The Savannah Bank Imbroglio-A Critical Look

By

Dozie Ikem Ezeife, Esq.

ezeife@yahoo.com

Several months ago the Central Bank of Nigeria closed down Savannah Bank of Nigeria. There was no prior notice to the bank or its customers. There was no indication to the bank that it was under investigation by the Apex bank. Up to this moment the Central Bank and the Federal Ministry of Finance have not laid out the reason for closing the bank. The Central Bank from all indications did not follow the procedure for liquidating a “distressed bank”. Savannah Bank officials and board have since insisted that the bank was not in distress and Central Bank have been unable to refute this claim with proper documentation.

While I am not coming down on the side of one or the other of these opposing sides, I am distressed by the callous, irresponsible and prehistoric manner the Apex Bank handled and still handles this imbroglio. The activities of the Central Bank and the Obasanjo administration on the Savannah Bank matter has dealt a grave blow to the Nigerian banking system and have destroyed the trust of Nigerians on Banking as a concept. At a time that Nigeria is reeling from the epidemic bank collapse of the Abacha era, the Obasanjo government through the Central Bank should have exercised greater restraint in the way and manner Savannah Bank was closed.

Recall that the crash of several commercial banks during the Abacha regime sent shockwaves throughout the country. Numerous businesses and individuals lost huge sums of money to these failed banks. Consequently, Nigerians lost faith and confidence in the banking system. People withdrew what money they could and refused to put their money in banks preferring instead to keep their cache at home, resulting in huge paydays for armed bandits. As a matter of fact, Nigerians are increasingly refusing checks as a means of payment for goods and services, preferring payment in cash instead.

Because of the loss of confidence in the banking system especially the checking system, Nigerians have formed the dangerous habit of carrying obscene sums of cash on their person thus constitution easy pickings for armed bandits. Commercial dealings in Nigeria are almost exclusively cash based. Credit system is non-existent, payment by credit cards is severely limited and payment by cheque (check) is virtually unthinkable. Countless numbers of merchants and ordinary Nigerians have lost their lives and properties to armed robbers on Nigerian streets and in public transport vehicles on account of this unfortunate state of affairs. Traders ought to be able to go to any part of the country, buy or sell their wares and complete the transaction with cheque (check) or credit card rather than by cash. This would greatly reduce the loss of property and innocent lives to armed robbers.

One must single out for condemnation the ignoble part being played by the Nigerian courts in this Savannah imbroglio. It is a shame that our judiciary would continue to allow itself to be played like a yoyo by politicians. The courts are supposed to be the last line of defense for Nigerian’s defenseless citizens. As a lawyer, I am shamed by the irresponsibility of some of our judges in issuing orders and granting motions that are senseless and in most cases contradicts an existing order made by their brother judges. The inordinate delay in sorting out this Savannah mess by all the courts involved is perfidious and condemnable. The responsible judges ought to realize the grave sufferings innocent customers of the bank are subjected to. The least the courts could have done is to force the lawyers and parties in the various litigations to speed up the process. There are provisions in our law books for shortening of time and for prioritizing the hearing of matters such as the Savannah bank litigations.

This savannah mess is wrecking havoc on the Nigerian economic system. More people have become cynical of the banking system and are increasingly withdrawing their savings from banks and hiding same under their beds or under ground. The resulting effect is that the local banks do not have enough money to make loans to their customers. Unavailability of cash is also forcing the banks to charge ridiculous rates on commercial loans.

At a time that the apex bank is calling on local banks to increase their capital base, the shoddy manner in which the apex bank handled and is still handling the savannah bank closure will surely make it difficult for these banks to attract investment. Nobody will invest in a local bank if the Central Bank can close the bank one morning without any sensible reason and without adhering to the laid down procedure for liquidating a distressed bank. That scepter of unpredictability and insecurity will not augur well for banks seeking new investors.

The Savannah bank mess is also discouraging a lot of potential foreign investors who might be considering investing in our banking system. The foreign shareholders in Savannah are using every available opportunity to shout to the world that Nigeria is not a safe place to invest. Who can blame them? You cannot close a bank without resorting to clearly laid down procedure and expect people to have confidence in your ability to properly regulate that industry. Our President and the Central Bank ought to realize that the reason laws and regulations are clearly set down is to ensure fairness and uniformity in a process. If you deviate from that clear channel, the process will be derailed and the system will collapse. We run a system that is guided by a body of rules. The rules are not there to decorate the books. The rules are meant to be adhered to; otherwise, the system will be enveloped in chaos. It is the measure of the pettiness of our leadership that one can order the closure of a bank just to punish his perceived political adversaries.

I sincerely hope that the Gbenga Aluko senate committee reviewing the Savannah Bank affair will resolve this matter and thus save the thousands of innocent Nigerians whose life-savings are trapped in this regrettable political mess.

 

Dozie Ikem Ezeife, Esq.

Attorney-At-Law

Oakland, California