AKINGBOLA'S SMOKING GUN
Early this year, Henry M. Paulson, Jr. released a book titled, ON THE BRINK: Inside the Race to Stop the Collapse of the Global Financial System. Paulson, a Goldman Sachs managing director, was tapped by President George Bush to be his Secretary for Treasury during the last phase of the Bush administration.
For a start, Paulson never wanted the job. He had to be lobbied—vigorously. When he finally succumbed, he had two powerful opposition to deal with: his wife and his mother. His mother broke down in tears, inconsolable. 'You started with Nixon and you're going to end with Bush?' Paulson's mother wept. 'Why would you do such a thing?…I hope you don't get confirmed.'
Sadly, he was confirmed! For 24 hours, she switched off her phone, too angry to speak to anybody. In Nigeria, the mother of a man nominated for a powerful ministerial position like finance ministry would throw a party, do thanksgiving in the church and generally celebrate. His kinsmen would organize special reception; friends would host him and paper the media with congratulatory adverts. Well, in these matters, we're operating in different planets!
It is not, however, Paulson's domestic battles that interest me in this case. It is the contrast between how the Americans confronted the battles against the collapse of their—and by implication, global—financial system and how we tackled the same problems at home. It might not be very significant, but the contrast started with the method of appointment. Months of speculation turned the choice of who heads our Central Bank into a theatre of the absurd. And for as many number of months, the incumbent CBN governor, Soludo, was virtually paralysed, afraid to take action on anything lest meanings be read into it as evidence of his desperation for reappointment. Yes, of course, I know that the Governor of our Central Bank is the equivalence of America's Federal Reserve Chairman, not Secretary of Treasury per se, but the process of appointment is all the same. The president makes the choice and the senate screens for approval in both countries.
If the recent report by Newswatch magazine which exclusively published a petition of the embattled former Executive Vice Chairman of Intercontinental Bank Plc., (IB Plc.) Dr. Erastus Akingbola, is anything to go by, then our CBN governor's appointment was a product of godfatherism. Akingbola claimed—and this was unrefuted from any quarters—that the powerful Kwara State Governor, Dr. Bukola Saraki blocked the renewal of Professor Chukwuma Soludo's appointment and replaced him with Mallam Sanusi Lamido Sanusi. According to Akingbola's petition to the Attorney General and Minister of Justice, Saraki took Sanusi to Yar'Adua for appointment. 'Being my customer, Dr. Saraki confirmed this personally to me,' Akingbola wrote.
In the Nigerian context, there is nothing spectacular about godfatherism. It's our political way of life. After all, even our current president is a product of godfatherism. The problem comes in the way the powerful protégés begin to dance to the tune of their godfathers.
For instance, Paulson's book, On The Brink, is about the concerted efforts of America's Treasury Secretary, Paulson, Federal Reserve Chairman, Ben Bernanke, President of Federal Reserve Bank of New York, Timothy Geithner, Wall Street CEOs and President Bush to save the total collapse of the financial system. To do that, Paulson gave a detailed narrative of the behind the scene manoeuvres to save major financial institutions including Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers, AIG, Merrill Lynch, Citigroup and others from collapse. Eventually, Geithner's eventual fatal decision not to save Lehman Brothers remained an eternal cross on his neck for which he is blamed for damaging American economy and plunging the world into financial mess.
In contrast, Akingbola's petition indicated that rather than a concerted approach to rescue our financial system, what we had was a buccaneer who ran through our financial system with a bulldozer targeted at catching pre-meditated enemies. The major difference was that the Americans—and the rest of the world—intervened through collaboration with all the stakeholders rather than criminalizing the CEOs, with the huge collateral systemic financial cataclysm that unleashed in the Nigerian economy. Is that suggesting that if the CEOs were really thieves, they should have been left off the hook? Far from it. After all, in America, Benard Madoff whose Ponzi scheme, blew over $50 billion of investors' money is in jail.
The last we know, from the CBN side, was that Akingbola was being charged with laundering, misappropriating or fleecing the bank of about N340 billion—about $2.4 billion! Well, bear in mind that the total share capital of Intercontinental Bank is N230 billion. Akingbola is currently facing different charges in UK and in courts in Nigeria. When he is eventually arraigned by the EFCC, we don't know if the charges would come up to the N340 billion total, or if that staggering figure was just mentioned to score propaganda point.
However, before the charges come, Akingbola has brought entirely new dimension to the case with his petition. He claimed that two and half years ago, Saraki approached him for a merger of his troubled Societe Generale Bank with Intercontinental but that the board of IB Plc shot down the proposal when due diligence revealed that SGB had N30 billion negative capital. That Saraki incited his protégé, Sanusi against him by falsely telling the new CBN boss that Akingbola and Mrs. Cecilia Ibru of Oceanic Bank Plc raised N6 billion to block his confirmation for the CBN job by the Senate. That when he met Sanusi to deny this, he reportedly told Akingbola not to bother since it is 'not all king makers in council (that) will support the choice of new Emir'. Note Sanusi's choice of metaphor!
'Apparently, it was Dr. Bukola Saraki inciting Sanusi against me, as a way of removing me and taking over IB Plc.' Akingbola claimed. The global financial crisis, he claimed, created opportunity for the duo to strike.
He blamed his bank's—and the banks'—financial crisis to drop of oil price from $147 per barrel to $30. Many of the banks had financed oil importation at the high price and the importers faced with a huge loss refused to sell, and by implication, leaving their loans unserviced. The exit of foreign institutional investors who hurriedly sold their stockholdings crashed the Nigerian stock market, registering a huge adverse effect on the banks. Furthermore, CBN's devaluation of the naira by 40 percent in response to the fall of oil prices put more strains on the bank as those with dollar denominated loans were left stranded, unable to pay. The devaluation triggered panic with overseas banks that had dollar placements with Nigerian banks and they hurriedly withdrew their deposits. 'IB Plc lost about $1.2 billion this way,' Akingbola said.
Going by Paulson's description of the dire state of the highly leveraged Western financial institutions, the situation of the Nigerian financial institutions would appear to be child's play in comparison. Perhaps, a more sober intervention by the CBN coupled with a very surgical punitive measures might have yielded a more salutary result like that of the Western financial institutions? The jury is out on that.
But Akingbola claimed that his bank's woes were turned into fortune by a predatory duo of Sanusi and Saraki. Before Sanusi's appointment, IB Plc had undergone CBN examination which turned up satisfactory result. However, within two weeks of Sanusi's appointment, special CBN examiners were sent to IB Plc. Their report was rejected by Sanusi who sent them back for damning reports, he claimed. The bank in a short space of time, he claimed, was subjected to four different examinations, because Sanusi, he was tipped off by some of the CBN examiners, was looking for a result that would justify Akingbola's removal as the CEO of IB Plc.
Two lorry loads of police were eventually deployed to remove him, he alleged. 'It was like a bad movie, a big surprise that a person can be driven away from a business he had started and nurtured over for 21 years in one hour. And without any opportunity to contest it,' he lamented. He said that when he received a tip off that another two lorry loads of police were on the way to arrest him at home, he had to hurriedly escape.