Nigeria charges bank execs after US$2,6b bailout

LAGOS – Executives from five Nigerian banks were charged on Monday with offences from recklessly granting loans to share price manipulation, a fortnight after a US$2,6 billion bank bailout.

Former chief executives and directors of Finbank, Afribank, Intercontinental Bank, Oceanic Bank and Union Bank appeared before a federal high court in Lagos to hear the cases against them.The charges varied from bank to bank but included failure to ensure the correctness of returns to the central bank, granting loans without adequate security or approval and conspiring to drive their own share prices higher.’These are not minor offences, these are offences that affected the whole economy of the nation,’ Rotimi Jacobs, one of the prosecuting lawyers, told the court.The central bank injected 400 billion naira (US$2,6 billion) into the five banks just over two weeks ago and sacked their senior management, sending shockwaves through the Nigerian corporate establishment.The banks had built up non-performing loans worth 1,14 trillion naira, leaving some of them close to collapse and at risk of triggering a systemic banking crisis in sub-Saharan Africa’s second biggest economy.The longest list of 36 counts was against former Afribank chief executive Sebastian Adigwe and his colleagues still at large, including conspiring with stockbroker Peter Ololo to manipulate Afribank shares.Former Oceanic Bank boss Cecilia Ibru, one of Nigeria’s highest profile bankers, was accused of ‘recklessly granting credit’ above her approval limits to firms with names including ‘Cloudy Heights Ltd’ and ‘Bliss-Bloss Integrated Ltd’.The Economic and Financial Crimes Commission (EFCC), Nigeria’s anti-corruption police, has said some bank loans were granted without collateral or board approval, and in some cases to individuals or companies using fictitious names.Erastus Akingbola, former chief executive of Intercontinental Bank, has been declared ‘wanted’ as the only one of the five bank chiefs not to have been detained for questioning.But half a dozen Intercontinental directors appeared in court, charged with granting loans to companies in which they were also directors and failing to ensure the bank met minimum capital adequacy and liquidity requirements.They were also accused of awarding each other US$10 000 holiday allowances.RECOVERINGTHE DEBTSEFCC agents have been hunting debtors as well as bankers, including some of Nigeria’s most powerful tycoons, whom the regulator said owed the five banks 747 billion naira.Babafemi said the agency had recovered 45,5 billion naira of that amount by the end of last week.Central Bank Governor Lamido Sanusi, who took office just over two months ago, has pledged that all those responsible for criminal offences will be prosecuted, and that depositors will not lose their money.’The message has been sent that the government has acted to promote savers. In the past, savers and creditors lost money while managers and debtors walked away,’ he said at a conference of international bankers in London on Friday.’Now what we are saying is we will go after every single one of them.’The five rescued banks are being run as going concerns until new investors can be found to recapitalise them. The priority for their new management teams, installed by the central bank, is to recover the loans and improve risk management.’So far we have been fire fighting, … to a large extent successfully,’ Oceanic Bank’s new head John Aboh said in London on Friday.’There has been no run on the bank. In the week after (the bailout) the increase in nominal withdrawals was less than five per cent. As of yesterday, we are seeing net positive inflows.’- Nampa-Reuters