I noted the sensitization seminar that was held in mid-October by the Nigerian Deposit Insurance Corporation (NDIC) in partnership with the National Judicial Institute (NJI) for Judges of the Federal High Courts. The seminar was held in Uyo and had an array of judges in attendance with the Chief Judge of the Federal High Courts, John T. Tsoho, superintending.
It has been a long-standing tradition of the NDIC to hold these interactions with the judicial officers as they considered them vital because of the critical role they play in resolving disputes that often arise from revocation of banking licenses, liquidation of failed banks and termination of liquidation activities.
The seminar has been an ongoing annual affair since 2012 but had a hiccup in the last three years due to the restrictions caused by the COVID-19 pandemic. Now that the seminar has resumed it has become a veritable forum to confront some of the more urgent integrity issues pertinent to the banking industry. I refer to the efforts to bring to book the bank directors of failed banks who have deliberately run their banks aground through malfeasances. They would be the most elusive and difficult culprits to handle. It is a worldwide phenomenon which would probably be more acute here due to the overwhelming reach they have to influence whatever pressures they see as detrimental to their selfish interests.
The NDIC, established in 1989, as a safety net for depositors’ funds has been treading the path of bringing those crooked bank directors to justice. In the 1990s, during the military regimes, justice meted out to directors who ruined their banks deliberately was swift and was carried out by the Failed Bank Tribunals. Those tribunals were phased out by the emerging democratic dispensations in 1999 because they were deemed anachronistic. It is some setback, but it has not deterred the NDIC from pursuing and prosecuting erring directors of failed banks, though the proceedings in the courts have slowed down considerably.
With the advent of mega banks in the millennium, bank failures when they occur become spectacular, and big public issues. However, Bridge Banking introduced as a novelty by the NDIC to take over a failed back and run it as a going concern was a saviour of sorts as it became a safeguard for depositors’ monies, the innocent shareholders’ investments, as well as the careers of the bankers.
The NDIC and all the other stakeholders including the Central Bank of Nigeria (CBN), its Big Brother, have performed magnificently in these respects. Now there is belief in the efficacy of bridge banking, that depositors need not fear the safety of their funds even if the bank fails. Nevertheless, the tardiness in the process of bringing the culprits who deliberately bring the banks aground to justice leaves much to be desired.
I doubt if the issue surrounding the demise of Savannah Bank has been laid to rest. Savannah Bank lost its licence in 2002 and was shut down by the regulatory authorities. Since it was before bridge banking, NDIC was primed to pay off depositors a percentage of their deposits when Savannah Bank challenged its closure in the Court of Appeal. Fast forward to 2009, when Savannah Bank got a judgement against the regulators. Somehow, even though there were sufficient grounds to go to the Supreme Court, the regulators decided not to do so and handed over the licence back to Savannah Bank. Since then, the bank has not opened its doors to the public due perhaps to its inability to raise the minimum start-up capital. The depositors have all this long been left in the lurch, justice has eluded them. I understand that many have died out of frustration.
The case of Skye Bank is more recent. When it collapsed in 2018, many on the board of directors were fingered as the main reason for the collapse of the bank. Individuals among them helped themselves to humungous amounts from depositors’ funds as loans that were unsecured and invested in high-risk ventures that eventually failed. The once-prosperous bank exhibited signs of going down in 2016 when it showed persistent liquidity challenges and other infirmities arising from not meeting obvious minimum banking thresholds.
The regulators finally took over the bank in 2018 and bridged it into what came to be known as Polaris Bank. Depositors’ monies were saved, and the careers of the bankers were also saved.
However, there was a heavy cost to the government treasury as N700 billion had to be loaned with a single-digit interest rate to Polaris Bank to stabilise. The regulators have done their bit, but punishment is yet to be meted out to those who set out to bring ruins to Skye Bank. There are harsh punishments in the statute books for the kind of looting spree that took place in Skye Bank, but the fat cats out there know that the wheel of justice grinds slowly. The regulators must persevere and continue to find ways to bring the culprits to face the wrath of the law speedily.
That’s why we will continue to applaud the constant engagement between the banking regulators such as the NDIC with the judiciary as a constant reminder to bring the looters of our banks to justice.
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