Sterling Bank was forced to pay a total fine of N50million for under reporting of public sector deposits as at Aug. 29, 2014.
For non- disclosure of date of last lodgement on credit print out, incomplete reporting of all transactions of politically exposed persons and appointment of a Deputy General Manager, Zenith Bank was made to pay a fine of N48million.
GT Bank also coughed out N24 million as fine for the appointment of some top management without the monetary authorities’ approval; as well as infraction arising from anti-money laundering/combating the financing of terrorism spot checks, among others.
The FCMB Group was penalised N6 million for not implementing prior year’s external auditors recommendations and failure to comply with ATM operation standards.
Customers are beginning to worry and to reappraise the bank’s long standing image which was built on integrity on the issues of corporate governance.
Some are taken aback as they ask what is happening to their once cherished financial power house?
Whereas experts defined corporate governance as involving a set of relations between a company’s management, its board, shareholders and other stakeholders, they explained that it was important that the fundamental values of transparency, accountability, fairness and responsibility be respected in order for companies to build and sustain the confidence of investors, stakeholders and society as a whole.
They observed that companies with superior corporate governance practices tend to have better stock price performance, higher profitability, larger dividends pay out and lower risk levels.
But the banks do not seem to want to operate according to the rules as analysts accuse them of being deliberate sometimes so long as they can benefit more from carrying out their action than not doing it.
They have advised the apex bank to wield a stronger stick than treating the matter with kiddies’ gloves.
A few of the analysts said it was non-enforcement of laws that caused the 2008 financial crisis which almost crippled the Nigerian financial system.
Industry experts believe that the CBN has the powers to ensure stability and therefore can take any measure within the law to achieve this objective.
”The bank complies with the legislation and codes of corporate governance of the jurisdictions within which it operates.
These include the banks and other financial institutions Act (BOFIA), the companies and Allied Matters Act (CAMA) and the codes of corporate governance issued by Central Bank of Nigeria as well as the securities and Exchange Commission, the United Kingdom listing (UKLA) by virtue of the listing of Global Depository Receipts by the Bank on The London Stock Exchange in July 2007”, Said one bank in its annual report.
The act, many believe suggests a contrary view to the good image and the laudable reputation the bank appeared to have built over the years.
Concerned that the issue lack of adequate corporate governance was capable of sinking an economy,Dr. Akintola Owolabi of Lagos Business school, said that the level of corporate governance in Nigeria was not only low but a far cry from its adherence in the developed economies.
A few weeks ago, the Chairman, Financial Reporting Council of Nigeria (FRC), Hajiya Maryam Ladi-Ibrahim had said the concept of corporate governance was born out of the need to protect stakeholders’ investment and assets of public interest entities.
She linked financial difficulties in many companies to weak corporate governance and warned that a situation where some individuals become more powerful than the organisations they represent would not enhance the economic growth of the country.
“As a matter of fact, the concept of good corporate governance is essential to the wellbeing of companies and their stakeholders. Until recently, corporate governance was not on the front burner in the public.
Indeed, it was a phenomenally prominent in boardroom and academic environment”, she said.
Corporate governance compliance seems to be a challenge for companies in the developing economies like Nigeria and other African countries.
For instance, some of the Nigerian Banks which failed and were nationalised in 2009 in Nigeria were mostly blamed for poor corporate governance.
Such banks as the defunct, Bank PHB, Afribank plc and Spring Bank Plc were weighed down by grave challenges of corporate governance. In addition, to date Cadbury Nigeria’s set back is still blamed on the refusal of its leaders to observe high level of corporate governance about a decade ago.
Internationally, some American Countries such as Layman Brothers, Enron and Arthur Anderson failed for not giving priority to corporate governance.
Perhaps the critical issue of corporate governance no longer exists in the dictionary of Nigeria’s Deposit Money Banks. This is as Hallmark checks confirm that many of them still do not consider corporate governance as an important segment in their daily, monthly and yearly operations.
In the financial year ended 2014, banks were compelled to pay a whooping N642million as penalty to the Central Bank of Nigeria (CBN) for various corporate governance offences. This appears to be the highest amount the banks have paid as penalty for running foul of corporate governance rules in the last 15 years in Nigeria.
Five DMBs were significantly involved in committing corporate governance offences in 2014.
These banks are; Skye Bank, Access Bank, Sterling Bank, Zenith Bank and FCMB.
Details show that while Skye Bank which was worst hit, paid a penalty of N330million for various contraventions of the BOFIA provisions during the year, Access Bank coughed out a total fine of N184million for going against some of the rules guiding banking operations.