The prince and the President

Lekan Sote
| credits: File copy

Prince Lamido Sanusi, whom the President insists is still the Governor of Central Bank of Nigeria, once said that a group he labels as the “Yoruba bourgouisie” are the problems of Nigeria. Could this conclusion have made him send the rattling shellack into the banking sector that is predominantly manned by the Yoruba? That will be fodder for another essay, on another day. Today, it is about the issues between him and the President, Commander-in-Chief of the Armed Forces of the Federal Republic of Nigeria, Goodluck Jonathan. Sanusi rode the CBN charger like a storm and will be leaving in a storm. Omo akin! Apart from his regular bombast and open criticism of the policies and senior personnel of the government, which he served, Sanusi was accused of financial recklessness and conduct inconsistent with the CBN core values of focused economic management, prudence, transparency and financial discipline.

Acting on a report by the Financial Reporting Council of Nigeria which cited 22 infractions in the CBN books, the President queried, and even suggested that, Sanusi should resign voluntary. The indictments included N20.202bn spent on legal and professional fees in 2011; N1.253bn allegedly paid for lunch of policemen and private guards in 2012; N2bn paid to charter airplanes to distribute currency nationwide (N511m to Emirates which doesn’t fly locally, N425m to unregistered Wing Airlines and N1.02bn to limping Associated Airlines whose 2011 financial returns recorded a turnover less than N1. bn.); N1.678bn on newspapers, periodicals, books and other publications; N38.233bn paid to Nigeria Security Printing and Minting Company whose total revenue for that year was only N29.37bn. Ah! Sanusi claims to have responded, through the Presidency, to some kind of audit queries from the FRCN, but has yet to receive a response.

Other accusations, by those who celebrate his job loss, include: recapitalisation, and sale, of rescued banks without the approval of the National Assembly; massive job losses in the banking industry; revelation of the exorbitant salaries of legislators; allegation of non-remittance of revenue by the Nigerian National Petroleum Corporation; introduction of Islamic banking, which irked some Christian leaders; and proposals to print N5,000 currency note. The General Secretary of Independent Shareholders Association of Nigeria, Adebayo Adeleke, said Sanusi’s suspension was long overdue. The Association of Senior Staff of Banks, Insurance and Financial Institutions said he turned Nigeria into a financial policy testing ground, and caused more job haemorrhage than the merger of banks from 89 to 25 by his predecessor, Chukwuma Soludo.

But Sanusi’s tenure will be remembered for bank debt recovery; discouraging family-owned banks; obtaining the CBN approval for employment of top staff and board members of banks; limiting the tenure of bank CEOs and Executive Directors to 10 years. Sanusi himself, claims that he substantially reduced inflation rate; gave the naira a stable exchange rate; reformed and saved the banking system from collapse; ensured robust bank cash reserves; injected funds from the Asset Management Company of Nigeria to collapsing banks; raised an alarm over non-remittance of revenue by the NNPC; and gained some independence for the CBN from meddlesome bureaucrats. But by far, “tsunami Sanusi” will be remembered for sending senior bank officials to face charges of fraud, lending to fake companies, giving loans to companies in which they had personal interest, and conspiring with stockbrokers to boost shares prices. He said, “We had to move in to send a strong signal that such recklessness on the part of bank executives will no longer be tolerated.”

His controversial stance made definite impact on the stock market, so his removal – or suspension– made some impact. The exchange rate, value of the stock market capitalisation, the All Shares Index, the number and the value of shares traded on the day his suspension was announced, all tanked. Experts say the slide came because investors didn’t know the direction the economy would take. But the Special Adviser to the President on Media and Publicity, Dr. Reuben Abati, quickly rushed in to announce that the country’s monetary policy would not change, and that what happened was just an internal restructuring. The Minister of Finance, Dr. Ngozi Okonjo-Iweala, also weighed in, by assuring investors that Sanusi’s suspension won’t affect the Federal Government monetary policy directions, and that Dr. Sarah Alade, who has been long in the CBN system, would step in as Acting Governor. Sanusi himself says Alade is a competent person, and will not likely change the current monetary policy for a long time. He adds: “I have confidence in her ability to run the CBN.”

Sanusi, who came into  the CBN, with an industry-wide recognition as a major contributor to the development of a Risk Management culture in the Nigerian banking sector, started his career with ICON Merchant Bank, before moving to United Bank of Africa, and finally the First Bank of Nigeria where he eventually became Managing Director. He reveals that as Chief Risk Officer of First Bank, he had a good idea of which banks had problems. He knew the banks that panicked when customers withdrew as low as N50m to N100m; which banks were permanently at the CBN expanded discount window; which were paying high interest rates; those with high loan-to-deposit ration; and those who were not players in the low risk segment of the market. He came prepared for the job, having received advance notice from late President Umoru Yar’Adua, who appointed him. He had immersed himself in tutoring by a Dr. Sophie Hague, of the British High Commission in Nigeria, whose doctoral thesis was on the Asian financial crisis. He also studied how the financial crisis in the United States and Turkey were resolved.

Sanusi gave N100m and N25m respectively to bomb blast victims in Kano and Madalla, with the argument that most of the beneficiaries were southerners, and that one of his predecessors, Joseph Sanusi, once gave N10m to bomb blast victims in Lagos. He argues also that donations to educational institutions were to build high quality personnel in business, banking and finance. Sanusi should not be faulted on these scores. The stated corporate social responsibility of the CBN include: capacity building programmes in Nigerian universities, collaborative research with Development Finance agencies, the National Assembly, the Economic and Financial Crimes Commission and a host of others. Other plans are sports development, provision of library services and keeping beggars of the streets. Why is no one commending these measures?

To the claim by the President that he has the powers to unilaterally suspend, but not sack, the CBN Governor, rather woolly Section 9 of the CBN Act, says: “The Governor… shall be appointed by the President by instrument under the public seal and on such terms and conditions as may be set out in their respective letters of appointment.” Section 8 confirms that the President has oversight responsibilities over the CBN: “The Governor shall keep the President informed of the monetary and banking policy pursued or intended to be pursued by the Bank.” Section also 46 says “The (CBN) may, with the approval of the President, make regulations for the better carrying out of the objects and purposes of (CBN Act).”  In addition, President can direct the Auditor-General of the Federation to audit CBN accounts, as the CBN is expected to transmit its annual financial returns to the President. It appears the President is the boss, even if the prince contests it.