Nigerian Banks As Cesspit of Corruption – Dr. Muiz Banire, SAN

A Yoruba adage says isale oro legbin which rendition in English is best captured by a philosophical statement credited to Mario Puzo that “behind every big fortune, there is a crime”. It is easy and gratifying to envy those who, in the Nigerian street lingo, “have made it big”. The big boys of the commercial world; the clean, suave-looking banking executives in shining shoes, dandy suits and sleeky cars whose mansions have made architecture a most enviable profession; the so-called captains of industry whose claims of God’s blessings have made other’s prayers seem unanswered by the same universal God that was said to belong to all of us but ought to “belong to no one.”

Their display of affluence, oppressive philanthropic interventions and God-rescuing donations in churches have bred envy and desperation among the youths. Everyone scampers to be like them and when they address the sources of their wealth, as they are quick to ascribe their successes to God, so they are impressive to hear of their ingenuity, daringness and business shrewdness.

They are regarded as the wiz kids whose touches, like Midas, turns everything to gold. They are the Yoruba proverbial Elegbede whose touches on every tree produces sonorous sounds. In the past two years, the lightning speed at which the Naira has been depreciating vis-à-vis the exchange rate with the United States dollar, has become quite debilitating to living a meaningful life. Some months ago, the rate of increase used to be less than 5 naira a week. That was when Naira was taking a leisurely walk in the park of devaluation. In the past few weeks, the rate of increase has assumed a jet speed. Every minute, every hour, naira falls in dastardly manners as the rate of increase could be 30 or more naira per day. The fear of naira exchanging for N1,000 was disaster at a time thought to be impossible.

Today, the fear is that it is imminent that it will cross the 2,000 naira threshold, after all, its big brother, the British Pounds, now exchanges for more than 2,200 Naira at the moment. There is no doubt that this has been having negative multiplier effects on the cost and standard of living of Nigerians. There is hardly anything, goods or services, that is not impacted by the rising exchange rates. At a function a few days ago, and I have been hearing this for some time in different quarters, that what has foreign exchange got to do with foods? I often wonder why the nexus between the foreign exchange and food items cannot be easily appreciated. Have we forgotten that tractors are imported, the spare parts of farm implements are imported, they all respond and react to the foreign exchange fluctuations?

Beyond this, the transportation of the items has bearing equally on foreign exchange. Vehicles are bought with foreign exchange. Imported duty is assessed in accordance with the exchange rates while the spare parts of the vehicles are equally affected by foreign exchange. This is just to demonstrate, by way of example, how foreign exchange impacts all goods and services. Now to the crux of my discussion today. Although there are so many factors that are responsible for the escalating cost of currency exchange in the country and which can fill limitless volumes of books, but in this conversation, I am concerned about the nefarious activities of the bank managing directors and their illimitable treasures. In the last few days, resulting from the death of the Group Chief Executive of Access Bank, Herbert Wigwe, (may he, his wife and son rest in perfect peace), so many interventions have surfaced all over the media on the ways and manners in which bank chief executives of this generation have become stupendously rich. In most of the writings, allusions to all manner of sharp and fraudulent practices have been made. Again, I am not able to interrogate that in this short engagement.

The singular area of interest to me is the sudden emergence of the banks and their managing directors as foreign exchange speculators. The management of most of the banks have perfected the acts of warehousing large volumes of foreign currencies with a view to disposing them at astronomical rates at a future time. This applies not only to the foreign exchange assessed from the apex Bank but also the borrowed sums and foreign accruals. As at January 2024, it was revealed that the Banks are holding over five billion dollars in this wise. This is a major contribution to the foreign exchange crisis we are experiencing. Foreign exchange, as the name suggests, is meant to serve the purpose of foreign exchange; importation of goods and services to facilitate trade with other countries. No nation can exist in a state of autarky and every nation must engage in trade with other nations. A situation where, aside from politicians, whose daily existence is designed to snuff life out of an average Nigerian, bankers have turned themselves to demons, is unbelievable.

These are elements who have appointed themselves as warehouse managers of our instrument of foreign exchange for the purpose of trading it at the black market and making stupendous profits. These are idle funds making lazy individuals wealthier than Satan based on mere speculation. The same dollar that you cannot access in the banks; that they will tell you they do not have, is everywhere in the hands of the managers of the bureau de change and street hawkers of the black market. The black market has defied rules of banking and it is regulated by the wild guesses and craze of the speculators. The engine room of speculation is in the boardroom of our banks. Aside from other criminal enterprises the bank executives have perfected like debiting customers’ accounts with all manner of charges, including every Friday collections of minor sums on our various accounts, these criminal elements have deodorized stealing and money-doubling fads that it is impossible to smell crimes on them without a careful forensic investigation.

These bank executives must be examined. The way and manner a tilapia was said to have swallowed a whale in the transaction that led to Access Bank of acquiring both Intercontinental Bank and its assets, is benumbing and challenging the capacity and seriousness of the present government in remedying criminal wrongs of the banking world. We have learnt of how many banks went under only to produce overnight multi-billionaires of owl-looking vultures of banking MDs. This is also not unconnected with the laundering of funds for public officials. The banking system is certainly in a mess in the country. Just as Chief Olabode George opined, which extra work are the bank executives doing that they display the kind of affluence we witness? Is it beyond their emoluments and fractional dividends accruable to them?

Wonders shall never end in Nigeria. Equally culpable are the treasurers of banks who have perfected the manipulative act of frustrating the genuine seekers of foreign exchange for their selfish ends. Most of them too are multi-billionaires in their own rights. The lifestyles of these dramatis personae need to be investigated to serve as deterrent to other potential criminals in the banking system. Those who take our youths in lessons in financial management and wealth creation have no legitimate businesses and one wonders why we condemn the Hushpuppies of this world when their fathers and godfathers are in decorated offices of our banking towers. Except the banks are made to start transiting the dollars in their kitty by way of quick turnover, the mess of the speculation they are involved in will continue. It is gladdening to see the Central Bank now imposing the net open position as a policy for compliance by the commercial banks. However, attempts at ensuring compliance in the past have not succeeded as compromises continue to reign. My hope and expectation are that the new Central Bank leadership, in conjunction with the Economic and Financial Crimes Commission, urgently intervenes. Currency speculation must be arrested.

This is the further way to reduce the pressure on the foreign exchange while ensuring access to it by those desirous of it. The existence of a parallel market in Nigeria has made this job of controlling foreign exchange impossible. I understand that many of the dingy corners of our streets littered by dollar hawkers are funded by the banking executives. The Act of the National Assembly creating the parallel market ought to be revisited so as to impose stringent regulatory measures. At least we are aware of how the business is carried on in other countries where the mode of regulation is quite effective that the black market would not determine the performance of their currencies in foreign exchange. Nigeria seems to be a lawless society where the tradition of legal compliance does not exist in abundance.
Where the government continues to allow the black market to continue to exist loosely regulated, it is certain that those who profit from the system will not let the dollar be. The same way they have made the dollar a scarce commodity, they have made new naira notes the exclusive preserve of naira hawkers at parties. The banks are most likely to turn you down if you ask for new naira notes only for you to find it stacked in bales in the hands of poor women who harass people to buy naira with naira in order to spray on celebrators at events.

The profit margin at which naira even exchanges for naira makes the business of hawking new notes quite profitable. Unfortunately, those poor women are not the ones directly profiting from the business. The bankers, who gave them the new naira notes, are the ones making huge profits out which the hawkers merely collect a commission. It ought to be made illegal to find anyone hawking naira. This practice of hawking naira at events ought to be halted. It is criminal already for anyone to spray naira at parties but the law is still being observed in the breach.
For God’s sake, naira is not supposed to be an item of trade like cassava or bread. It is the means of exchange otherwise referred to as the legal tender. The government must crack down on all criminals who have made our country a hell on earth. Until this is done, owning a bank or occupying a top position in a bank may be the best way to make fortunes on a daily basis. It is my view that the Economic and Financial Crimes Commission should revisit the issue of compliance by bankers with the filling and submission of the code of conduct forms, thwarted by the National Assembly then. This is the most potent way of tracking their illicit funds.