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EFCC, Local Banks and the Rest of Us

Written by Abiodun Olayinka

Saturday, 23 August 2008

Since the confirmation of her appointment by the Senate, Mrs. Farida Waziri, the executive chairperson of Economic and Financial Crimes Commission, EFCC, has not lost a single moment in stating the policy direction and steely resolve of her Commission in its mission of riding the nation of economic and financial crimes and other acts of corruption. One of such resolve is the declared readiness of the EFCC to sanitize the banking sector.

Mrs. Waziri said in very clear terms that the EFCC will now begin to monitor activities and transactions in not only the banking halls but also in the inner recesses of banking operations. The reporting of suspicious transactions which many banks have been doing rather perfunctorily will now be made more pragmatic in the sense that the EFCC will no longer be waiting for banks to send their reports to the Nigerian Financial Intelligence Unit, NFIU, but will be using its intelligence and monitoring apparatus to check transactions that run counter to the regulations of all agencies that have oversight responsibilities on banks.

I think we need to commend the forthrightness of Mrs. Waziri in admitting that our banks need serious cleansing. For many of us who have been watching happenings in the banks with helpless amazement, her resolve to beam the searchlights on them is hope rekindled. The truth is that the public is getting increasingly dissatisfied with our banks in the way they conduct their businesses. In a depressed economy like ours, nobody needs any rocket science to know that banks cannot be declaring the kind of returns on investment they are churning out without breaching regulations or compromising rules of best practices. The EFCC should begin to conduct due diligence on banks, and it is gladdening that the iron lady in the anti-graft agency has shown interest in uncovering all that are being concealed in banks.

What are the main issues involved in this? Transactions in our banks are less than transparent. There are banks in this country that are keeping different books or records for different purposes. There are banks that are assisting their customers to ‘manage their funds’ (an euphemism for money laundering). There are banks with some cosmetic anti-money laundering solutions in their systems but which are potent machineries for money laundering. There are banks that are perpetually cooking figures to ‘beat the competition!’ Politicians and their cronies stealing public funds are hiding them in our banks. Are such banks giving reports of such deposits to regulatory agencies, including the EFCC? The EFCC has serious work in its hands to bring sanity and transparent business practices to these banks.
In another vein, the EFCC has a duty to make the public know the rate of adherence of banks to regulations. This is one issue that is essential to the investing public. Any bank that regularly breaches regulations may be a risk to its depositors. Whatever the EFCC can do to keep the public abreast of developments in these banks will be a welcome exercise.

Closely related to all this is the issue of bank fraud. Over the years, the media and all regulatory agencies of banks have always been keeping fraudulent activities in local banks under wraps. The usual defence of this attitude is that sensitive information about such things, in our banks , may create investors’ run and consequently threaten the solidity of the banking industry and even the economy. This is just a defence, it is never a justification. I think the EFCC should break away from this tradition. Fraudulent activities in our banks should no longer be secretly tackled. The public should always be put in the picture of what is happening in banks because of their investments. After all, the same members of the public will bear the brunt if things go awry.

Mrs. Waziri, in her new engagement at the EFCC, is shaming all her critics with her measured consistence and un-compromising commitments to the anti-corruption war. We have cause to be optimistic that she will do a good sanitation exercise in the banks and save the public the heartache of traveling in sinking ships.

Over the years, Nigerians have lost considerable fortune to the tragedy of bank failures. Many promising businesses have died in infancy, many lives lost and many homes torn apart by the loss of deposits in failed banks. In retrospect, the failures came as a result of weak regulatory agencies or poor monitoring by those empowered by law to do so. However, Mrs Waziri is rekindling our hopes that these banks will no longer be allowed to carry on as if they are a law unto themselves. All manner of shady practices in our banks such as insider credits, inflation of interest rate, illegal movement of dollars and other international currencies without authorization, non- adherence to the “Know Your Customer and Business”, KYCB’s directive of the Central Bank of Nigeria and other corporate infractions must be probed. Suspicious bottom lines of local banks must always be queried and by so doing, the EFCC will be helping the public and moving the nation forward.

Since Waziri made her intention of sweeping the banks of malpractices known to the public, lots of internal schemes are being made in the banks to put things in order. This is to be expected in a sector that is feeding fat on our collective indifference and non-vigilance. Therefore, nothing short of total cleansing should be done in the banks.

Intelligence and monitoring will achieve more for the EFCC. Waziri has demonstrated that she can do much more than her predecessor did in this respect. We are banking on her resolve to address this need. Since her assumption of duties, she has been wonderful in the way she is re-positioning the EFCC. There is no Nigerian today (and I stand to be corrected) who has not seen the changes taking place in the EFCC. And all these are going on without any noise, propaganda or threats. Even the monitoring of banks which the iron lady spoke about was not couched in arrogant, defiant statements. She simply said that the EFCC would now do more to make our banks free of fraudulent dealings. All these are symptomatic of the deeper intellect and maturity of the new driver of the anti-graft agency.

At this juncture, it is quite apposite to charge the EFCC to go deeper in its monitoring of activities, transactions and operations of our local banks. All the rules of economic governance of the banks must be looked into. Even, compliance with guidelines in the granting of loans must not be spared. It is an open secret that our banks prefer to offer quick loans to traders than manufacturers. As far as they are concerned, growing small businesses may amount to crawling to Mars and so, manufacturers continue to groan with attendant effects on the real sector. An economy surviving on the service sector is a vulnerable economy. Manufacturing is the backbone of any developed economy and is never easy to attain this level. Local banks must move beyond this culture of seeking quick profits. Both the apex bank and the EFCC should ensure that banks are persuaded to assist manufacturers more. Incentives should be given to the banks that are already doing this. If there are rules in line with this position, the EFCC should see to it that those rules are obeyed. This is one way of revamping the economy.

Closely related to this is the need to place service delivery in our banks under sharper focus. In this respect, the use of automated teller machines, ATMS, comes to mind. There are so many cases of fraud being perpetrated through the use of ATMs in banks. Incidences of such fraud are so pervasive that one may be tempted to think that ATMs are meant to punish bank customers rather than help them. The EFCC should appraise the use of this instrument by banks. Many banks are known to leave their ATMs empty without cash. This is improper. Some of these banks are operating as if they are not obliged to comply with regulations. All these are likely to stop now that the public is aware that the EFCC will now begin to breathe heavily on local banks. It is important to assure Mrs. Waziri that the public is totally in support of her new drive to inject sanity in the financial sector. We are confident that with the success she is making of her appointment as the new boss of the EFCC, the banking sector can only get better by the time she is through with it.

Waziri should continue to make us proud of her as recent developments in the polity are showing that those who think that they are above the law are being asked to account for their misdeed. We can only wish her more success and God’s abiding presence in her new engagements.

Olayinka wrote from Ilesa, Osun state.

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