Regulators may do well by earning their pay
The Economic and Financial Crimes Commission (EFCC) recently raised some weighty allegations against some chief executives in the banking industry. The accusations ranged from hosting lavish parties, buying exotic vehicles to acquisition of properties at home and abroad. Besides, some are allegedly giving loans to their cronies without the necessary collateral. “We want bank executives to keep to their ethics of their profession, protect depositors’ funds and avoid unnecessary luxury at the expense of their banks,” the commission said.
The EFCC is the only anti-graft agency which still poses a strong challenge to impunity. The allegations against the chief executives are serious and troubling. Unfortunately, this is not the first time such allegations are made against many of those entrusted with public funds in the banking sector. Some of them had failed public expectations in the past while cursory supervision of the banking industry has cost the nation dearly. Between 2008 and 2009, the impacts of the distress in the sector, largely attributed to inadequate regulatory attention, are still being felt. To the extent that corruption is a cankerworm that is threatening to destroy our nation, it must be fought with all that we have.
Indeed, this newspaper, had on a couple of occasions, underlined the challenges before the anti-graft body and had repeatedly called on the federal government to cater to its needs, including the provision of better funding and improved training and equipment that would upscale its capacity for investigation and prosecution of corruption cases. In addition, we supported a closer supervision, continuous stress testing and timely remedial actions to ensure that none of our banks failed.
There is no doubting the fact that there are some issues with banking operations, judging by what happened in the immediate past. On loans repayment, for instance, it is important that the regulatory authorities pay closer attention to supervision. Loans don’t just go bad overnight. A proactive regulation should detect early warning signals and ensure the right thing is done.
There is therefore the need to strengthen regulatory rules because if banks failed in the past, they can fail again. Fortunately, the banking industry in general is better regulated by the Central Bank of Nigeria (CBN).
This underscores the need for the EFCC to, at all times, act within the law. By respecting the rights of suspects and complying fully with the orders of courts, it will be far easier for the anti-graft to sustain and institutionalise the war against corruption. The reality of the Nigerian society in recent years, especially since the advent of social media, is that inaccurate and false reports quickly take a life of their own and may be taken to be the true version of events. Anyone, no matter how highly placed in the society, should be invited for questioning by the law enforcement agencies if he or she has infringed on the law.
In these days when the government is badly in need of boosting Foreign Direct Investment (FDI) flow into the country, false and inaccurate reports about some prime movers of the economy can send the wrong signal to foreign investors resulting in the nation potentially losing billions of dollars in investments. We reiterate the need for caution particularly because of the negative effect false reports portend for these organizations, the banking industry and the overall economy. With the country’s bloated debt profile set to increase even further with an additional $30billion, financial experts have said that more effort should be put into trying to attract private capital into the economy.
All said, it is significant that the regulatory authorities should justify their pay by doing their work.