BUSINESS DAY
The ongoing trial of Godwin Emefiele, the suspended governor of the Central Bank of Nigeria (CBN), has brought to the fore a growing concern on how corporate governance gaps without checks and balances can make an “emperor” out of the country’s top banker.
Within a decade, Emefiele moved from being a powerful figure who could decide who got Nigeria’s scarce dollars or who benefitted from trillion-naira intervention schemes with a stroke of his pen to being suspended from his job and investigated for money laundering and terrorism financing.
The suspension of Emefiele, who was often called “emperor” by several bankers due to the way he ran the monetary affairs of the country, has raised concern about the governance gaps in the apex bank’s management and its regulatory functions.
“There are corporate governance gaps that allow the CBN governor to become increasingly powerful and unaccountable. For instance, there is no clear separation between the position of CBN governor and chairman of the board of directors,” Babajimi Ayorinde, a corporate lawyer and founding partner of The New Practice, said.
According to Section 6 Subsection 2 of the CBN Act 2007, the CBN’s board of directors, which is responsible for the policy and general administration of the bank, consists of the governor who is the chairman, four deputy governors, the permanent secretary ministry of finance, five directors, and the accountant general of the federation.
“It’s not ideal that the chairman of CBN’s board of directors is the same as the person who is the governor,” Ayorinde said. “The chairman of CBN’s board of directors should ideally be an independent non-executive director, not the CBN governor.”
In the United Kingdom, the Bank of England has a Court of Directors (equivalent to CBN’s board of directors) which acts as a unitary board, setting the bank’s strategy budget and taking key decisions on resourcing and appointments. One of the non-executive members is selected by the Chancellor to chair the court.
The United States runs a unique system that allows several reserve banks to collectively make up the Federal Reserve Bank.
BusinessDay’s findings showed the chairman of the board of Governors of the Federal Reserve Board is not the CEO or an employee of any of the reserve banks that make up the Federal Reserve Board.
In South Africa, the apex bank provides for a board of 15 directors chaired by non-executive directors. The governor and three deputy governors are the only executive directors of the bank.
“If the chairman of the board of directors of the CBN who is supposed to set the agenda and allocate time for discussions in board meetings is the same person who is governor, there is the possibility that he will only allow deliberations on things he wants discussed,” Ayorinde said.
He added, “Even in his absence, the law states that only the CBN governor can nominate any of the deputy governors to represent him. That’s too much for one person.”
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