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Business leaders, others oppose bill to give CBN governor immunity from judicial review

How we made payment system in Nigeria globally competitive – CBN

Leaders of Nigeria’s private sector have risen against a controversial bill that aims to give the Central bank governor more powers including immunity from third party lawsuits.

The Bill, which has been passed by the National Assembly but awaits the President’s assent to become law, will replace the Banking and Other Financial Institutions Act, BOFIA. The business leaders as well as investors and lawyers say the bill could create a monster regulator in the CBN, by allowing it to do and undo without judicial review.

One of such provisions they say is Section 51 of the Bill which grants immunity from judicial intervention to the Federal Government, the CBN, or any officer of the Federal Government or the CBN from any action, claim or liability to any person in respect of anything done in the exercise of their duties under the Bill.

Section 51 of the Bill reads, “neither the Federal Government nor the Bank nor any officer of the Federal Government or the Bank, shall be subject to any action, claim or demand by or liability to any person in respect of anything done or omitted to be done in good faith in pursuance or in execution of, or in connection with the execution or intended execution of any power conferred upon that Government, the Bank or such officer, by or under this Bill or the CBN Act or any rules, regulations, guidelines or directives issued thereunder or pursuant to any other relevant laws,” according to a copy of the Bill seen by Business Day.

In a letter seeking the urgent intervention of President Muhammadu Buhari, the leading private sector think-tank, the Nigerian Economic Summit Group (NESG), raised concerns about sections of the bill which it said should be amended before presidential assent is given.

The NESG also kicked against granting immunity to the CBN and its officers from judicial review of acts undertaken in the exercise of their administrative duties.

The concerns of the business leaders include the real worry that the bill attempts to usurp the power of the courts to grant restorative or similar orders against the CBN or the governor in any action, suit or proceedings in relation to the revocation of a license by the central bank and limits claimants remedy to only damages.

They said the bill extends the scope of the central bank’s regulatory oversight and licensing over and beyond the collection and solicitation of deposits from the general public.

In addition, they said the bill gives the governor of the CBN absolute powers to refuse to grant a banking license without giving any reasons whatsoever. According to the business leaders, such enormous power goes against the grain of contemporary and good order regulatory oversight.

The NESG also said the bill attempts to restrict/prohibit Nigerian banks from establishing any relationship with a foreign bank or other entity which does not have a physical presence in its country of incorporation. This will seriously impact the ease and efficiency of doing business by Nigerian banks.

Other sections of the bill about which the NESG raised alarm is that it provides a process for the restructuring of banks outside of the provisions of the recently signed companies and allied matters act, CAMA

The bill also appears to suggest that the CBN may grant a license to foreign banks to undertake domestic or offshore business within a designated free trade or special economic zone in Nigeria.

In addition, the bill grants the CBN examiners powers to attend (as observers) management and board meetings of banks and other financial institutions or specialized banks.

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Finally, the bill aims to grant immunity from judicial intervention to the FGN, the CBN or any officer of the government or the CBN from any action, claim or liability to any person in respect of anything done in the exercise of its duties under the bill.

The NESG said the bill “will have serious negative throwback on the country as a whole, jeopardise ability to engage in third party transactions and enable unbridled exercise of power by officers of the Bank, in a world where the actions of the financial sector and its regulators are being brought under closer scrutiny. In modern democracies only heads of governments carry such immunity,” the NESG letter to Buhari read.

A former deputy governor of the central bank who spoke with Business Day expressed grave concerns, saying, “no CBN has had reason to push for such powers which blatantly attempt to give the current leadership of the bank power to break eggs without being questioned about where the omelettes are,” the former deputy CBN governor said.

“Clearly, the economy will suffer for it as this proposed law only increases the risk associated with investing in Nigeria,” the former deputy governor said.

“What would a governor of the central bank need any immunity for?”, asked a former governor of the apex bank who spoke to our reporter. “What do we do if it happens that a governor of the bank contravenes the very law establishing the bank.”

According to the former apex bank governor, there is already in BOFIA a section that requires any one to first write the governor and to put him on notice before he or she can sue the governor.

A senior lawyer, who served as a state attorney general, not only questioned how the Bill managed to scale through the National Assembly but also why there was no wide ranging consultation and days of public hearing to highlight the several contentious provisions in the Bill.

He noted that while “paragraphs B, F and I (of the bill) make the argument against CBN’s bid for total immunity very clear; paragraphs H and J zero in on a power grab of a very invidious kind.
“You get the feeling that this Bill was drafted for the NASS Committees by CBN itself. We have here a very clear case of regulatory megalomania,” said the former attorney general.

However, Konyin Ajayi, a Senior Advocate of Nigeria (SAN) and professor of law comes to the defence of the bill.

“Its nothing like the immunity that Governors enjoy; rather it protects actions done in good faith in the mold of existing laws that protects all public servants – by way of pre action notice or public officers protection law,” Ajayi told Business Day.

“This is not new and has always been in BOFIA and has been upheld by the Supreme Court in a number of cases – in line with high public policy considerations of protecting orderly public administration from frivolous actions.”

The existing BOFIA does have a provision in Section 53 that reads: “Neither the Federal Government nor the Bank nor any officer of that Government or Bank, shall be subject to any action, claim or demand by or liability to any person in respect of anything done or omitted to be done in good faith in pursuance or in execution of, or in connection with the execution or intended execution of any power conferred upon that Government, the Bank or such officer, by this Act.”

The new Bill will however confer more powers on the CBN, Businessday learnt.

Calls to the CBN seeking clarity on what it expects to achieve with the new powers were not immediately returned.

The President of Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, also questioned why the CBN governor wants to leverage the Bill to create an immunity for himself which he said will deter moves to question any wrong doings in future.

“Such a provision should be dead on arrival,” Okezie said.

“Why immunity for CBN? Does it mean they have skeletons in their cupboard which they wouldn’t want to be questioned,” he said.

Okezie said it would be better for NASS to rather make an act to make CBN not an appendix to the executives.

“That is the kind of law investors want to see not the kind that wants to create immunity for CBN governor,” he said.

The Nigerian Bureau of Statistics (NBS) reported last week that Africa’s largest economy contracted by a record 6.1 percent in the second quarter of 2020, the most since 2004 as the country grapples with lower oil prices and the COVID 19-induced economic headwinds.

Investment inflows into Nigeria fell by the most in four years to $1.29 billion in the same period. Badly-needed Foreign Direct Investment was at a paltry $148.6 million, a decline of 33 percent compared to last year.

The CBN with its numerous intervention funds has extended its tentacles and authority to such diverse areas of the economy like arts & culture; entertainment; technology; healthcare; agriculture; aviation and others.