Concern mounts over activities of rescued banks' MDs

CBN Governor Lamido Sanusi

As speculations heighten over the fate of the rescued banks there is growing unease in the banking industry about the activities of the Group Managing Directors (GMDs) ...

and other members of the executive management teams that the Central Bank of Nigeria (CBN) appointed to run the stricken financial institutions. 
Reports reaching Business Hallmark indicate that simmering complaints against what are widely regarded as the extravagant lifestyles and suspiciously fraudulent actions of these men and women who were contracted mainly to eliminate wastages and make the rescued banks more efficient, are now threatening to boil over in many of the affected institutions. A source in one of the rescued banks with head offices on Victoria Island , who asked not to be named, told this newspaper that initial suspicions that the CBN appointed executives were only out to feather their nests have been confirmed as they (executives) appear to have become more brazen in their actions following indications that the banks may be acquired before the end of the year thus bringing the two year tenure that they were given by the CBN to an early end. “They (executives) are no longer pretending that they are out to salvage the banks; it is obvious that they are cutting their own deals and making the most of the opportunity of being bank executives,” he stated.
Brewing storm in Union Bank
Only last week, in an open letter addressed to the CBN Governor and published as an advertorial in national dailies, the Nigeria Labour Congress(NLC) accused the Mrs. Funke Osibodu-led management team in Union Bank of a myriad of wasteful and unethical practices that it said are inimical to the interests of the bank and its workers. Among other accusations, it alleged that while the former GMD of the bank earned about N38 million per annum, the current executive directors each took home N68 million per annum in addition to collecting two years housing grant in advance totaling N180 million and medical grants of $120,000 each. According to the NLC, “In complete disregard of the bank's stark economic realities, the Executive Management purchased two bullet proof Mercedes 'S' Series Jeeps for the Group Managing Director/Chief Executive Officer(GMD/CEO) at a total cost of N40 million in addition to new Mercedes 'E' Series purchased for the four Executive Directors. This is despite the various exotic vehicles inherited from the immediate past management which cannot be accounted for.”
Accusing the management of stripping the assets of the bank and deliberately running it down in order to make it cheap for acquisition by its (present management's) cronies, the Congress further alleged in the publication that the bank's management had been moving experienced staff from sensitive duties like Foreign Operations, Human Operations, Risk Management, etc and replacing them with newly employed and highly paid but inexperienced staff. This, it stated, was part of the management's strategy to ensure that no questions are asked about its clandestine activities.
To have attracted the attention of the umbrella body of the country's trade unions-the NLC, might make the state of affairs in Union Bank appear to be the most critical of all the rescued banks', but an investigation by Business Hallmark revealed that the situation was not much different in the other rescued banks. In Oceanic Bank and Afribank, for example, the managements have also purchased state-of-the-art bullet proof cars for their executive directors and other senior officials in addition to approving salaries and allowances for themselves that do not reflect the poor financial state of the banks.
Sanusi's cronies?
Appointed about a year ago by the apex regulator to replace the sacked executive managements of the troubled banks, the GMDs, particularly, are a mix of veteran and well known and the not so well known bankers. They include Mrs. Funke Osibodu for Union Bank, Nebolisa Arah for Afribank, Mrs. Suzanne Iroche for Finbank, Lai Mahmoud Alabi for Intercontinental Bank, John Aboh for Oceanic Bank, Gbolahan Folayan for ETB, Cyril Chukwuma for Bank PHB, and Mrs. Sola Ayodele for Spring Bank. Critics were, however, quick to contend that the criterion that seems to have most recommended these individuals were their alleged closeness to the CBN Governor, Mallam Lamido Sanusi; a charge denied by the Governor, who has since explained that the apex bank has a list of experienced and highly skilled bankers as well as professionals in the financial services sector that it always consults whenever it needs to deploy people to rescue ailing banks. Their brief, according to the CBN, was to stop the hemorrhaging taking place in the rescued banks, stabilize the institutions and clean their books sufficiently enough to make them attractive to interested investors.
But they had barely spent two months in office when most of the GMDs began to be criticized for allegedly allocating to themselves the same- and in some cases better- salaries/perks /allowances than their ousted predecessors. As far as critics were concerned, given the much publicized distress that these banks were facing which had led to massive job cuts in the industry , it was simply amoral and did not make economic sense for the executives to be collecting such huge salaries. They were, also, accused of acquiring luxury cars and extending contracts to cronies and companies owned by their spouses, friends and associates at inflated costs even when they were competent personnel within the banks that could carry out the tasks.
For instance, Business Hallmark recalls that Mr. Cyril Chukwuma, the Managing Director of Bank PHB Plc, not too long ago was alleged to have collected his $120,000 off -shore vacation allowance for the financial year ended December 31, 2009, despite not having spent up to six months at the struggling bank as was required by the company's regulations. He was, also, alleged to have authorized the movement of about $3.13 million cash which was intercepted at the Murtala Mohammed International Airport by law enforcement agents. And yet another allegation was that he approved a N60 million mortgage loan in favour of a yet- to be confirmed Deputy General Manager(DGM), and that the amount approved for the said DGM was about N21 million more than the official limit that staffers in his category are officially entitled to.
Attempts by this newspaper to get reactions from corporate communications staff of the rescued banks were generally not successful although in the case of Union Bank, its head of Corporate Affairs, Mr. Francis Barde, issued a press release in which the bank restated its commitment to ensuring staff welfare and listed the several steps that the bank's management had taken to make staff happy and productive.
In a telephone chat with Business Hallmark, however, CBN spokesman, Mr. Mohammed Abdullahi, disclosed that the apex bank was yet to receive a copy of the NLC letter and wondered why the letter was published in the newspapers when a copy had not yet been sent to the CBN. He noted that recent complaints about the activities of the rescued banks' GMDs could be linked to actions of some groups that are trying to obstruct the impending recapitalization of the banks.
But a financial analyst who spoke on condition of anonymity argued that this was the best opportunity that the rescued banks' bosses have to enter into a lot of deals and make plenty of money for themselves. According to him, “Everyone already knows that the banks are in dire financial straits so not too many questions would be asked if the directors for selfish reasons decide to paint the situation much worse than it actually is. Besides, it is unrealistic to expect that the rescued banks' Chief executives will not use this opportunity to feather their own nests when they know that they would only occupy the position for short time.” He noted that it was significant that these chief executives have been trying to get the CBN to extend their tenure and the refusal by the apex bank, so far, to grant this request might be a signal to them to make good for themselves while they still have the opportunity.
Commenting on the issue in an interview with a national daily not too long ago, Mr. Lawson Omokhodion, former Managing Director of Liberty Bank (in liquidation), faulted the activities of the CBN- appointed management teams, warning that they would further worsen the fate of the struggling financial institutions. He counseled that until the banks are nursed back to good health, "the highest paid bank staff (including the Managing Directors) should not earn more than N2 million per month, while the Executive Directors should be on N1.5 million monthly. The bank will fuel their vehicles. They should stay in their personal homes for which they would each receive N1.5 million per annum as rent." The former bank MD rejected the CBN's argument that the sick banks' executive management teams needed to be paid well to make them work hard enough to earn their pay, stressing that the CBN should not be seen on the one hand to be fighting the extravagance and recklessness of the ousted bank executives while on the other hand encouraging same for its own appointees.