Friday, July 24, 2009

Failed Banks Debtors

Today Nigerians know better why 13 of the nation’s banks went under some years ago, leaving their depositors and staff in agony from which many of them have not recovered.
Reports released the other day by the Nkechi Nworgu-led Senate committee on banking and finance gave out the names of some prominent Nigerians who took huge loans from the ill-fated banks but failed to pay back. They had used their privileged positions as directors in such banks to funnel jumbo-size loans to themselves but either failed or refused to pay back. Reeling under the debilitating weight of such un-repaid loans, the affected banks collapsed.
The more shocking part of all this is that these defaulters, if not defrauders, had never had to face the law which their actions contravened. Almost all of them still swagger around the country as if they have done nothing wrong despite the anguish that their action had caused many unsuspecting Nigerians.
Despite calls for proper investigation of the collapse of the banks, it was not until recently that the Senate waded into it and uncovered what has come to look like a can of worms. When those entrusted with the safe-keep of depositors’ funds turn out to be the undoing of such treasures, then something is wrong with the system.
In commending the Senate for its painstaking investigation and making the names of these defaulters public despite obvious pressures not to do so, we urge that it makes good its promise to bring them to book through the relevant government agencies. The Senate also needs to widen its investigation. There may be others who are equally involved in this heartless profiteering.
For clear reasons, the action of these loan defaulters must be seen for what it is: an act of economic sabotage. By their greed and irresponsible act, they had not only made depositors, and even other shareholders lose their money but also made workers of the collapsed banks to lose their jobs. Both developments have had very grave impact on the social and economic well-being of the nation.
While all the ruined careers and wasted investments may not be redeemed, those behind such recklessness must not be allowed to get away with a mere slap on the wrist. Regardless of their social standing, they must be made to face the full wrath of the law and to pay back that which they took from the failed banks. The National Assembly must ensure that not only are the offenders properly penalized but also that the relevant laws aimed at checking such insider-abuse are strengthened in the nation’s corporate governance. It is possible that such insider-abuse is still happening today. We need not wait for more banks to fail before serious measures are taken to stamp out this unhealthy practice.
It may not be possible to eradicate fraud altogether from any financial system. But it will be sad to create the impression that any set of individuals can defraud the system with impunity. If that happens, then the authorities would be fueling crime in a sector so critical to the economic health of the nation. That is why in other countries economic crimes such as tax evasion, criminal manipulation of the stock market and violation of specific financial laws are visited with severe penalty. The Bernard Madoff episode in the United States is a very recent example. For committing financial crimes against the system, the 71-year-old Madoff was sentenced to a jail term of 150 years. He was also stripped of all his possessions under a $171 billion forfeiture order. But the crime was so evident that he refused to appeal the sentence.
The essence of Madoff’s sentence is to deter others who may be inclined to toe that line. Nigeria should do no less with economic saboteurs