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Columnists, Scruples

Anambra: The Strange Case Of 75 Billion Naira

Posted: Jan 12, 2016 at 12:00 am   /   by   /   comments (0)

By Ugochukwu Ejinkeonye, 08112662685

In March 2014, while handing over to his successor in Awka, former Anambra State Governor, Mr. Peter Obi, announced that apart from ensuring that all salaries and allowances of public service workers and pensioners were paid up to date, he was also leaving behind N75 billion in “cash and investments” for the in-coming administration.  In a normal country, where accountability and responsible governance are normal expectations, where public service has not been crudely reduced to mere organised banditry as is largely the case across Nigeria, this should not attract any applause. But we live in an abnormal country where criminal accumulation and wasteful spending have long been accepted as normal features of public service, where public officers ensure that they empty government treasuries and erect pyramids of debts before they leave office.  And so Mr. Obi’s rare example was widely applauded, and has been extensively held up by several commentators to underline what decent and conscientious public service ought to look like.

But last week, nearly two years after he was sworn in as the Governor of Anambra State, Mr. Willie Obiano, sought to insert a sharp pin in the balloon of public excitement about what many have come to accept as Obi’s exemplary tenure.  At a press conference in Awka, the Secretary to the State Government (SSG), Prof Solomon Chukwulobelu, declared that “The N75 billion [which Obi claimed he left behind] was not there; it was not handed over to anybody. At best it can be half-truth…In the real sense, what the Obiano administration inherited from Obi was N9 billion cash and N26 billion near cash.”

He explained further: “…to provide a true and fair picture of the state’s net position on March 17, 2014, the investments handover notes ought to have captured current liabilities and contingent liabilities also borne by the previous administration as at the time of handover. To put this in context, the total portfolio of inherited projects valued at approximately N185 billion was however not captured in the breakdown of the handover notes.”

According to Prof Chukwulobelu, out of the N185.1bn owed contractors, Mr. Obi only paid the sum of N78.9bn as at March 2014 when he handed over to Obiano, leaving a debt of N106.2bn.

These are indeed very weighty disclosures, and if they turn out to be true, they can only destroy whatever value Obi’s N75 billion was expected to add to the Anambra purse.

But Obi’s media aide, Mr. Valentine Obinenyem, is calling for a public, televised debate on this contentious issue. I think this call is important and very necessary so that Nigerians can know exactly who is saying the truth about this matter. Both parties should come together with their facts and figures before television cameras to prove the truth or otherwise of their different positions. I think that as part of its patriotic duty to Nigeria and Nigerians, a national television or civil society organization should take the initiative to organize this debate right away and invite them. Although Channels Television has done well to feature spokespersons of the two regimes separately in its breakfast show, there is need for a moderated forum where they will meet together to iron out the differences in their individual accounts. And should any of the two parties develop cold feet and shun the debate, the organizers should announce the party that absconded to Nigerians and we will then now know who among the two leaders has been doing willful damage to truth and a badge of shame would promptly be put on him. This is how matters of this nature are usually resolved in civilized countries.

In a statement published in the media last week, Obineyem stated that “on coming to office, Obi spent his first year to complete all the contracts awarded by his predecessors. In some cases, he had to start from scratch. Obi, for example, paid over 35 billion in arrears of pension and gratuity. Though they [Obiano’s spokespersons] inflated the figures, but the point to note is that the debt they are talking about in their press conference is contract sum on projects yet to be executed.”

According to him: “They said that Obi left 106.2 Billion (wrong figure) overhang on contractual debts alone. I challenge them to publish the schedule of the debts and the companies being owed. As at the time Obi left office, he paid for all the certificates generated on contracts awarded. Certificates are generated on the basis of work completed. Are they saying Obi ought to [have paid] for contracts yet to be done? The same man saying this awarded 35 fresh [contracts on] roads within his first year in office at the total cost of over  81 billion Naira out of which he has paid 10 Billion Naira. On the other hand, Obi awarded roads totalling 93 Billion in his last year in office and paid a total of over 51 Billion on those roads before leaving office. Most of those roads were used to campaign for him during electioneering on the premise of continuity.”

Obienyem gave the breakdown of the money Obi left for his successor as follows:

N27billion in local currency;

N26.5 billion in foreign currency investment (foreign bonds);

N28.1 billion in Certified State/ MDS balances.

Then he said: “Even in the final handover document, Obi deducted N10 billion approved federal government refund as well as the salary, pension, gratuity, money on certificates raised on contracts for the month of March, which all amounted to N5 billion before arriving at the balance of over N75 billion he bequeathed his successor. As a financial expert, Obi went to his end-of-tenure event with Gov. Willie Obiano and said all this in the presence of all the Bank MDS in whose banks the monies were. In fact, as at March 17th when he handed over, he got all the certified statements of Anambra’s accounts from the banks these monies were and handed them over to his successor.”

Now, people have asked why Gov Obiano had to wait for nearly two years into his tenure to release this damaging breakdown. While his principal secretary, Mr. Willie Nwokoye, said on Channels Television last week that Obiano was too busy with his work to start addressing such matters, the National Publicity Secretary of the All Progressive Grand Alliance (APGA), Chief Ifeatu Obiokoye, told reporters in Awka that the reason was that Obi was all the while still a member of their party and so it would not have been proper to embarrass him with a rebuttal.

This is how he put it: “I believe Governor Willie Obiano was being cautious by coming up with the truth now which, if he had done before now, would have embarrassed his predecessor.” In other words, this has more to do with politics than the need to ensure accountability. What one can deduce from this assertion, therefore, is that no one would have bothered himself making these astounding revelations were Obi still in APGA.



Well, I think that this ought to be very simple matter if Obi’s accusers would bother to   answer these few questions. Was there any project completed before March 2014 that Obi did not pay for before leaving office? How exactly do Obiano and his advisers define debts? Was anyone expecting Obi to have paid for projects not yet uncompleted as at the time he was leaving office? Wouldn’t that be termed a criminal act? Is government no longer a continuous process where a successor is expected to take over the responsibilities of the office from where his predecessor stopped and ensure they are fully and successfully discharged?  Okay, can Mr. Obiano get the Managing Directors of the banks where these contentious funds were lodged to issue certified statements contradicting Obi’s claims? Why should they expect any reasonable person to believe their mere words of mouth contradicting Obi’s claims without any credible documentary evidence?

One point one has noticed in this controversy is that whereas Obi had announced that he left N75 billion in “cash and investments,” the Obiano people are harping on the misinformation that he actually claimed to have left N75 billion cash only. And so, Obiano’s principal secretary could question whether it amounted to good governance to have left such an amount while there were some things to be done in the state. He also accused Obi of announcing that he left the billions of naira for the state without also disclosing  the obligations he left behind?

I do not know if Obi did not give to his successor the list of the projects that were yet to be completed as at the time he was leaving office (because that would really be quite strange in a handover note) but my feeling is that these fellows were hoping to come into government to play around and do nothing? Because, what is governance if not the discharging of obligations? Haven’t the Anambra State government been getting monthly allocations from the Federation Account and Internally Generated Revenue (IGR) since Obiano took over? Or were they thinking that there was a tree from which Obi was plucking money and which he carefully cut down before leaving office? In fact, there is even only a marginal difference between the figure Obiano’s principal secretary acknowledged on Channels TV and what Obi had announced which they are challenging. In fact, one could easily see that the people interviewing him were grossly unimpressed by his theatrics. I thought I saw relief on their faces when his session was over.

When Obi assumed office, he wasted no time in clearing the arrears of pensions and gratuity he inherited to the tune of N35 billion and he seemed happy and fulfilled doing so. He also hastened to complete all the projects left behind by his predecessor. But in Obiano’s case, he had no arrears of salaries, pensions and allowances to defray. He had no debts arising from completed but unpaid-for contracts to offset, so what is his problem? Was he expecting Obi to have paid the contractors upfront? What if they eventually defaulted, who would carry the can?

Obiano announced in Mkpor last week that he was seeking a second term in office. “I am going to stay eight years in office and nobody can stop me!” he said. That is a legitimate ambition which is within his rights as a Nigerian. But he stands the chance of being the one to stop himself because of the kind of puerile, needless war he is waging against his predecessor. If he thinks that the only way to stamp himself on the minds of the people is to rubbish Mr. Obi, he would wake up to realize that he has been trapped in a very long dream. He should remember that he rode on the record of this same Obi to power, because, by the time he became APGA’s governorship candidate, only few people could recall ever hearing name.

Now is it not demoralizing that at a time when the stories emanating from most of the states of the federation are mainly about months of unpaid salaries, empty treasuries, mountains of debts and strivings to obtain bailouts from the Federal Government, we have in Awka a governor who  could find the time to engage in a pointless battle with his predecessor who had handed over to him a healthy state with NO arrears of unpaid salaries and NO mountains of debts; a predecessor who instead of billions of debts handed over to him a purse full of billions in “cash and investments.”  One of the foreign investments, according to Obi’s aide (and which has not been refuted), has even yielded about N10 billion profit to Anambra State.

That’s probably why Obiano could find the whopping sum of N5 billion (as also alleged by Obi’s aide) to mark his hundred days in office and buy all those fleets of posh Prado SUVs and luxury pick-ups for each of these functionaries going about now running their mouths. If Peter Obi had wallowed in the kind of revolting profligacy allegedly flourishing in Awka today, would he have been able to leave Anambra in such a healthy state?  In Oyo State today, for example, Gov Ajimobi is even saying that the bailout he got from the Federal Government is not enough to lift the crushing debt burden weighing the state down and that he needs more. In Katsina State, Gov Bello Masari had to lie to obtain an eleven billion naira bailout from the Federal Government. Other more disheartening stories are oozing from several states, but Anambra, because of Obi’s prudent management of resources does, not have such tales of woes.

If many Nigerians today hold Obi up as a model governor, he truly earned it. One thing he was, however, regularly accused of during his tenure was his firm refusal to “carry long” the so-called elite in the state. You would think that this was one serious charge if you did not know what it meant. Indeed, what that meant was Obi’s blunt unwillingness to continue the unsightly tradition of throwing lavish parties for and sharing out Anambra money to an army of parasitic elite who also exist in several states of the federation, and who depend on public funds to maintain the opulent lifestyles they have become used to but lack personal resources to sustain. Obi’s philosophy that public funds were only meant for the execution of public projects and not to be squandered by a few privileged parasites won him some very bitter enemies, but it also won him the respect of decent Nigerians who mean well for the country.

At a time, Obi was almost the only governor one could meet queuing at the airport to board an aircraft like “ordinary” passengers like us (he also always flew economy class) while his colleagues, some of whom would not have qualified to serve as his P.A. in any of his companies before they became governors hopped about in private jets and wallowed in unspeakable profligacy. This is one thing that deeply pains and causes prolonged sorrow to decent and responsible Nigerians about public officers, and the likes Peter Obi is a kind of consolation that all is, perhaps, not entirely lost, that the whole place has not been totally overrun by ferocious locusts.

In his statement, Obienyem alleged that the bacchanals and lavish reveling abhorred by Obi during his tenure at the government house have returned in full force; the current governor charters private jets to take him around (and this costs a fortune) and engages in several wasteful spending that can make the hearts of Ndi Anambra who are used to Obi’s meticulous and scrupulous use of funds to bleed?  Now if all these avoidable expenses succeed in depleting the billions left behind by Obi, is the sudden proclamation that the funds never existed the most responsible response?

Before long, Obiano would go to the polls to seek a second term as he has announced. The last time, it seemed almost a walkover for him because of the solid reputation of his predecessor with which he was marketed to the people. Today, he should realize that he is entirely on his own and facing a no mean challenge. Right now, some people are asking whether his party, APGA still exists; what is Obiano doing to refurbish and refocus the party or is he planning to run on a different platform? Also, given the nature of the elections already conducted under the ruling APC, he should know that he would be facing a very unusual opponent. Even if the APC finds it difficult to browbeat the Anambra people to give them their votes (due to President Buhari‘s undisguised unfriendly disposition towards the South East), the PDP will not be any easy opponent to confront. I think that this should constitute more worry to Mr. Obiano than hauling weak and often contradictory allegations at a man who is no longer constitutionally allowed to run for the office of governor and whom he has not been able to accuse of any form of financial mismanagement.





Banks And Their Siege On Delinquent Creditors

By Magnus Onyibe

Nestled around the serene atmosphere of the waterfront on Awolowo road, Ikoyi, Lagos, is Protea Hotel, Westwood, where an array of credit administrators were huddled together discussing the imminent publication of the names of those that banks have classified as chronic creditors in the mass media.

If the new threat by the banks is carried out, it will be the second time this year that banks are purportedly getting the mandate of the Central Bank of Nigeria, CBN to publish the names of recalcitrant debtors, which the apex bank is believed to have approved for publication every quarter with a view to embarrassing the debtors and consequently compelling them to settle their debts.

I have no idea if the first publication in March this year, yielded bountifully through recovery of the debts, but I’m aware that the action triggered a litany of court litigations against the banks by most of the alleged debtors who headed to the courts to tie the hands of the banks so that they or their agents can’t lift a finger against them.

As a fall out, some banks have also taken pages of newspapers to apologize to the clients that they falsely accused of being financially indebted, for fear of court actions against them for defamation of character and loss of business.

If the first action of publishing debtors names in the mass media did not yield desirable results of significant debts recovery , as some skeptics have argued, how come the banks are about to repeat the same measure?

It may well be that it is because the contrarians were wrong and banks actually recovered a considerable chunk of the debt that has motivated them to want to name and shame those that are yet to pay via media publication of their names again.

Whatever the case may be, neither the CBN nor the bankers have availed the public of the result of the last action, so a fair assessment of the efficacy or other wise of the unorthodox debt recovery strategy by banks can’t be made by creditors or ordinary members of the public.

Bankers are understandably anxious to shore up their positions which have become precarious as the report of the first nine (9) months results of top five(5) banks in Nigeria revealed that they have combined impairment in excess of N80 billion naira.

That figure is alarmingly hovering around 140% over and above last year’s third (3rd) quarter report and worse of all; the credit stock has entered the neighborhood of the 5% bad debt limit stipulated by the CBN.

The CEO/Registrar of Institute of Credit Administration, ICA, Chris Onalo has been, sort of, holding brief for the practitioners and beneficiaries of bank credits and by extension entrepreneurs. In the view of the ICA scribe, the publication of the creditors list is an over reaction and expression of sympathy by the CBN to the bankers (against credit takers) which is capable of doing great damage to the economy.

Another stake holder in credit administration, Edwin Udegwu who is opposed to the apparent over reaching of banks and breach of bank-customer confidentiality, is of the opinion that credit institutions must find ways to resolve credit issues amicably and legally without sending wrong signals to international investors through publication of delinquent debtors list in the mass media.

From my investigations, there are five groups who are largely responsible for the current bank/creditor imbroglio.

These are: (1) the banks/bankers, (2) the civil/public servants,(3)the mass media, (4)the judiciary/police and (5)the creditors.

The solution to the challenge could also be provided by the prompt action of (1) the executive and (2) legislative arms of govt.

Permit me to quickly justify the assertions above and please note that due to lack of space would like to be fleeting rather than detailed in my analysis of each of the contending factors.

Let’s start with the banks/bankers that are so desperate to rake in humongous profits that they compromise the fundamental rules of credit administration which is known as the five Cs by credit practitioners: Capital, Collateral, Character, Circumstance or Condition, and Capacity.

When all these factors are not strictly adhered to and vigorously implemented and monitored to ensure compliance with the agreed terms and conditions, credits are bound to go bad resulting in default in payment.

Lack of proper training of bankers which is prevalent these days is largely responsible for the breaching of the aforementioned credit principles as some bankers these days rise to the position of granting credits to customers without understanding the rudiments because they rose to prime positions probably due to their prowess in mobilizing cheap public sector funds for their banks in their billions and are thereafter rewarded with double promotions.

The unrealistic interest charges that could go as high as 25-30% is also a veritable reason why credits fail, as most entrepreneurs are unable to meet their debt obligations under such debilitating interest charges. As one businessman recently moaned, except one is into illicit business like drug or human trafficking, repaying loans at 30% after paying tax to government and taking care of other over head bills is unrealistic. Also questionable is how banks are utilizing the services of credit bureaus to mitigate the activities of serial creditors. Although relatively new, how come most of the banks have common creditors who should have been red flagged as having bad credit ratings by the credit bureaus?

Furthermore, even as creditors bear the pains of prohibitive interest payments to financial institutions, banks still make huge profits of hundreds of billions of naira annually prompting government and entrepreneurs to harbor the impression that they are basically working for the banks.

In this regard, bank owners have a critical role to play in reducing their profit expectations as that would help bring down the pressure on bankers to book credits without subjecting them to proper credit analysis.

The recent government TSA policy of channeling government funds to government bank-CBN is expected to awaken banks to their responsibility of the good old practice of banking whereby their top echelon would earn their pips by rising through the ranks and garnering the critical experience required for real banking as opposed to harvesting a deposit of N100 billion from government parastatals and automatically earning double promotion to the top.

As for the civil servants, it is the cloak of secrecy, as opposed to transparency that enables them hide vital facts from the public that has been hindering transparency in policy administration and by extension hampered best practice in credit administration and corporate governance in Nigeria.

For instance, as at the last time l checked, banks are believed to have returned about N1.4 trillion to CBN vaults via enforcement of the Treasury Same Account, TSA policy and l gleaned that information from the public domain. Similarly, an average Nigerian has a fairly good knowledge of those who have registered and the ramifications for not registering for the Bank Verification Number, BVN, a policy being driven by Nigerian Interbank Settlement System, NIBSS,which is also aimed at curtailing booking of multiple credits by serial debtors. So why is the sum of money recovered from so called chronic debtors after publishing their names in the mass media not made public by the CBN or Nigeria Deposit Insurance Corporation, NDIC ?

On the part of the mass media ,despite the passage of Freedom Of Information, FOI, bill that is supposed to bring out the skeletons from the cupboards of civil and public servants, a lot of policies, programs and nefarious activities of public officials are still shrouded.

As the saying goes “if the mountain can not come to Mohamed, Mohamed will go to the mountain”

So apart from ministries and other agencies of govt that have been canceling Information,the media is equally culpable for not leveraging on the bill to ferret out such hidden facts through investigative journalism to the delight of Nigerians.

Only last week , while l was traveling through the UK on my way to canada, l read in the Daily Mail, the salacious details of how, National Health Service,NHS executives were living large on public funds while denying the average Britons of medical care.

You can imagine what the ramifications would be for the individuals mentioned in the report. Similarly,leveraging on their version of FOI law,British Members of Parliament,MPs were also recently ‘bursted’ by journalists on housing allowances and sundry other unsavory misdeeds to their constituents, resulting in dire consequences.

The role of the media in policy formulation and administration in Nigeria can not be over emphasized because of the feed back mechanism embedded in the media and which is why it is critically important to focus the minds of readers on the fundamental facts that lack of Information with respect to how policies are formulated in the banking industry is also one of the factors militating against effective and efficient credit administration.

For instance,in this digital age of online mobilization of support for or against policy measures by govt or organizations,how come not much is being discussed about banks and their unorthodox war against creditors in the social media?

The reason is simple: paucity of Information about the positive or negative effect of the action.Had the CBN or the Bankers Committee availed the public of the outcome of the last exercise of publishing creditors names ,bloggers would have been compelled to mobilize the public in their support and this would have promoted positive legislation towards institutionalization of the apparently unorthodox method of debt recovery that has been adopted by banks in Nigeria .

Next is the judiciary which has become a recurring decimal responsible for Nigeria’s socioeconomic and political malady. Like the tortoise which features in every dark and sinister African folklore,there are situations whereby cases between bankers and creditors,remain in court up to seven(7) years.

Courts are also known to have granted injunctions shielding bad debtors from being arrested or detained.Most banks also resort to using the police through the courts or via self help to seize homes, factories and other assets, as the case may be.

In the instances listed above, malleable judges and police chieftains are alleged to be active collaborators with the creditors or the banks perpetuating judicial perfidy.

Regarding the creditors, some of them borrow without the intention of paying back the loans owing to the loopholes existent in the credit administration policies or lack of any articulated policy in Nigeria.

Some of them borrow with the intention of not paying back but banking on plans to resort to the jungle Justice of survival of the fittest by using pliable policemen or court judges to fend off the creditor banks.

Why can’t Nigeria opt for the Dubai experience?

l cite the Dubai example because, most of the mum and dad investors (pension funds which are stable portfolio investments as opposed to hedge funds ) of the Western world of Europe and North America are domiciled in the UAE because the judicial and credit systems over there, work.

In Dubai,UAE,if anybody issues a dud cheque, the person is arrested, detained and made to settle the debt before he or she can be released from detention.

I’m aware of a Briton who was in detention over ‘bounced’ cheque for over one year without being released until the debt was recouped. Similarly, bank credit in Dubai is obtained under stringent conditions which is why bad debts are minimized and therefore seldom an issue in that economy.

In other words, fundamental human rights of the culprit in dud cheque scan or delinquent creditors are suspended until the debt obligation for which a cheque is issued, or a credit is obtained, is redeemed.

To elevate Nigeria’s credit administration to the level of Dubai, the establishment of commercial courts which would be solely dedicated to issues relating to banks and creditors, and as such offer speedy dispensation of Justice could be viable and therefore recommended.

This is the point at which the executive and legislative arms of government come into the equation with a view to resolving the conflicts in credit administration in Nigeria, once and for all.

Several attempts by past military administrations through the setting up of failed bank tribunals yielded little or temporary reprieve because soon after the exercise are concluded ,debts piled up again and banks failed again to the detriment of teeming Nigerian populace who are bank customers and more often than not suffer loss of their savings domiciled in banks.

A more innovative approach was adopted at the dawn of return of democracy in Nigeria when Assets Management Corporation of Nigeria,(AMCON) was introduced to buy bad debts, off Nigerian banks. Through that measure, bank customers were effectively shielded as AMCON facilitated government’s prevention of banks from failing. It’s pertinent to point out at this juncture that banks fail essentially due to inability to remedy credit gone bad.

So credit guaranty funds that would be applied as hedge against bad credit, appears to me, to be the next policy that government should contemplate introducing to stop credit from going awry.

If credit guarantee scheme is good for export business and it was therefore established to sustain the flow of export business, l see no reason, local credit should not be similarly guaranteed to forestall future banks failure.

As the saying goes, ‘prevention is better than cure’.

Since AMCON was brought into the financial system to cure the disease of bank failure, a specific credit guarantee mechanism should be instituted to prevent the disease of credit crystallization that lead to bank failure.

In the new dispensation, President Muhamadu Buhari has recently, graciously approved the sack of Justice Lambo Akanbi, indicted by the National Judicial Council, NJC for reportedly frustrating Shell Oil Company on a business transaction that went awry between the International Oil Company, IOC and a contractor of which justice Akanbi was the adjudicator.

The fact that NJC has resumed sanctioning judges and president Buhari, in line with his anti corruption posture, endorsed the sack without reservations is a welcome development that could usher in some sanity into the Judiciary whose reputation has descended into the abyss given the narrative of their alleged ignoble roles in recent governorship election tribunals in some states.

To introduce sanity into credit management in Nigeria, the federal government should through the ministry of justice, ramp up efforts at proposing a bill to the National Assembly, NASS that would facilitate the passage of Dubai type of credit administration.

Since time is of essence, there is no need trying to reinvent the wheel so knowledgeable people on the issue of banking and finance from the executive, legislative and judiciary arms of govt coupled with experts from the CBN, NDIC, Bankers Committee, Nigerian Institute of Bankers, NIB, as well as members of the organized private sector like Nigerian Chambers of Commerce and Industry , NCCI, should be empanelled to embark on a field visit to Dubai with a view to coming up with a credit regime based on the Dubai experience.

Extraordinary circumstances require extraordinarily innovative solutions and no approach would be more dynamic as the action of thinking out of the box which the proposed action entails.

As l pointed out to Chris Onalo, the administrator of ICA which recently conferred on me the privilege of a fellow of the Institute of Credit Administration,FICA, a collaborative effort between the ICA, CBN and Bankers Committee can make the proposal contained in this article become a reality very fast.

So instead of further equivocation or quibbling by or between the ICA , CBN and Bankers Committee-that is threatening to publish creditors lists again, the trio should join forces to lobby the presidency to prepare the bill and the NASS to pass it, pronto into law, when the bill is presented.

It would not be difficult convincing legislators and top government officials in the presidency to embrace the initiative because some of them have also been victims of bankers’ publication of debtors list which some of them view as malicious.

That in my view is the quickest and safest way to avert a return to the dreaded distress bank syndrome in Nigeria.

Onyibe, a former commissioner in Delta State government, development strategist, futurologist and an alumnus of Fletcher School of Law and Diplomacy wrote in from Canada.