Lessons from Cecilia Ibru’s rise and humiliating fall
The court convicted Mrs Ibru for granting $20m and $16m credit facilities above the approved limit set by the bank. Photo/AFP
Who is Cecilia Ibru?
She looks like a favourite aunt in your extended family.
Her plump frame is topped by a round face with high cheekbones and a warm smile.
Images of her depict a stylish dresser, with her hair usually parted in the middle and tied back in a tight, neat ponytail.
Mrs Ibru was the CEO and MD at Nigeria’s Oceanic Bank International Plc.
She was a member of the Presidential Consultative Committee on SMEs and in recognition of her numerous contributions to the development of banking in Nigeria, the Federal Government of Nigeria had honoured her with the award of Member of the Federal Republic.
Mrs Ibru, at 63, was quite simply regarded as the First Lady of banking in Nigeria since she was the first female leader to raise her bank’s equity to N25bn, (approx $203m), the first female to head the 5th largest bank and the 9th largest company quoted on the Nigerian Stock Exchange, and in year 2000, the first female CEO to post over N1bn profit ($8m at today’s value) in a financial statement.
But as with all good things, her sterling career came to a less than illustrious end in August 2009, when the Nigerian Central Bank Governor Lamido Sanusi fired the CEOs of five of the country’s largest banks, including Mrs Ibru, for massive irregularities in corporate governance and lending.
On October 7, a Federal High Court in Lagos sentenced Mrs Ibru to 18 months imprisonment without an option of a fine for abuse of office and mismanagement of depositors’ funds.
The court convicted her for granting $20 million and $16million credit facilities above the approved limit set by the bank.
As with all public humiliations, the Nigerian blogosphere as well as the media have exploded with opinions about Mrs Ibru’s actions.
What is causing much excitement are the reparations that the court has asked her to make and the resultant revelations of just how much she had amassed during her time as CEO.
Mrs Ibru was also ordered to forfeit assets worth $1.5bn comprising of 94 prime properties across the world including the US, Dubai, and Nigeria to the Assets Management Corporation of Nigeria.
She was also ordered to forfeit shares in about 80 listed companies on the Nigerian Stock Exchange and 20 unlisted companies. Let me help you break it down.
Assets worth $1.5bn would be equivalent to approximately Sh124bn.
The Kenya government’s expenditure in this financial year is Sh998.8bn against total expected receipts of Sh831.6 bn arriving at a total budget deficit of Sh167.2bn.
Give or take a few loose Sh40 billion, Mrs Ibru’s assets can plug our deficit!
The Nigerian bloggers were not so subtle. According to one blogger, Mrs Ibru’s assets comprise more than half of the Nigerian police force’s total budget for 2010 and more than Nigeria’s entire federal health budget.
Ours is not to pontificate or point fingers, but merely to muse.
I daresay that the fine lady may probably have applied the same amount of shrewdness to undertaking personal business that she applied in her management of the bank.
Charade
After all, the bank did become one of the top 10 Nigerian banks under her able leadership, right?
But if it was all smoke and mirrors then how could such a charade have gone on for such a long time?
Where was the regulator?
(And hence Governor Lamido’s unprecedented step of pulling the rug from under the feet of five banks met with nothing but international acclaim for being the first regulator to stick a firm neck out under the guillotine of Nigerian politico-economic interference).
Most importantly, where was the Oceanic Bank board when all the large loans were being dished out?
Any bank worth its corporate governance salt must have a Board Credit Committee which reviews loans that require approval above a certain limit.
Even if it can be said that Mrs Ibru bypassed the committee, at some point the average board committee member would have been able to pick out that the loan portfolio was significantly increasing in value and not necessarily in volume, which would obviously raise the red flag that there were some big loans being given out that were not necessarily coming before the committee’s attention for approval.
A $20m loan is not an everyday kiosk refurbishing loan and these are the kinds of loans that Mrs Ibru was charged with breach of controls for.
There may be a connection between the loans that Mrs Ibru was approving outside of her limit and the global asset acquisition she has become famous for hence the requirement for those assets to be seized.
But it should not only be the fair lady who should be hauled into court.
The board members of the Oceanic Bank have a duty of care to shareholders, depositors and to the regulator of the bank.
By the time the CEO of an organisation accumulates wealth equivalent to a percentage of the country’s national budget, it stands to reason that the board members were either totally asleep or totally collaborative. There simply can be no middle ground.
It makes one start to wonder whether we take a good, long and hard look at who sits on the boards of the banks in which we place our hard earned money.
Is that man or woman whose stilted smile and starched white shirt match the austere look of the annual report the best placed person to keep the CEO and management in check?
Or have you at the very least bothered to find out the educational and experience credentials of the directors who purport to have your best interests at heart?
Join the queue of thousands of blissfully ignorant others like you.
