Posted by Politics X on September 2, 2009 at 8:57pm
By Bassey Udo and Ini EkottSeptember 3, 2009 05:59AMTReprepared for Politics blog by Akin OsunlajaThe lawmakers in Abuja had hauled the Central Bank governor before them, to defend the legality of his actions in firing the senior executives of five failing banks.Leading the charge was the chairman of the House of Representatives Committee on Banking, Ogbuefi Ozomgbachi, who was indignantly challenging Sanusi Lamido Sanusi over whether the central banker had overstepped his authority and made a mockery of our constitution.“Any action taken in pursuant to the CBN Act that is inconsistent with the provisions of the Constitution is null and void, ineffective and of no effect whatsoever,” Mr. Ozomgbachi thundered, reading from prepared remarks.But the four-page letterhead document from which Mr. Ozomgbachi read his hand-written introductory remarks bore the logo of Rockson Engineering, a company identified by the CBN as one of the worst bad debtors whose non-performing loans sent the giant Intercontinental Bank to ruin.Rockson, whose directors are the wealthy businessman J.I.A Arumemi-Ikhide and his wife, Mary, owed and had refused to pay Intercontinental about N37 billion as of May 31.That and other large loans gone bad caused the bank to run out of cash, and the CBN to rush in to the rescue. The bank’s CEO, Erastus Akingbola, has since fled the country and been declared a fugitive by the Economic and Financial Crimes Commission. Rockson claims the whole thing is a misunderstanding.How lawmakers who claimed to be acting in the interest of the public came to read their strong criticism of the Central Bank governor from a company central to the dispute led observers at yesterday’s hearing scratching their head.OZOMGBACHINot a few were quick to draw a link between members of the committee and the company, insinuating that Rockson Engineering, which was one of the companies that strongly faulted the CBN’s name and shame strategy, may have masterminded the lawmakers’ summons of Mr. Sanusi.“It is not a mere coincidence that the lawmakers would be using so flippantly the letterhead paper of a debtor company listed by the CBN and not another writing plain paper to convey their speech to the public, if they did not have anything to do with the company,” said one witness at yesterday’s hearing, who asked not to be identified so he could speak freely.Officials of Rockson Engineering were not immediately available for comment last night.In a bid to save face after it became clear that the audience had made a link between Rockson and the committee chairman, the lawmakers drove journalists out of the venue to allow them have a private meeting with the CBN governor and members of his team.But prior to the closed session, Mr. Sanusi had offered a strong defense of his intervention in the banking crisis, which included injecting N420 billion into the five banks. The EFCC is now trying many of the bank executives and their alleged accomplices, seeking convictions for fraud, money laundering and other racketeering.Mr. Sanusi told the lawmakers that there was no illegality or inconsistency in the action of the CBN, as the Act which established it as a lender of last resort derives its powers from the provisions of the constitution. The Act, he said, requires him to regulate the activities of commercial banks and set levels of their cash holdings and what level of risk taking is appropriate.“Where a bank is deficient in any of these, the CBN may, under the statutory powers, order redress of the deficiency in any of the ways contemplated by the law,” he said.Mr. Sanusi said the CBN’s intervention was not only consistent with global trends, but also was a patriotic decision to stem further erosion of confidence in the banking industry as a result of its huge exposure to the capital market.He explained that the 10 banks audited had granted over N900 billion loan as at December 2008, representing about 12 per cent aggregate credit, or 31 per cent of shareholders funds.“Of this figure, the five banks accounted for more than 50 per cent of the total exposure, with over N754 billion, or 10 per cent of aggregate credit and over 27 per cent of shareholders’ funds, to the oil and gas industry.“At its peak, the banks’ total outstanding commitments under the CBN expanded discount window stood at over N434 billion. Therefore, CBN’s action to inject fresh capital into the five banks was not only within its statutory powers, but done to save them from imminent collapse, as well as restore confidence to the banking system,” he said.
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