Nigerian Music Nigeria – CBN NDIC Disagree Over N3 Trillion Bank Debt Cancellation

Source: Wisdom Patrick and Tunde Opeseitan, Vanguard, 3 January 2010

CBN Abuja

There is dispute between the Central Bank of Nigeria (CBN) and the Nigerian Deposit Insurance Corporation (NDIC) over a N3 trillion debt to the country’s 24 banks which the CBN wants to write off because of political pressure. The NDIC is not in favour of the idea, saying it is not in the interest of the economy.

“Those who borrowed the money would have collaterals, they are wealthy and are still alive,” an official of the NDIC argued on Sunday. “So, if they can’t pay up their debts, get hold of their collaterals, sell them and recover the public money – or better still, allow the EFCC (Economic and Financial Crimes Commission) to conclude its investigation.

“Why jump into a hasty conclusion that they are not able to pay, then write off the debts?”

The source, who is close to acting NDIC Managing, Umaru Ibrahim, said the CBN is yielding to pressure from politicians, majority of them in the Peoples Democratic Party (PDP), business tycoons, and bank Directors.

But a circular written on October 26 last year by CBN Director (Banking Supervision), Samuel Oni, explained that it is in the interest of corporate governance, in line with global best practice, for all pending matters, including bank debts, to be cleared off, “so that our financial institutions can take off on a clean slate in the New Year.”

Oni said the process, which should have been completed before last December, would review the terms for debts and prospective loans, in accordance with Section 44 of the Banks and other Financial Institutions Act (BOFIA). The first source confirmed that President Umaru Yar’Adua has told Vice President Goodluck Jonathan that the bank reform spearheaded by the Central Bank of Nigeria (CBN) Governor, Lamido Sanusi, is a no go area for anybody.

“(Yar’Adua) said Sanusi should report to him directly on matters relating to bank reform, and his word on it is final. So when we learnt about the debt cancellation talk, we knew it would be carried out intact.”

However, another source at the Nigerian Financial Intelligence Unit (NIFIU) in the EFCC warned that, “If there is such move by the CBN it would certainly set not only a bad precedent, other bank debtors still struggling to pay back can feel cheated. “The EFCC has been holding discussions with the debtors, especially those in the eight troubled banks, on a way forward. What would happen to all that effort? Well, we shall see. Let (Yar’Adua) come back first.”

Still on bank troubles, the EFCC will today arraign associates of former Intercontinental Bank Managing Director (MD), Erastus Akingbola, for alleged money laundering and financial crimes worth N27 billion.

The accused, senior officials and Directors of the bank, will be arraigned on 12 counts before Justice Tijani Abubakar at the Federal High Court in Lagos.

They are Raymond Obieri, Bayo Dada, Akinwumi Solomon Fabunmi, Toyin Odesile, Ayoola Ayinde Olabisi, OluwaToyin Oyelade, and Ayodele Thomas.

Akingbola and five companies in which the bank Directors allegedly have interests are also named in the charge: Regal Investment, Tropics Securities, Tropics Properties, Tropics Finance and Investment, and Bankinson Nigeria.

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