Home Eye on Power EOP 18: Corruption in corporate Nigeria: The case against regulators (Pt 2)

EOP 18: Corruption in corporate Nigeria: The case against regulators (Pt 2)



I concluded the first part of this article with this: So the question arises; how could this level of abuse and financial recklessness be perpetrated in banks and publicly quoted companies over a period of time with all the regulatory stipulations and oversights? Were the regulatory agencies asleep when these infractions took place and what is their level of culpability? For instance, the Oando case did not start in 2019 or even with Gwarzo; it dates back to 2016 and beyond; and yet nothing was done.

This conclusion leads to another question: why is corruption thriving in Nigeria both corporate and public? The simple and direct answer is regulatory failure – police and judiciary. The truth is that corruption has become a culture because those whose responsibility it is to check it are hand in glove with the perpetrators.
For instance, the police are the statutory body vested with powers to curb corrupt practices; you can add the EFCC and ICPC – they are all the same thing. All these agencies of government but particularly the Police are neck-deep in corrupt practices so it becomes doubly challenging for them to fight corruption. If we get them right, the battle is half won.

Here is my take: corruption has seeped and permeated into corporate Nigeria because those who should ensure transparency and public trust have joined in the moral degradation afflicting the larger society. It was inevitable to happen and as already stated we live in an integrated society and everybody is competing for the same social space. With materialism as the new god, there is no way those in the private sector would remain indifferent to the culture in the public sector. Remember, the private sector regulators are public servants competing with others in the public sector and private sector operators.

SEC, CBN, NDIC, NAICOM, NIMASA, NCAA, NAFDAC, NCS etc are all public sector agencies regulating private sector operators. Is it likely that a bank would suddenly collapse without the knowledge of the CBN like what happened to with Skye bank? How did Oando carry out such impunity without the censure of SEC which must statutorily review and approve its trading account every quarter? Can an aircraft that endangers the lives of Nigerians be flying without the approval of the NCAA? Are the importers of fake drugs unknown to the officials of NAFDAC and Customs?
Adult Nigerians 20 years ago would attest to this fact; how the resolve and determination of one person at the head of NAFDAC practically rid the country of fake drugs. Before late Prof. Dora Akunyili became the DG of NAFDAC Nigerians were drowning in the ocean of fake drugs; it was such a dangerous racket that nobody dared to challenge them. Before she was eventually appointed minister Nigeria had become virtually free of fake and substandard drugs. Needless to say that, after her, we, like a dog, have returned to our vomit.

However, it must be admitted that beyond corruption, usually public servants are ill-prepared and ill-equipped to regulate private sector operators who are often better trained, smarter and more technologically savvy. There used to be this saying in those days that banks kept three or four different books – one for the management and board, one for the regulators and one for the shareholders. So unless you have access to the different books, you cannot know the true state or condition of the banks. True, inspectors go to the banks but it depends on what they see. Often the pictures they see are distorted and they know but turn a blind eye for a pay-off.

Thus, regulators are cashing in on this obvious environmental challenge for their selfish ends. As a former banker, I remember when Inspectors used to visit. We would have been tipped off several days in advance of their coming and a frenzy of activities would be set in motion. When the eventually arrive, they were taken to the boardroom where ‘all the necessary documents’ would be provided. Generally, some of the documents are doctored but they were passed. Lunch is then served and a welcome package provided and they call it a day.

READ ALSO: EOP 17: Corruption in Corporate Nigeria a Regulatory Failure (1)

The truth is that banking supervision is a sham; it uncovers little or nothing. A cousin of mine used to work in the banking supervision department of the CBN. He was a Deeper Life member then and used to lament of the corruption in the department and its conflict with his conscience. He once said to me: “An audit can never discover anything the bank does not want him to see”. He was one of the first to leave when Pa Joseph Sanusi introduced the Project Eagle in 2000 that offered sumptuous package for early retirement and began the modernization of the CBN. I doubt if the situation has changed.

So what happened in Oando is not unique or peculiar. Indeed, it is a general trend across the spectrum of organized private sector regulators. It also explains the loss of confidence in the country’s business environment by foreign investors. It explains why Lever Brothers and Cadbury happened; it demonstrates why Skye bank, Oceanic bank, Intercontinental bank, and so on, occurred.

It was the reason EAS airline aircraft suddenly dropped out of the air in 2003 – the flying public and most people in the sector knew it was coming. It is the reason why fake and substandard products and drugs have flooded Nigeria again. So look no further for the reason behind the Oando fiasco; it is the failure of SEC as the collapse of any bank is the fault of CBN and NDIC, the early warning signs are always there.

SEC has been poring through their books and accounts in the past four years and could not see or refused to see the financial rape due to compromise; and when it woke up from its materially induced slumber, it was crippled by extraneous influence, which is a form of corruption. It is a sad situation that negates all the attempts and policies being contemplated and initiated to grow the economy, because investors are very discerning these days and properly reckon and appraise the business environment before venturing in with their money. We should ask ourselves why the country is losing FDI to other smaller countries around us when there are more economic opportunities here.

The answer is weak, corrupt and compromised institutions and agencies responsible for upholding fiduciary obligations. In business, they include the police, judiciary, and regulators. Unless an investor is sure of getting fair hearing, and quick dispensation of justice in any dispute he is not likely to come. Government concept and understanding of investment is archaic, myopic and unrealistic. Without strong and transparent regulatory institutions as part of the business environment, investors will not come regardless of the opportunities abounding here. It is a cry to the wind.

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