Sanusi Lamido Sanusi starts a ‘bonfire of the bankers’ in Nigeria
How the 'Ben Bernanke of Nigeria' put his country's financial elite in the dock
All those Brits and Americans who were crying for blood last year when the bankers got found out will be delighted to hear that there is another way of dealing with a banking system that's been decimated by bad debt. It could be called The Nigerian Solution.
When their financial sector lately experienced the same sort of collapse that ours did a year or so ago, the Nigerians took drastic measures. Last month, the intellectual, smartly-dressed governor of the Central Bank, Sanusi Lamido Sanusi (pictured), bailed out five Nigerian banks - Afribank, Intercontinental Bank, Union Bank, Oceanic Bank and Finbank – with 400 billion naira (£1.6bn) of public money, and dismissed the heads of every one them.
"We had to move in to send a strong signal that such recklessness on the part of bank executives will no longer be tolerated," he said.
Sixteen Nigerian senior bank officials face charges including fraudWhile the heads of the failed British banks, men like Sir Fred Goodwin, Lord Stevenson and Andy Hornby, were planted in front of the Treasury select committee and expected to show contrition for their contribution to our economic crisis, the Nigerian authorities have gone much, much further. What they have done has been labelled a "massacre".
Now 16 senior bank officials face charges ranging from fraud, lending to fake companies, giving loans to companies they had a personal interest in and conspiring with stockbrokers to boost share prices. And one executive, Intercontinental's Dr Erastus Akingbola, is on the run. He is believed to have fled to Britain and the Nigerian authorities have started to look into extradition arrangements with the Home Office.
One of the executives charged is Cecilia Ibru, previously described as a 'corporate Amazon' and the 'First Lady' of Nigerian banking. Ibru, a dedicated Christian, comes from an elite Nigerian family whose business empire includes hotels, publishing, oil and gas.
After handing herself in to Nigeria's Economic and Financial Crimes Commission (EFCC) last Wednesday, she was detained at their headquarters in Lagos over the weekend, and had to sleep on a mattress on the floor.
Ibru's lawyer reported that, because the EFCC didn't have any diesel to power their generator, the room in which she was kept had no power and was swarming with mosquitoes. So when she appeared in court on Monday, after listening to 18 of the 25 counts against her, Ibru collapsed in the dock and had to have a doctor attend her before the hearing could continue.
Ibru and the other bankers tried alongside her have pleaded not guilty, and there have been questions raised about the legality of the charges. But, though he has had to counter criticisms that he carried out the process without correctly involving the National Assembly, Sanusi has not been deterred. Recent reports indicate that seven more banks may have to be bailed out, and their executives would face censure too.
Firmly in the spotlight, Sanusi, Nigeria's equivalent of US Federal Reserve chairman Ben Bernanke or Bank of England Governor Mervyn King, is taking the chance to completely remodel his country’s financial landscape. During a recent trip to London, he made a bid to lure foreign investment for the stricken banks, and Lagos is currently teeming with western bankers and management consultants flying in and out from London, Frankfurt and New York.
Sanusi is apparently exploring every possible avenue in his efforts to reform system - including Islamic finance. Because of the inherent deficiencies in the conventional western banking system, he says, "the crisis has provided scholars, lawmakers and bankers to reassess opportunities provided by Islamic finance".
Sharia-compliant finance does not allow the charging or receiving of interest on money. Based on teachings set out 1,400 years ago in the Koran, its rules maintain that all wealth belongs to Allah, and that humans are merely trustees of the money they have.
While many western banking centres remain unimpressed by Islamic banking – though Britain has approved some Sharia-compliant financial products – the system does have its advocates. The recent banking crisis in Wall Street and the City might never have occurred, they argue, if more banks were run along Muslim lines. ·