PEOPLE AND POLITICS BY MOHAMMED HARUNA

Bank of the North: The Ethnic Card and Envy as Red Herrings

kudugana@yahoo.com

In the last several weeks, Bank of the North, the only surviving of the old regional banks – the other two being National Bank of Nigeria (NBN) of the old West and the African Continental Bank (ACB) of the old East – has been in the limelight for the worst reason a bank would like to be in the limelight – imminent bankruptcy. This is not the first time the bank will be in serious trouble. On at least three previous occasions, it has been in somewhat similar crisis, but on each of those occasions it managed to bounce bank to good health.

The question on many peoples lips is will it once again overcome its crisis or would it finally succumb to its recurring ill-health, and go the way of its old regional peers that collapsed nearly twelve years ago?

The last time BON suffered apparent ill-health was over 11 years ago. At that time, Citizen newmagazine was still in circulation and I anchored a cover story on its apparent ill-health in the edition of February 3, 1992. The headline was “Is Bank of the North Collapsing?” The accompanying editorial on the story was similarly headlined “BON on the brink?”

Our investigations at the bank, the Central Bank of Nigeria (CBN) and National Deposit Insurance Corporation (NDIC), the twin watchdogs of the banking industry, showed that the bank was indeed in a spot of bother. According to a CBN report on the bank, its management was too top heavy, its board’s size too unwieldy, and its assets too idle for a bank of its size, all this among other defects. At the same time, however, the problem, according to some banking experts, did not seem to justify the joint CBN/NDIC inspection of its books in January 1992 which invariably led to alarming speculations about the banks health. Joint CBN/NDIC inspection of a bank, according to industry experts, is a definitive signal that a bank is on the danger list and is more likely to die than recover. The collapse of NBN in 1992 and the slow death of ACB about the same time were all  prefaced  by a joint CBN/NDIC inspections a few months before.

In 1992, the BON management had good cause to suspect that the joint CBN/NDIC inspection was motivated more by politics than by business. The BON management believed that certain people at the helm of affairs in the two institutions were envious of BON’s status as the only regional bank to have survived the break-up of the old regional structure and were therefore looking for the slightest excuse to kill BON.

Among the bank’s management’s reasons for suspecting the motives of CBN and NDIC were (1) the fact that BON never asked for nor received any bail-out money from CBN/NDIC as was the case with NBN and ACB, and (2) more importantly, BON’s account with CBN was in a very healthy credit.

Even then third party experts Citizen spoke with on the issue said although the CBN/NDIC alarm bell may indeed have been more politics than business, BON had no reason whatsoever to be smug about its performance. For a bank it age – it was incorporated in September 1959 and commenced business in January 1960 – said such experts, it ought to have been much bigger and certainly much more efficient and profitable than it was.

Whatever the motives of CBN/NDIC in jointly inspecting the books of BON early 1992, the bank survived and eventually bounced back to good health.

It remained in good health until two years ago when its management appeared to have slipped back into its old habit of recurring complacency – this time probably worse. In the last eight of the nearly twelve years since the 1992 joint CBN/NDIC inspection of the bank, Alhaji Muhammed Bulama, one of the longest serving senior staff of the bank was its managing director. In his first six years as MD, Bulama took the bank to great heights. Three years ago, for example, he broke the one billion Naira profit threshold for the bank. It declined the following year, but it still remained a healthy 700,000,000 Naira or so. During his tenure he also increased the assets of the bank from about 10 billion in 1995 to over 100 billion today.

For some inexplicable reason, however, it appears Bulama, ith last two years of his tenure, embarked upon destroying this excellent record. . His case is now before the courts and one may therefore comment on the merit or otherwise of his prosecution at the risk of contempt of the courts.

Such risks, however, do not seem to have deterred his many supporters who appear to have embarked on a campaign of vilifying each and every one they imagine is their hero’s  traducer. Their main targets, in this respect, appear to be the CBN itself at the institutional level and Dr. Shamsuddeen Usman, one of its deputy governors, at a personal level.

As was similarly the case twelve years ago, Bulama’s supporters have been saying that the CBN, whose management is dominated by Southerners, Yoruba in particular, had never given up its alleged objective of killing BON. However, sensing that this time the ethnic argument was not anywhere as credible as it was twelve years ago, Bulama’s supporters have apparently decided, first, to change the ethnic argument from one of South versus North to one of the rest of Nigeria versus the people of Borno, and second, to add sheer envy of Bulama’s success to their arsenal of counter-offence against Bulama’s alleged traducers.

Several articles have been written and many interviews given along these lines, but perhaps the most noteworthy is an advert by Borno Forum published in the Weekly Trust of September 20^th and signed by Dr. Shettima Mustafa (OFR), as its General Secretary. Anyone who knows Dr. Mustafa knows that this one time Federal Minister of Agriculture, among other things, is a man of high integrity and has never been given to frivolities. Yet the advert under his signature has gone on to great extent to reduce the crisis of BON to one to ethnic cleansing and envy. “On occasions like this”, said the advert, among other things, “one would be forced to begin to think that Bulama’s tragedy could be part of a grand design to see to the obliteration of indigenes of Borno in the scheme of things in the country.”

It is most disturbing to see someone of Dr. Shettima Mustafa’s credibility lend himself to a campaign which is based on the shakiest foundation to say the least. Take, first of all, the ethnic argument about Bulama’s downfall. That this argument will not wash is clear from the fact that unlike 12 years ago when BON’s account with CBN was in the black, by February 2001, the same account had been overdrawn by about eight billion Naira. By the time of Bulama’s sack from the bank two years later, the account stood at 30 billion. This position is simply indefensible.

Equally indefensible, was the total loan exposure of the bank, which stood at 50 billionNaira by the time Bulama had to leave. Out of this, the northern state governments, as owners and the most creditworthy debtors of the bank, owned  no  more than 10 billion. Meaning the rest was lent to individuals, many of them of dubious credit worthiness. The least one can say about all this is that Bulama, as the bank’s boss, cannot escape vicarious responsibility for such an appalling record.

Clearly, even if it is true that CBN had an agenda to kill BON, Bulama cannot escape blame for handing the apex bank a deadly weapon for doing so. The truth, however, is that the CBN, at least this time, actually bent over backwards to try to save BON from tipping over the brink to which Bulama had apparently taken it in his last two years as managing director. For by February 2001, when the bank’s account with CBN was over-drawn to the tune of 8 billion Naira, instead of suspending the bank from its clearing house, the CBN indulged it by taking the unprecedented step of organising a joint CBN/NDIC retreat for the bank’s senior staff in Kaduna to examine its crisis and find solutions to the crisis. Up to that time Bulama was alleged to have embarked on a reckless lending spree including to him self when his personal account was alleged to have been overdrawn by about 140,000,000 Naira!

At the end of the Kaduna retreat, CBN, NDIC and BON reportedly came up with a list of recommendations on how to stop and reverse the rot in the bank. For the next two years Bulama reportedly ignored all those recommendations.

For all its effort to stop BON from tipping over the brink, CBN has now become a villain of the piece in the eyes of Bulama’s supporters. More specifically, Dr. Shamsuddeen Usman, as the deputy governor who initiated the Kaduna retreat has been widely portrayed as the principal source of Bulama’s misfortune. One article in the New Nigerian of September 11 even alleged that Dr. Usman contrived Bulama’s misfortune because Bulama, by virtue of his outstanding record at BON, stood in Dr. Usman’s way of becoming the next governor of CBN! If Bulama’s misfortune had not been a very tragic turn of events for someone who had taken BON to great heights, this suggestion of Dr. Usman’s envy of Bulama would have been a laughable suggestion.

The truth of the matter, if Bulama’s supporters care to look for it, is that Bulama was principally the architect of his own misfortune. Here was someone who for six years worked hard and used his inside knowledge as one of the longest serving senior staff of the bank to raise it to unprecedented height. Suddenly in his last two years as the boss, he seemed to have allowed personal and political considerations to get the better of his professional judgement and apparently landed himself into serious trouble as a result.

Bulama’s supporters may question the manner of his prosecution. They may even question his apparent discriminatory treatment compared to the bosses of other banks in situations similar to BON’s. Such questions, however, are not reasons not to hold Bulama responsible for his deeds. Instead, they are reasons for holding others who may have committed similar offences equally responsible for their own mistakes. In any case, the logic that unless you punish all, then you must punish none can only leave society the worse for it.

Whatever the rights and wrongs of the prosecution of Bulama for his alleged infractions, the resort by his supporters to the ethnic card and to arguments of envy is merely pursuing red herrings. The important thing is that BON is in dire straight and it should be rescued. By dissolving BON’s board which seemed to have had no control over the bank’s management and by also taking it over, at least temporarily, from its owners, i.e. the northern states, who merely watched as the bank’s management wiped out their equity, CBN seems to have taken the correct first steps in pulling the bank back from the brink. The next step, according to banking experts, is to give it a hefty waiver on its account with CBN – say 40% - and restructure the rest as loans payable over at least 10 years, something which the apex bank had done for other banks before. The putative owners of BON should then use that period to privatize it in order to save it from its recurring relapse into a ill-health. This is the way out for BON.

Dwelling on Bulama’s sad fate while glossing over or even ignoring his alleged role in BON’s current financial crisis, is hardly the best way to rescue it.