Placing banking sector confidence at risk as EFCC arrests more MDs

Within the last two weeks, three managing directors of the tier I and II deposit money banks were at different times arrested by the Economic and Financial Crimes Commission (EFFC) over alleged sharp practices in relation to oil sector.

The banks chiefs that have faced arrest by EFCC but have been released include, Nnamdi Okonkwo, managing director of Fidelity Bank, Yemi Adeola, managing director of Sterling Bank and Herbert Wigwe, the group managing director of Access Bank.

The recent arrest by EFCC compound the woos of banks which have been confronted with poor asset quality, rising non-performing loans due to huge exposure in oil sector as well as foreign exchange challenges.

Analysts are concerned that such public disgrace would erode the confidence of the public on the banking sector. This is even as the EFCC plans to arrest more banks subsequently.

The anti-graft agency arrested the Okonkwo on April 25 following allegations that he assisted Diezani to handle $115m and converted it to N23 billion during the build-up to the 2015 presidential elections.

However, the Central Bank of Nigeria (CBN) informed all customers of Deposit Money Banks, other stakeholders, and the general public that it is fully aware and indeed a part of the ongoing investigations of certain financial transactions in some banks by law enforcement authorities.

The CBN on Monday assured customers and stakeholders that it would not allow the banking system to be used as a conduit for any illicit transactions.

In a statement signed by Isaac Okorafor, acting director, Corporate Communication, the CBN informed all customers of Deposit Money Banks, other stakeholders, and the general public that it is fully aware and indeed a part of the ongoing investigations of certain financial transactions in some banks by law enforcement authorities. 

“The CBN is also carrying out its own special examinations and investigations to ascertain the veracity of some allegations, as well as the extent and persons that may be involved in such activities,” the statement said, adding that some of these investigations are routine and only relate to isolated transactions, “therefore, it is important to state that the safety and soundness of the Nigerian banking industry remain strong”.

Meanwhile, the CBN carried out Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) compliance examination of banks at end-May 2015, which included a review of foreign currency deposits in banks pre- and post- 2015 General Elections. The exercise revealed that there were cases of inaccurate rendition of Foreign Transaction Reports, Suspicious Transaction Reports, poor and inadequate Customer Due Diligence and non-identification of Politically Exposed Persons. The affected banks were penalised for the infractions.

HOPE MOSES-ASHIKE