The Fall of Erastus Akingbola: by Dayo Coker


The chickens have come home to roost. After years of bad management and dubious financial practices, the head honcho of Intercontinental Bank Plc has been sacked. This should not come as a surprise to readers of my blog. Five months ago, I pointed out Intercontinental Bank's precarious state in a series of articles questioning the competence of its chief executive, Dr Erastus Akingbola. In these articles, I asked the bank to reveal its true financial state in the spirit of full disclosure.

After the publication of these articles, I was inundated with questions from journalists, executives and members of the public. While some of them denounced me as an agent of an imaginary northern cabal that was intent on taking over the banking sector by creating an unstable atmosphere, a majority of readers thanked me for the expose and encouraged me to continue with my investigations. My persistence paid off when the European Investment Bank exposed some of Intercontinental Bank's bogus claims. I released my findings to the mainstream media who curiously decided not to further pursue the matter although their pages were suddenly filled with advertisements from the financial institution.

Rather than address the issues raised by several notable pundits including the respected eggheads at Proshare, Dr Akingbola proceeded to the tabloid press where he gave interviews to City People and other magazines. He also launched a smear campaign against Sanusi Aminu Lamido Sanusi, then the chief executive officer of First Bank. This wide reaching campaign claimed that Mr Sanusi was "de-marketing" Intercontinental Bank in order to increase his chances of being made the governor of the Central Bank.

In addition, the bank purportedly showed its books to Renaissance Capital whose resident analyst Kato Mukuru affirmed that it was strong enough to manage its risk. Renaissance Capital was wrong. Its PR supremo Matthew Pearson has already started a damage control exercise by trying to limit the damage wrought by his firm's irresponsible analysts. But then Renaissance Capital is a dubious research firm backed by Russian oligarch money. Its chief executive, Stephen Jennings sees Africa as the next big thing and is happy to continue praising Nigerian banks as long as they steer their securities business to his other firms. This scenario has repeated itself time and time again in developed economies where analysts tout stocks backed by their employers in order to get profitable deals. That report should have been thrown into the trash but the gullible Nigerian press swallowed it hook, line and sinker.

Recent Developments

On Wednesday, August 12, 2009, Intercontinental Bank commissioned an advertisement in The Guardian where it appealed to the President and released an abridged version of a list of purported debtors. The list which was released by A.O.S Practice, its loan recovery agents, included three popular petroleum marketing firms Rahamaniyya, Capital Oil and Tanzila Petroleum. Their respective promoters, Alhaji Abdulrahaman Bashir, Patrick Ubah and Alhaji Shehu Badamasi were also named. To put it mildly, the advertisement was ill advised and stupid. A few bankers who agreed to speak to me yesterday unanimously agreed that Intercontinental Bank was trying to undermine the CBN and prepare the public for a huge bad loan provision in its financial statements.

Intercontinental bank issued a denial on Friday, August 14, 2009. This is a matter that the NBA should look into as one of the parties must be lying. If the bank did not authorize the publication, then the lawyer, Chief Ajibola Aribisala must be disbarred for acting contrary to his client's instructions. But since Intercontinental Bank still retains the firm as its loan recovery agent, it is obvious that the two firms were acting in concert. The first statement of the advertorial reads: "We are the Solicitors to Intercontinental Bank Plc., hereinafter referred to as "Our Client" in respect and on behalf of whom we have instructions to write to your esteemed office." In my opinion, there is no ambiguity in this sentence.

The advertisement then goes on to classify the Nigerian banking sector into two groups; those devoted to the growth of Nigerian industry and those acting on behalf of foreign-based institutions. In his inimitable Yoruba-influenced English, Aribisala then goes on to say that Intercontinental Bank belongs to the former group. According to him, "By using its broad financial base, our client as with other banks of its ilk, have patriotically oiled the wheels of wholly Nigerian owned manufacturing entities, production companies and investments corporations with the allocation of the needed finance to such businesses and companies ostensibly driven by persons perceived to be (sic) immense integrity." He argues that it is wrong to classify Intercontinental Bank as risk-prone while other less patriotic banks are being recognized for their financial prudence. Aribisala ends this rambling preamble by suggesting that there is a cabal of influential people who are bent on destroying the banking sector by defaulting on huge credit facilities.

However the most curious part of the advertisement is the complaint which Intercontinental Bank presents to the president. It says that it does not have a "preponderance of bad loans" on its books but has been held hostage by an influential cabal whose members have saddled with non-performing loans. What is the meaning of this dumb statement? Mr Aribisala who is a Senior Advocate of Nigeria then shockingly condemns the Nigerian legal system which has made him wealthy enough to acquire the Protea Hotel Kuramo Waters, Victoria Island.

The lawyer also asks the government to amend the legislation covering financial crimes in order to strengthen the system. If he is really serious about such reforms, then Erastus Akingbola should end up in jail for his role in plundering shareholder funds. The timing of this letter is highly suspicious. For instance, the Tanzila Petroleum case was reported well before Sanusi became the CBN Governor. Why didn't Intercontinental Bank write to the president then? Why start this media campaign now?

Opinion and Analysis

Intercontinental Bank is an institution built on quicksand. Its top executives have never felt the need to instill a culture of ethics and good corporate governance. Buoyed by soaring oil prices and a bubble stock market, they invested heavily in high risk sectors such as downstream oil marketing and margin trading. Now that the house of cards has collapsed, Intercontinental Bank is trying to shift the blame to businessmen and a convoluted legal system. Alhaji Shehu Badamasi's case is a good example. The oil and gas man used 600,000 shares of a small insurance company to borrow 17 billion naira from the bank and then used the money to buy luxury houses. What sort of bankers would sign off on such a glaring case of diversion?

Dr Akingbola is the Madoff of Nigerian banking, a crook who brazenly diverted funds to his wife's companies while emasculating all his top management executives. He hides behind the cloak of religiosity using his “Christian” carapace to fool members of the public. He has decimated an institution by refusing to hire competent managers and allowing parochial ethnic and religious considerations to influence key judgements. Even junior staffers of the bank are taught that the bank is built on Jesus and cannot be "pulled down" by detractors. This sort of shallow thinking encourages sloth and inefficiency. How can managers be effective when they are not held accountable for their actions?

Intercontinental Bank's argument that a cabal is trying to destroying the financial sector holds no water. If a "smaller" bank like AccessBank could force African Petroleum, an energy behemoth, to meet its obligations, what prevents Intercontinental Bank from using the same means unless its people have dirty secrets? The bank is at war with nearly all its clients in the energy trading sector as a result of its sharp practices. These firms know that they have the bank over a barrel and will continue to use this as a bargaining tactic. The bank's venture into real estate has also been a failure as the economic meltdown has cooled the market for luxury houses.

Erastus Akingbola's foray into downstream marketing had less to do with patriotism and more to with good old lucre. The bank's bosses saw the sector as an easy way to exploit oil traders by charging abnormal management charges and "upfront" interest. Since most of these marketers were swashbuckling cowboys who desperately needed these loans to finance imports, they did not bother to contest the loansharking habits of the bank. There is a lack of accountability and transparency in Intercontinental Bank. Intercontinental Bank also borrowed heavily from foreign financial institutions and regular loan repayments have exacted a heavy toll on its balance sheet.

During his days at the helm of First Bank, Mr Sanusi said something very important when the he spoke to the Financial Times. He explained that the size of a bank was secondary to its ability to manage risk. This ideology explains why some banks have been able to weather the storm in spite of their huge loan portfolios. GTBank, for instance, recently gave a 50M dollar loan to AMNI International and was part of the consortium that financed a recent Lafarge WAPCO project. What project has Intercontinental Bank financed this year? Instead, Dr Akingbola has been on a nationwide tour lobbying Northern traditional rulers to put pressure on Sanusi L. Sanusi. In the past three months, he has visited countless emirs, the Sultan and northern governors.

In spite of the bank's professed patriotism, the bank has done nothing with the 100 million dollar loan that it got from the African Development Bank. Instead, Intercontinental Bank keeps making the headlines for all the wrong reasons. The bank was named in the controversial Gbenga Daniel affair where a lowly cook had 400 million transferred into his account. It was also named as one of the underwriters that refused to meet their obligations to African Petroleum's public offer.

The End of Erastus Akingbola's banking career.

Sanusi has done the right thing by dismissing Erastus Akingbola and his fellow travellers in the banking industry. We can no longer allow ourselves to get sentimental over matters of such importance.

Thank you for your time.

Dayo Coker.
Blogger and Policy Analyst
[email protected]

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