been invested on projects and as soon as the projects were matured and yielding results, she would honour her loan obligations. Today, Brazil is one of the industralised nations and as a matter of fact, a great manufacturer including the building of Aeroplanes and others. With regards Ghana, the then Prime Minister, Dr. Kofi Busia told the financial institution is involved to give Ghana time and peace to pay up. With the persistence and pressure of the creditors Dr Busia replied “KAFO DIDI” meaning a debtor must eat and by extension survive to be able to pay owed debts. The Prime Minister maintained this position of his and refused to be stampede by pressure exercised by pressure from any quarter that was detrimental to Ghana’s interest. Our dear President Tinubu, you have a leaf to borrow from;

    President Tinubu must be focused on his administration 8 point Agenda on reviving and consolidating the economy to bring Nigeria back on track and be counted as one of the great nations. She must on no account be distracted from this position of renaissance. If need be, the Nigeria’s debt profile should be subjected to second look to clear any doubt or possible cub webs. Where re-negotiation is desirable and acceptable, let it be.

    Nigerians must be convinced of debts incurred, the feasibility and acceptability of mode of repayment. There is no crime in borrowing but the justification for such must be compelling and the money so borrowed judiciously applied.

    Coming home, some measures being taken by this administration to stabilize the economy, bring sanity to body politic, palliatives to cushion the effects of subsidy removal are commendable, but must be sustained and maintained as applicable. The 8point Agenda of the government aimed putting the nation on a sound economic footing must be implemented with passion and vigour. Above all, Nigerians of all shades of opinion both at home and abroad must not only be part of this movement to make Nigeria great once more, but must

    make sacrifice one form or the other where desirable.

    • Izekor is a journalist and analyst and writes at Victorizekor@gmail.com
  • LASAA begins clampdown on outdoor advertising debtors

    LASAA begins clampdown on outdoor advertising debtors

    The management of the Lagos State Signage and Advertisement Agency (LASAA) has started a clampdown on debtor agencies, its Managing Director, Mobolaji Sanusi, has said.

    This followed the directive of Governor Akinwumi Ambode, to ministries and agencies to begin the enforcement on defaulters and debtors.

    Sanusi said: “We have just finished our strategy session to know how best to enforce those on our debtors’ list.

    “We are scaling up our compliance and enforcement to ensure that outstanding dues to the agency are paid up before the end of the year. For clarity, we have categorised our enforcement teams into billboards, business signs and mobile advertising vehicles.

    “For billboards, we are going after all the defaulters who have refused to pay up their yearly permit fees.

    “In line with our collection model, all billboard owners are subjected to a payment plan every year. We have discovered that 60 per cent of the categories that are supposed to have paid up their outstanding to the agency are still in default.”

    Sanusi said corporate businesses would also feel the enforcement.

    He said: “Some big corporate organisations are still in default for their business premises signs and the branding on their official vehicles. We will ensure they are all captured for enforcement.”

    The managing director stressed the need for businesses to always ensure tax compliance at all times rather than wait for government agencies to carry out enforcement.

    Sanusi said: “The revenue we collect forms a reasonable fraction of what His Excellency (the governor) needs to provide his super structure infrastructural demands of our dear state; hence, the need for those owing the state, not only in the realm of outdoor advertising but also in other spheres of public commitment to our government. After all, our administration has been delivering and meeting public expectations in this regard.”

    The agency chief said LASAA remained committed to the growth of the outdoor advertising industry as well as the aesthetic of the commercial city of Lagos.

    He urged stakeholders in the industry to join hands with the agency to develop the industry’s professionalism and prompt payment of rates.

    Also, LASAA recently launched its 2018 mobile advert sticker for branded vehicles in Lagos.

    It urged branded vehicles captured as fleet to register for a permit with the agency.

    The agency has also warned its clients to desist from patronising middle men and do business directly with its offices in the local government areas.

  • AMCON debtors

    AMCON debtors

    •Time to shut them out of the financial system

    Five and half years after the establishment of the nation’s ‘Bad Bank’ – the Asset Management Corporation of Nigeria (AMCON) – to take over the toxic assets that had impaired the balance sheets of operators in the banking sector, the corporation is itself stuck in the pit of unrealisable assets.

    While appearing before the Senate Committee on Banking, Insurance and other Financial Institutions last week, Managing Director, AMCON Ahmed Kuru, was reported as lamenting that rich Nigerians indebted to the agency continue to live large, flying around the globe in their private jets, while neglecting to meet their obligations to the corporation. He put the figure being owed the corporation at N5.4trillion.

    After several cycles of ‘name and shame’ of the chronic debtors, we find it troubling that little has changed in terms of the attitude of the debtors to meeting their obligations to the lenders. If the development exemplifies the familiar pathology that continues to manifest in every strand of the nation’s public life – the impunity that has since assumed a way of life for the powerful elite –AMCON’s utter helplessness offers a classic study in institutional paralysis.

    To imagine that we are here talking of barely 300 individuals or entities  – according to AMCON – accounting for more than 80 per cent of these  outstanding obligations; a club so powerful that when they sneeze the entire financial sector catches cold – and now so powerful as to be untouchable. That’s a dangerous way to organise a modern economy or society. To allow that is to encourage further impunity.

    We recognise that a number of variables beyond the control of the debtors could partly explain some of the cases of bad loans. There is certainly a world of difference between victims of legitimate ventures that have gone bad due to inclement operating environment and the activities of a cabal that have made a habit of preying on the financial system. Unfortunately, it is the activities of the latter that have cast a dark shadow on the former and with it, the recourse to criminalise what are ordinarily commercial transactions.

    The above naturally throws up the question of how the debts were contracted in the first place. Did these loans actually go through the whole hog of due process? It seems particularly doubtful that these loans were adequately secured. Could it be a case of unrealisable assets being pledged given the pervasive impunity of the era?

    Has AMCON explored all legitimate means to recover the loans or are there especial encumbrances that require amendment to its enabling law? These questions are certainly pertinent.

    Be that as it may, the issues are quite clear: All debtors have an obligation to pay what they owe. The challenge is for those among the debtors who truly mean well to step forward to engage AMCON in a show of good faith. Agreed, the current economic challenges dictate that AMCON think outside the box to find a solution that reflects the exigencies of the current time. But that can only happen when the debtors accept without reservation that they have an obligation to discharge; certainly not when those who have taken money out of the system without paying back are seen junketing round the globe in symbols of unmerited wealth.  As it is, AMCON needs to move swiftly to halt what it has itself identified as the reign of impunity, using every means recognised by the law. After trying out the tactics of naming and shaming and other variants of moral suasion to no avail, it seems about time to ensure that the pathological borrowers are shut out of the financial system – at least until such a time that they make good on their debts.

  • Lawyers, courts to blame for chronic debtors

    Lawyers, courts to blame for chronic debtors

    The rising incidence of debtors at deposit money banks has been blamed on the meddlesomeness by lawyers who seek perpetual injunction at the law courts to the detriment of the banks.

    Giving this insight in Lagos at the weekend was Mr. Edwin Idegwu, a banker and risk management expert.

    Idegwu spoke as guest speaker at the Nigeria Credit Industry Awards organised by Institute of Credit Administration (ICA).

    According to him, credit institutions in the country have a responsibility to ensure that credit issues are resolved amicably without recourse to the court of law in order to encourage foreign investors.

    In his paper titled: ‘Credit Management: Our Credit Market, Our Judicial System, Economic Prosperity, Capacity Building and Professionalism,’ Idegwu, who is Coordinator, Remedial Management Group, Afribank Nigeria Plc, said: “The issue of abuse of judicial processes cannot be ignored as this has in so many way encourage chronic debtors because of banks inability to recover loans due to one problem or the other.”

    Expatiating, he said: “It is equally regrettable that our law courts either continue to intentionally or otherwise provide security cover for loans defaulters and encourage the grant of frivolous injunctions to further shield bad debtors from banks.

    “It is in Nigeria that a court will rule that creditors are hereby restrained by themselves, their assignee, agents, servants or privies from arresting, detaining or in any manner infringing on the fundamental rights of the debtors on account of the indebtedness of a company in which the debtor is a sole proprietor and /director. At least, 90 per cent of bad bank debtors hire police/security men to guard their factories, homes, and other sectors.”

    While commending the Economic and Financial Crimes Commission (EFCC) for their commitment in the anti-graft war, he however, impressed on the government on the need to reintroduce commercial courts across the states to expedite cases.

    The commercial courts, he stressed, “Must be made to address business-related cases that harbour a certain sense of urgency and responsibility just as Alternative Dispute Resolution (ADR) can also be explored.”

    Speaking earlier, Prof. Chris Onalo, Registrar and Chief Executive, ICA who gave the opening remarks on behalf Chief Adetunji Oyebanji, the ICA President, said there was need for the apex bank to revisit some of its policies to open up the economy.

    Oyebanji who is Chairman/ Managing Director, Mobil Oil Nig. Plc emphasised that one of the major ways to improve the economy is to strengthen the credit market especially at a time of impending recession, the effect of which is to improve or reduce unemployment market through real sector lending and foster economic expansion particularly through adequate credit support for Small and Medium Enterprises (SMEs) which are globally regarded as the backbone of any economy.

    The highpoint of the occasion was presentation of recognition awards to outstanding chief executives including: Dr. Cosmos Maduka, President/CEO, Coscharis Group, Dr. Richard Nyoung, CEO, Lekki Gardens, Femi Obaleke, Executive Director, Jaiz Bank, Mr. Duru Chibuzor Philip, Managing Director/CEO, Fawaz Investment among others.

  • Is debtors’ list publication legal?

    Is debtors’ list publication legal?

    The Central Bank of Nigeria is empowered by the various provisions of the CBN Act to regulate and supervise the activities of commercial banks in Nigeria. Section 44 (a) CBN Act 2007 provides that there shall be a Committee for the co-ordination and supervision of financial institutions in Nigeria. This provision has placed the direct supervision of banks and other financial institutions under the purview of the Central Bank of Nigeria. The supervision of the banks is to promote and maintain adequate and reasonable financial service for the public; as well as ensure high standards of conduct and management throughout the banking system. The powers of the Central Bank of Nigeria in regulating and supervising commercial banks seems unfettered as the Act provides an incidental clause to enable the Central Bank of Nigeria discharge its functions as prescribed according to law. Section 32 (1) CBN Act provides that “the Bank may, subject as is expressly provided in this Act generally conduct business as a bank, and do all such things as are incidental to or consequential upon the exercise of its power or the discharge of its duties under this Act” . It would therefore be right for the Central Bank of Nigeria to make regulations and guidelines that would ensure that the objectives of the Act are fully accomplished. This directive must be obeyed by all financial institutions and any financial institution which fails to comply with such directive is at risk of sanctions from the Central Bank of Nigeria.

    In ensuring that the Central Bank of Nigeria is properly backed up through the instrumentality of law, the federal legislature has passed the Banks and Other Financial Institution Act (BOFI Act). The various provsion of the BOFI Act gives wide powers to the Central Bank of Nigeria to regulate the activities of banks and financial instutions in Nigeria. The power includes but not limited to issuance and revocation of licenses should there be a breach of the law or any regulation by any bank or financial instution, section 3 & 8 BOFI Act. Section 57 BOFI Act empowers the Governor to make regulations to give full effect to the objects and objectives of the Act, it provides as follows, (1) The Governor may make regulations, published in the Gazette, to give full effect to the objects and objectives of this Act. (2) Without prejudice to the provisions of subsection (1) of this section, the Governor may make rules and regulations for the operation and control of all institutions under the supervision of the Bank.

    In light of the above provisions, the Central Bank of Nigeria is solely responsible for the supervision of banks and financial instutions in Nigeria, subject to the overall supervision of the supervising minister. The incidental power of the Central Bank of Nigeria is sufficient for legal protection as regards its directive to all banks to publish the names of debtors. It would therefore be right on the face value for the banks to obey the directive of the Central Bank of Nigeria. However, since the CBN Act and BOFI Act are not the only legislation governing conducts of citizens and institutions in Nigeria, it would be pertinent that other laws should read in consonance with the CBN Act and the BOFI Act.

    The Nigerian legal system is anchored on the doctrines of English Common Law and legal tradition as a result of colonisation and of reception of English law through the legal transplant. The doctrines of common law form a substantial part of the received English Law in Nigeria and this received English Law are part of our legal and judicial system. Received English Law comprises of Doctrines of Common Law, Doctrines of Equity, and Statutes of General Application. Section 45(1) Interpretation Act provides that, “the common law of England and the doctrines of equity and the statues of general application which were in force in England on 1st January, 1900 are applicable in Nigeria, only in so far as local jurisdiction and circumstances shall permit” It would be right from the interpretation of Sec. 45 Interpretation Act to state that the doctrines of common law as part of our laws would impose a duty of confidentiality upon a banker to its customers. The duty of confidentiality was first brought to fore in the case of Tournier v National Provincial and Union Bank of England [1924] 1 KB 461 where a bank disclosed to its customer’s employer that one of the customer’s unpaid cheques was drawn in favour of a bookmaker’s account. As a result of this disclosure, the customer’s employer did not renew his contract with the customer. In arriving at a decision, the English Court of Appeal held that confidentiality was an implied term in the customer’s contract and that any breach could give rise to liability in damages if loss results. This duty is not however exclusive and without qualification, the dutyof confidentiality can be dispensed with when required by law, public duty, bank’s interest or in circumstances where the client has consented even if impliedly to such disclosure.

    The provision of exemptions from this duty cannot be a basis to act in an unrestricted manner, as the exemptions are not to be used vaguely but in regards to facts. In interpretating situations where the exemptions can be applied it would best serve the interest of the justice to apply the purposive approach rule of interpretation. The purposive approach rule considers not only the letters of the legislation vis-a-vis their true or extended meaning but it further considers the reasonings behind such legislations by looking at the history of the proceedings and the purpose the law was to achieve. In NURTW v. RTEAN (2012) 10 NWLR (Pt. 1307) 170 S.C at Page 196 paragraph A, the court stated par Fabiyi JSC “It is basic that one of the vital canons of interpretation of statutes is that a court of record should be minded to make broad interpretation or what is sometimes referred to as giving liberal approach… A court should give a holistic interpretation to a statute as required by law… A court should aim at giving a statute purposeful interpretation; I dare say”. Therefore, in establishing the occurrence of breach of this duty, it would best serve the interest of justice to scruntize the exemptions created by English Court of Appeal.

    A banker is allowed to breach the duty of disclosure when such disclosure is required by law. In arriving at definition of the term “law” the Interpretation Act LFN 2004 defines “law” in Section 18 (1) Interpretation Act as “law means any law enacted or having effect as if enacted by the legislature of a state and includes any instrument having the force of law which is made under a law.” It would then be that the directive of the Central Bank of Nigeria by facial value would be sufficient to breach this duty since it was made by an instrument having the force of law. However, since the duty of confidentiality has been imposed by doctrines of common law and accepted by the Act of the Parliament, there would appear to be a conflict between the two positions. In resolving the conflict, the court has always used the hierarchial status of laws to determine which law supercedes the other in cases of legislative conflict. It cannot therefore be that a principle which has been enacted by a federal legislation would be subjugated and over-riden by a directive from the Central Bank of Nigeria made pursuant to an Act. The Court having enunicated the hierarchy of laws in Labiyi v. Anretiola (1992) 8 NWLR (pt.258) 139 would not be willing to topple the express provisions of an Act with a directive made pursuant to an Act. The English Court of Appeal further conceded that the duty of confidentiality can be circumvented at instance of public duty. Public duty must not be defined vaguely but in relation to the circumstances of fact and the law. In the case of Dododo v. EFCC (2013) 1 NWLR (Pt. 1336) 468 C.A, the Court of Appeal defined the term public as “the people of a nation or community as a whole” while the Black Law Dictionary has defined duty as a “moral obligation”. The exception would therefore be applicable in circumstances where non-disclosure would cause public hurt or injury, particulary, instances of criminal liability. In regards to all available facts, the CBN has not stated that the debtors accrued the debt through illegality, neither has it been controverted that a banker-customer relationship existed, especially as a legal transaction is strictly a private and civil affair. The exception of disclosure by reason of public duty can barely avail the Central Bank’s directive in light of the afore-mentioned. With regards to disclosure occassioned by bank’s interest, the balance of convenience would rest solely on the bank as the law is cleaar that he would assert must proof, section 135 Evidence Act. Since, the bank’s interest is dependent of the facts of each case; the legality would be hinged on the reasonable man’s test.

    In futherance of the rights of the debtors to have their loan transaction carried out under strictly confidentiality, the Constitution of the Federal Republic of Nigeria has ensured the codification of rights to privacy. Section 37 Constitution of the Federal Republic of Nigeria 1999 3rd Alteration provides; “the privacy of citizens, their homes, correspondence, telephone conversation and telegraphic communications is hereby guaranteed and protected”. This provision in the constitution supercedes whatever law or directive that mandates the disclosure of personal corresspondence of a person’s account into the public space. This provision having been provided for by the constitution is of a special status as it can only be contravened under the circumstances permitted by the constitution itself and not by any directive or even an act of the parliament. Section 1(1) (3) of the constitution of Nigeria gives an overlording preference to section 37 of the constitution, section 1 (1) (3) provides “(1) This Constitution is supreme and its provisions shall have binding force on all authorities and persons throughout the Federal Republic of Nigeria; (3) If any other law is inconsistent with the provisions of this constituion, this constitution shall prevail, and that other law shall to the extent of the inconsistency be void.” However, the constitution has also stated instances that the provisions of Section 37 CFRN 1999 3rd amendment can be exclusively overridden. Section 45 CFRN 1999 3rd amendment permits the vioation of the provision of Section 37 CFRN 1999 3rd amendment in the interest of defence, public safety, public order, public morality, public health or for the purpose of rights and freedom of other persons. Succintly, the provisions of section 37 can be circumvented for public policy and for the purpose of ensuring the rights and freedom of other persons. Public policy has been described as actions taken to stop the obliteration of public interest or to protect public interest. Public policy is based on the test of a reasonable man as well.

    The combined reading of Section 18(1), 45(1) Interpretation Act, Section 42(a), Section 23(1) CBN Act, Section 57 BOFI Act and Section 37, Section 1(1) (3) Constitution of the Federal Republic of Nigeria, would be that though the Central Bank of Nigeria has the powers to give directives for the overall goverance of banking business in Nigeria, such directive must not contradict any express provision of the law. The Court has consistently risen to the defence of the law, especially the constitution. It has even gone further to declare any contradictory act against the law to be null and void and of no effect. The position of the Court has been that that no action or directive would be allowed override the express provision of the law no matter the brilliance or good intent of such actions or directives. The publication of debtors would therefore be more of a moral exercise that cannot be hinged on any legal provision.

     

  • Bank debtors: Beyond “name and shame”

    From the onset the name and shame campaign by the Central Bank of Nigeria (CBN) sounds too ordinary to come from such a technocratic organization. The phrase lacks sophistication and sounds and reads like something coming out from die-hards of a political party wanting to get even with their rivals. Reducing a matter as serious as debt recovery (running into hundreds of billions of naira) to mere emotional expression reveals the weakness of the banks and the regulatory authorities.

    Although it would be wrong to say categorically that the programme is politically motivated, it will also not be wrong to argue that the phrase is in sync with the current political mood in the country. Coming at a period when the new regime is making a song and dance of anti-corruption and fraudulent economic and financial practices, there can be no doubt that Nigerians will be more interested in its political implications than the economic. And that is the danger, albeit the fact that the final objective of the name and shame exercise is laudable.

    Not unexpectedly, the exercise has already sparked off so much controversy bordering mostly on rebuttals by the affected organizations and individuals of their inclusion on the name and shame lists published by some banks. As it is, almost every company or director named in the lists has denied owing the banks. Although it is tempting to say that such denials are to be expected, the overall result is that beyond the “Political Effect” of the publications, the CBN and the banks might have failed, at least for now, in achieving the initial objective. For, in the face of the denials, the onus of responsibility now lies with the banks to prove that they are owed by the organizations concerned. And since the mere publication of names does not make the debtors culpable, it means that they will remain innocent until it is proved otherwise. And if the matters ever get to the courts, then we should forget it.

    In my view, a situation where almost every so–called debtor has put up a vehement denial shows that the lists published might not be error-proof. But they should be, given the assumed sophistication of the banks and the implications – political, social and economic – of the exercise. For me, it would be quite unfortunate if any of the banks published any of the debtor organizations and their directors without being 100 per cent sure. Yes, 100 per cent, because there should be no room for such laxities in that sector. That disputes have already arisen shows that the sector has, either by design or default, become part of the pervasive malaise in the Nigerian system. It is something we can ill afford.

    As I noted at the beginning, the first sign that the exercise might have been poorly conceived is the appellation given to it. Shame? Shame who? Shame who you do not have an incontrovertible evidence against? Agreed, the banks may still come up with such (fool proof) evidence but that   may take some time. As things stand, it would not be out of place for critics to accuse the CBN and the banks of playing to the gallery. The idea might have been mooted before the current political dispensation but the apparent tardiness of which the banks are being accused has given room for critics to see some political contents, however marginal, in the exercise.

    In spite of the haziness of the exercise so far, it should be hoped that it will overcome the initial setbacks to go ahead to realize the objective for which it was embarked on; which is to sanitize the banking system. Still, something tells me that the name and shame exercise might have been conceived as a one-sided effort. If we assume, at least for purposes of argument, that so much rot exists in the banking system, then it is proper to ask the following questions: Where were the banks? Where were they when things were going from bad to worse?

    We understand that most of the debts are accumulations of unpaid interests on the principal money borrowed. But that also raises the question as to whether the businesses where going concerns. Where the companies operational and at what capacity when the loans were granted? At what point did the banks notice that the facilities had become non-performing?

    If a company has ceased to carry out the business for which it obtained a loan, should the bank still go ahead to charge interest from a non-existent business ? How thorough were the appraisals before the loans were granted?

    There is no attempt here to teach the bankers their job but we believe that given that the banks also operate in a larger environment that has been be-devilled with several flaws, it would be wrong to assume that they (the bankers) cannot share in the blame. In any case, stories of sharp practices amongst bankers are quite familiar. Not too long ago, some bank chief executives were jailed for presiding over the granting of loans to companies in which they had huge interests.

    The point being made here is that while the overall objective of the name and shame exercise may be theoretically attractive, it also offers an opportunity for the banking sector to re-examine its modus operandi.

    There is this story that one of the cases involved arose because a certain bank manager was fond of dipping his hands in the money of his customer. He had approved an overdraft (OD) but each time the customer came to draw from the OD, the manager would also take out from the money and prepare the documents to read that it was the customer that took away the extras. Eventually, the bubble burst. A dispute arose over the figures and inevitably, the facility became problematic. Curiously, this particular debt is among those listed by the bank in the ongoing name and shame exercise.

  • Food Concepts, four other debtors owe UBA N4.42b

    Food Concepts Plc, a market leader in the West African food sector and four other companies are owing the United Bank for Africa (UBA) Plc N4.42 billion, The Nation learnt yesterday.

    A chronic debtors’ list from the bank obtained by The Nation showed that Food Concepts Plc owes the UBA Plc N1.70 billion, being a commercial agriculture loan it obtained in 2009, which is expected to expire in December 2016.

    The affected companies and their directors, based on the Central Bank of Nigeria (CBN) directive on chronic debtors, are to be banned from accessing foreign exchange from the official window, and trading in the Nigerian Government Securities Market.

    The directors of Food Concepts Plc are Chief Dele Fajemirokun, Deji Akinyanju, Idris Mohammed and Mark Hilton. Others are: Bashorun Odunaya Olagundoye, Alhaji Tunde Yusuf, Doyin Akinyanju and Pual F.

    The other chronic debtor is Menol Oil and Gas Limited, which owes the bank N787.85 million over an Import Finance Facility approved for the company in 2011 which expired in 2012. The directors to the company are Ngozi Ofodum, Catherin Okwesa, Stella Ofodu, Ofodum Idimma, Ofodum Mazu and Ofodum Okwura.

    European Soaps & Det. Limited is owing the bank N765.46 million over an overdraft and Import Finance facility approved for the company in 2012, and expired in 2013. Suresh Nayak is a director in the company.

    Rockbridge Energy Limited owes N705.39 million over a short-term loan approved in 2014 and which expired last year 2014. The directors of the company are: Abubakar Jamilu, Abubakar Zara, Ibrahim Musa, Abubakar Hamza and S. Nuraddeen.

    The last among the five debtors is High & Marketing Limited which owes the bank N459.25 million over a term loan approved in 2006 and expired in 2008. Bashir Dalhatu, Mohammed Dalhatu and Nasiru Dalhatu are the directors.

     

  • 13,000 debtors owing AMCON, says Chike-Obi

    13,000 debtors owing AMCON, says Chike-Obi

    The Asset Management Corporation of Nigeria (AMCON) yesterday said it is still being owed debts valued at billions of naira by 13,000 debtors.

    Its Managing Director, Mustafa Chike-Obi who spoke yesterday  while handing over Enterprise Bank Limited and Mainstreet Bank Limited to Heritage Bank Limited and Skye Bank Plc respectively,  said the corporation made over 25 per cent returns from each of the lenders, adding that it plans to sell Keystone Bank Limited immediately after the general elections next month.

    Chike-Obi commended the buyers while the AMCON Chairman, Alhaji Aliyu Kola Belgore presented awards to the former management of the bridged banks. Skye Bank and Heritage Bank also got goodwill letters from the corporation.

    The AMCON chief said bridging the banks was a necessity because of their impact on the banking system. He said it was the corporation’s choice to divest from the banks adding that the decision has been worthwhile.

    Managing Director, Heritage Bank Limited, Ifie Sekibo thanked the former Managing Director, Enterprise Bank, Ahmed Kuru for efficiently managing the bank by taking up the responsibility of assisting the Central Bank iof Nigeria (CBN) to stabilise the bridged bank and returning it to profitability.

    Group Managing Director of Skye Bank Plc, Timothy Oguntayo, said the bank saw value and synergies in the acquired bank and promised to harness and optimise the value. He thanked the regulators for granting all the required clearance and approvals that paved the way for the acquisition and eventual takeover.

    CBN Governor, Mr. Godwin Emefiele, warned against a reoccurrence of the factors which led to the takeover of the three bridged banks.

    He said if the bridge bank option had not been adopted in 2011, the systemic crisis in the banking sector would have been unprecedented and costly in terms of its effects on other banks.

    HBCL Investment Services Limited (HISL) is promoted by Heritage Bank paid N56 billion to acquire Enterprise Bank from the AMCON.

    Sekibo said the acquisition will enable the bank become bigger and more innovative. He said the combination of the two banks will produce a force to be reckoned with and a paradigm shift in the banking industry.

    “We have always seen Enterprise Bank as one of the potential giants in Nigeria’s banking landscape. With a truly vast branch network, innovative and professional staff, solid assets and large customer base, Enterprise Bank is easily one of the preferred banks for value creation wherever you might be in the country.

    “The partnership process will seamlessly birth an entity that would be optimum of excellence and innovation. In less than two years, we have redefined the concept of banking and emerged as one of the fastest growing banks in Africa. Partnering with Enterprise Bank, whose vision is in line with ours, will ensure we continue delivering distinctive financial services, building on our legacy of innovation while creating, preserving and transferring wealth across generations,” Sekibo said in a earlier statement.

  • Banks’ chronic debtors

    Banks’ chronic debtors

    •It’s still the same story of no lesson taught; no lesson learnt

    IN an industry that has done little else than “name and shame” chronic and pathological debtors, the report last week that the Bank of Industry (BOI) has inducted 10 indigenous companies into its Hall of Fame must be seen in two parts. The first is to see it as welcome – an affirmation of the Nigerian spirit of honesty and enterprise despite widespread claims to the contrary. The other is to rekindle the debate as to whether the financial services industry has learnt anything of significance, in the aftermath of the 2008/9 toxic assets crisis from which the entire sector has barely recovered, on the basis of which it can hope to chart a pathway to a stable future.

    The main substance of the report is that the companies “obtained long-term credit facilities from BOI at least twice and fully repaid the loans as and when due”.  In the words of BOI’s Managing Director and Chief Executive, Rasheed Olaoluwa, the companies “have proven that integrity is not a function of size or of the business environment. They have shown considerable honour and character that we commend and applaud”. The 10 companies are, Supercor Industries, Bauchi; Rumbus Sacks, Kano; Ammasco International, Kano; Cement Company of Northern Nigeria, Sokoto and Cobet International, Port Harcourt. Others are Happinex Foam, Benin; Innoson Enugu, Nigerian Aluminium Extrusion Ltd, Lagos;, Nigerian Foundries, Lagos and Paul B Limited, Enugu.

    The obverse side of the same story is that another set of companies – 24 in number  – made the bank’s blacklist for their failure to repay their loans and for showing “a high level of dishonesty and lack of integrity”.

    In an industry where bad moral hazards have become the rule rather than exception, the exemplary performance of the 10 companies obviously deserves to be showcased. And while there must be thousands of such entities and individuals operating in the financial sector, doing good business with the banks while fulfilling their obligations promptly, the fact that more than twice the number, for whatever reasons, have neglected to fulfil their obligations would seem to indicate a more fundamental problem in the industry. In this particular instance, the BOI would merely serve as a miniature – a window into an industry of which the value of non-performing loans has continued to soar in spite of the strict guidelines said to have been put in place by the apex bank. If ever any evidence was needed for this, it must be the quantum jump by 16 percent in the value of non-performing loans in the 12 months spanning August 2013 to August 2014, from N344.26billion to N400.57billion.

    Beyond its symbolism, there is little else that the idea of a Hall of Fame would achieve in practical terms – the same way that the tactic of “name and shame” has not proven to be effective deterrent to loan abusers. If we are any wise to the efficacy of the regulatory reforms promised by the Central Bank of Nigeria (CBN) in the wake of the banking crisis, it is their falling short of what was expected. A measure of the result is the latest finding by the apex bank that two banks have their capital adequacy ratio (CAR) below the 10 percent prudential minimum stipulated under the Basel 1 and 2 frameworks.

    While it cannot be denied that the Assets Management Corporation of Nigeria (AMCON) has largely succeeded in cleaning up the banks’ toxic assets, there are however, as yet, no proofs that the practices which necessitated the coming of AMCON have disappeared. This apparently is the context to explain the latest diversionary debate as to whether AMCON, a child of necessity, should operate in perpetuity as against its original design to wind up after 10 years. If we are worried by the curious provision for the sinking fund for AMCON which appears to have thrown entire cost of the resolution of the crisis to the banks, we are even more worried by the seeming reluctance of AMCON to embark on the process of winding down. Of course, we find the idea of the CBN committing N50 billion annually into the sinking fund as inexplicable, hence our relief when the National Assembly rejected the provision in the proposed amendment to the AMCON Act.

    The point is – the banking sector has never been lacking in worthwhile suggestions on how to deal with the hordes of delinquent debtors. The easiest one is to shut the debtors out of the financial system – something that has proven, time and again, to be easier said than done. In the situation that the frustratingly slow pace of the judicial process has hardly helped matters – the debtors are simply allowed to enjoy the fruits of their unwholesome behaviour even while preying on the system in the absence of a functional credit bureau.

    Most certainly, there is a lot that the banks can do to improve on their credit decisions through the instrumentality of the credit bureau. Then is the issue of corruption which also needs to be tackled frontally, particularly at the level of the judiciary.  The greater challenge of course, is to prevent the abuse in the first place through the banks whose responsibility it is to strengthen their internal controls; and the apex bank in the area of enforcing the relevant guidelines. While these may not necessarily provide fool-proof mechanism to insulate the banks from bad or non-performing loans, they would no doubt go a long way to bring the loans to the barest minimum.

  • CBN debtors’ list

    CBN debtors’ list

    •People who take loans must be ready to pay or face the consequence

    LAST week, the Central Bank of Nigeria (CBN) returned to the name-and-shame tactics of publishing the names of the financial sector’s biggest debtors. Prominent among the 113 companies and 419 directors/shareholders in the list are Femi Otedola, Alhaji Sayyu Dantata, Sir Johnson Arumemi-Ikhide, Prof Barth Nnaji (former Minister of Power), Mrs. Elizabeth Ebi and Dr. Wale Babalakin.

    Unlike in the past when it stopped at the point of making the names public, this time, the apex bank announced the extraordinary measure of shutting them out of further credit. It also threatened to hand them over to law enforcement agents in the event of their continuing neglect to fulfill their repayment obligations to the lenders. Banks which flout the directive would be made to make an immediate provision of 100 percent of total principal and interest outstanding in the account of the customer and related parties – without prejudice to regulatory action that the CBN may further take.

    As a newspaper, we are torn between the tendency to criminalise debts that is increasingly commonplace, which we deplore, and the offensive criminal impunity underlying the transactions that have now constituted an albatross to the financial system. Much as we are willing to concede to a world of difference between the class of genuine borrowers who became unwilling victims more by factors beyond their control than anything else – and the class that now constitutes the delinquent class renowned for preying on the financial system, the trouble has been in spotting the difference.

    Unfortunately, in the circumstance in which the banking sector found itself saddled with a staggering toxic loan portfolio of N3.4 trillion, the CBN seems to have reasoned that the situation dictated drastic measures. At this point, it is increasingly hard to fault the apex bank. True, the Asset Management Corporation of Nigeria (AMCON) has taken over most of the toxic loans in the bid to give some breather to the financial system; this itself has come at huge costs to the treasury. Meanwhile, a good number of the debtors have neither shown enough efforts to engage their creditors let alone the willingness to pay what they owe.

    The measure by the apex bank, in our view, speaks to the exigency of the situation. The initiative, and, if we dare say, courage, by the CBN in making public the names of the individuals, is deserving of commendation. Far from being drastic, it comes with the territory that those who borrow from the financial system must see themselves as having the obligation to pay. Failure should therefore come with expectations of penalties, if only to discourage irresponsible debtors from bringing the roof down the heads of everyone.

    In the specific case, it seems to us a necessary step to complement the on-going efforts to sanitise the financial sector. It is important to send the signal to those whose activities contributed in no small measure to the unravelling of the sector that the impunity of that era would not be overlooked. We cannot imagine a closure to the unfortunate event that culminated in the failure of some of the nation’s big lenders, and the collateral cost of the loss of investment by nearly two million shareholders, outside of the drastic prescription. Those not averse to hiding behind legalism to frustrate legitimate debt recovery need to be taught the lesson that the alternative to being credit-worthy is being shut out of formal credit. If we must make the laws stricter to make it mandatory for people to know that loans are no free funds, we should not hesitate to do so.

    All said, we must note that the financial system would not have found itself in this mess if credit bureaus were in operation. Clearly, the coming of the bureaus as a guide to the making of credit decisions has become imperative. Everything that needs to be done to get the bureaus on board must be done – immediately.