Nearly ten years on:

Nigerian Banks Still Riddled by Fraud & Crisis

Central Bank of Nigeria building in Abuja

Nearly ten years ago the Central Bank of Nigeria conducted a deep assessment of the country’s banks. The 2009 exercise exposed large-scale fraud committed by a number of CEOs.

            To save the banking system from collapse, the Central Bank took over a number of institutions and spent billions saving others. In addition, criminal charges were laid against five CEOs for offences which included fraud, market manipulation, concealment and grant of credit facilities without adequate security.

            Only one case has been prosecuted successfully. The others appear to be stuck in an unending cycle of dismissals, appeals and re-trials.

            The bank saga and the failure to bring the bank executives to justice underscore the fact that the Nigerian justice system isn’t working.

            The bank saga and the failure to bring the bank executives to justice underscore the fact that the Nigerian justice system isn’t working. The problems – the subject of a great deal of discussion – range from judicial corruption to a lack of judicial independence to delays in the justice system. The cases of the bank executives provide a useful case study through which to examine the weaknesses of the Nigerian judicial system. These include the capability of prosecutors and the ability of the court system, including judges, to actually bring cases to fruition. This is particularly true in corporate cases which are often difficult to prosecute under the criminal law.

Judicial Corruption

            The fact that Nigeria has a number of corrupt judges is common knowledge in the country. Over the years, there have been various allegations of corruption in the judiciary. In 2013, two High Court judges were suspended and recommended for retirement by the National Judicial Council for misconduct bordering on corruption.

            Similarly, in 2016, a raid carried out by the Department of State Services revealed that cash worth USD$800,000 had been found in the homes of senior judges suspected of corruption.

            Judicial corruption reduces public confidence in the country’s justice system. This means that suspected incidents of directors’ misconducts are less likely to be reported given the prevailing belief that justice is unlikely to be served. Similarly, it can affect the attitude of investigators and prosecutors who might have less incentive to investigate and prosecute cases diligently.

            While it would clearly be an exaggeration to accuse all judges in Nigeria of corruption, it is reasonable to conclude that corruption remains a problem. But since none of the judges involved in the trial of the bank executives have been accused of corruption, it’s necessary to look to other causes for the failure to bring the bank executives to book.

Judicial delays

            One of the main problems in the bank executive cases has been endless delays in the judicial process. The trials’ time line tells the story.

            Criminal proceedings started in 2009. About six years later, in 2015, the Court of Appeal struck down the case against two of the executives on the basis of lack of jurisdiction of the trial court.

            A declaration of lack of jurisdiction means that the court lacks the power to try the particular case. In itself this isn’t a bad development. After all, compliance with relevant rules on jurisdiction is essential to ensuring justice is done. But the fact that it took six years for this decision to be reached highlights severe delays in Nigeria’s court system.

            Following the Court of Appeal’s decision, the High Court, in deference to the superior court, dismissed the pending case against the third bank executive.

            In another turn of events, a year later, in 2016, the Supreme Court overturned the Court of Appeal’s decision and ordered a re-trial of the bank executives. This meant that, nearly 10 years after the initial trial, a fresh trial was started, and with it room for further appeals.

            There is currently no end in view. While appeals and cross appeals are inevitable parts of litigation, the lengthy time spent on them is not.

            This delay has been attributed to several factors. Initially, the trials suffered from several unwarranted adjournments at the request of the defence lawyers.

            Another weak spot has been the prosecuting authority. The unit responsible for prosecuting these kinds of cases, The Economic and Financial Crimes Commission, has been severely criticised for its inefficiencies.

            To worsen the problem, the trial judges were changed several times. One judge was elevated to the Court of Appeal while a few others were transferred to different divisions of the court leading to a fresh trial each time.

            These issues significantly delayed trial proceedings.

Potential inequality

            Another question to consider is whether the failure to successfully prosecute the directors is a reflection of the difference in the treatment of high-profile offenders versus ordinary Nigerians.

            Cecilia Ibru, the only bank executive who was convicted, was sentenced to just six months in prison and required to forfeit shares and other assets worth over USD$1.2 billion. Compare this with the case of David Olugboyega, an armed thief, who was sentenced to death after being found guilty of a £50 robbery. Granted that armed robbery carries the death penalty,however, it seems that carting away millions of money should attract a stiffer penalty.

            In addition, rich offenders can afford well skilled lawyers who can devise different strategies to delay, or prevent, successful prosecution. Poor offenders don’t have this benefit.

            The recently introduced Administration of Criminal Justice Act of 2015, which aims to promote speedy dispensation of justice, promises to improve the situation. Time will tell.