Davidson Iriekpen, 10.25.2010

 

It was a major victory for the Governor of the Central Bank of Nigeria (CBN), Mallam Sanusi Lamido Sanusi, yesterday when a Federal High Court in Lagosheld that he had statutory power to appoint and remove any bank chief executive or director.

 

Justice Mohammed Idris made this declaration while ruling on a case filed by some aggrieved shareholders of Union Bank Plc challenging the propriety of the appointment of executive directors into the board of the bank by Sanusi.

 

According to the judge, section 35 sub-section (2) (d) of Banks and Other Financial Institution Act (BOFIA) gives the CBN Governor the power to remove or appoint not withstanding anything in any written law or contained in the memorandum and article of association of the banks.

 

In the words of the judge, “in my view by virture of the combined effect of the provision of section 33 and 35 of BOFIA, the CBN Governor is empowered to order a special examination into the books and affairs of a bank. He can also intervene in the operation of a bank by removing and replacing the directors of a bank found to be in a grave situation; to hold otherwise is to impair the legislative intent underpinning the provisions, which is the ability of the CBN Governor to provide a failing bank with necessary managerial and operational support to facilitate the bank’s turn around.”

 

Justice Idris also noted that the two sections state that the CBN Governor could remove from office with effect from such date as might be set out in the order any director of a bank or appoint any person or persons or directors and provided in the order for the person or persons so appointed to be paid by the bank such remuneration as might be set out in the order.

 

He also said the law further stated that the governor could appoint any person to advise the CBN in relation to the proper conduct of its businesses and provided in the order for the person or persons so appointed to be paid by the bank such remuneration as might be set out in the order.The judge also said: “It is clear from the word OR used in the law and it is also a settled law that the word OR is a distinction word used to express alternative or to give a choice of one or many things.

 

“On the whole, I hold that this originating summons lacks merit and is hereby dismissed and N20,000 cost is awarded in the favour of the respondent.”

 

The shareholders who included Danson Izedonmwen, Edith Izedonmwen and Osato Edo-Osagie had dragged Union Bank and the bank’s Managing Director, Funke Osibodu (who was sued on behalf of herself and others appointed into the board of the bank by Sanusi) before the court seeking an order that the said appointment was fraudulent.

 

They urged the court in their final submission not to allow Sanusi to get away with the “harm he has done to the banking sector”, adding that the CBN boss had already set a dangerous precedent that must not be allowed to stand. The shareholders had wanted the court to restrain Union Bank from parading Osibodu and her colleagues as managing director and executive directors respectively.

 

They also wanted the court to nullify all the steps taken so far by Osibodu on behalf of Union Bank, most especially the Annual General Meeting of the bank held on December 15, last year.

 

The plaintiffs further asked the court to hold that the appointment of executive directors and non-executive directors into the board of the Bank was fraudulent, and that the position of the law was that those people (Osibodu and her colleagues) should be held for criminal offence.

 

The shareholders had also sought the declaration of the court that no report of the purported special examination into the books and affairs of the banks said to have been ordered by the CBN governor herein on June 22, 2009 was ever made available to the banks and/or their members and their response thereto made and/or entertained prior to the CBN and its governor purportedly proceeding to take action thereon all such actions and/or steps taken by the defendants  remain null void and of no effect whatsoever.

 

They also contended that the action of the CBN Governor constituted grievous violation of the banks and/or their members’ constitutionally protected rights to  fair hearing under section 36(1) of the constitution of the Federal Republic of Nigeria.Last year, the apex bank intervened in eight banks after its joint audit with the Nigeria Deposit Insurance Corporation (NDIC) discovered that they were in “grave financial conditions”.

 

This culminated in the sacking of banks CEOs along with their executive directors. Consequently, the CBN injected N620 billion in the form of tier two capital in these banks namely: Afribank Nigeria Plc, Oceanic International Bank Plc, FinBank Plc, Bank PHB Plc, Spring Bank Plc, Equitorial Trust Bank, Union Bank of Nigeria Plc and Intercontinental Bank Plc.While the former CEO of Oceanic Bank, Mrs Cecelia ibru, has been jailed, seven other CEOs are currently on trial in the court.

 

Source: Thisday