Nigeria Content Online

The Central Bank
has come down hard on directors of rescued banks who have insider
related loans, in a renewed crackdown on those that have contributed to
the terrible state of some of the banks.

As part of efforts
to recover the loans, the Central Bank has placed some of the affected
directors on suspension with an ultimatum to repay the loans or face
prosecution.

Specifically, the
regulator on September 27 suspended four non-executive directors of
Finbank for 90 days for failure to pay their debts. They are Ernest
Orji, proprietor of Southern Sun Hotel, Ikoyi; Ezelue Efobi;
Iheanyichukwu Anyadiegwu; and Agnes Ebubedike.

The suspended
directors together owe the bank N20 billion, out of about N25 billion
of insider related loans. Mrs. Ebubedike is also standing trial
alongside Okey Nwosu, the former chief executive officer of the bank;
Danjuma Ocholi; and Dayo Famoroti, both of whom are former directors of
the bank.

The Economic and
Financial Crimes Commission (EFCC) had in 2009 taken them to court on a
90-count charge, bordering on money laundering and granting of reckless
loans, amongst other offences.

Outstanding indebtedness

The CBN gave each
of the directors an ultimatum to repay their outstanding indebtedness
to the bank within that period, failing which, they shall be prosecuted
and blacklisted from holding any position in any bank or financial
institution, under the purview of the CBN.

It had earlier
issued letters of query to the recalcitrant directors, who failed to
heed the warning. This latest action by the bank became inevitable,
since the affected directors did not pay back their loan.

It was gathered
that the CBN may have moved against the affected officials in order to
recover the funds from them before their final exit from the bank. The
Central Bank recently released tenure guidelines, which stipulate that
non executive directors would only serve for two years after which
their terms may be renewed for another two years, but will be subject
to the approval of the apex bank.

A source at Finbank
said the CBN onslaught is also a moral issue as directors who are
indebted to the banks have no justifications to decide on actions
against other debtors.

“It is not proper
that directors who are indebted would now sit at meetings where
decisions are taken against other debtors. This is a corporate
governance issue. It is part of the sanitisation process,” the source
said.

Only Finbank

Mohammed Abdullahi,
the Central Bank spokesperson, said the action was taken against the
directors of Finbank, and not to directors of other rescued banks. He
added that the move against the directors was in fulfillment of the
code of conduct of bank directors, which stipulates that directors
should not have non performing insider related loans.

Sola Oni, the Nigerian Stock Exchange spokesperson, said he was not aware of the development.

Finbank officials refused to comment on this development. They did not respond to enquiries on the issue for nearly a week.

But Susanne Iroche,
its chief executive, told shareholders at a forum in Lagos recently
that the bank is operating with negative capital, as 88 percent of its
loans are currently non performing.

“We have taken
deposits and shareholders fund up to N88 billion, which is yielding
nothing for us but that is costing us money. We can’t continue to
operate like that. We have to resolve this as quickly as possible,” she
said.

Only N2.7 billion
has been recovered from insider related loans, putting the total amount
of non performing loans at N156 billion, while the bank expects to
recover between N10 to N15 billion before year end.