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.”
“The CBN Act is weak in terms of making the CBN governor accountable for his actions despite the oversight functions of the National Assembly or the president,” Ogba said.
The central bank governor is expected to appear before the National Assembly from time to time to make formal presentations on the activities of the bank and the performance of the economy, according to Section 8 subsection 4 of the CBN Act.
“The activities of Section 8 subsection 4 rarely happened in the last administration and there was no stated punishment for the violation of such laws,” Ogba said.
“Even in terms of application, the law is very limited and vague; it needs to be more specific on the kind of activities of the bank that the CBN governor is expected to make reports on to curtail excessive tendencies,” he added.
To arrest the slump in the naira, Emefiele took several unorthodox steps.
He operated a multiple exchange rate system that sowed confusion among foreign investors, ordered the cutting of trees where black-market vendors worked in the capital, placed a ban on cryptocurrency trading – a burgeoning alternative initiative popular among young people hedging their money against rising inflation, and banned a website that reported the value of the dollar in the black market, among several other measures.
Although the CBN Act only allowed for a loan of five percent of the federal government’s previous year’s revenue, Emefiele’s CBN lent it N22.7 trillion under the Ways and Means Advances clause that can be activated only if the government has a temporary revenue deficiency.
“Emefiele took a lot of questionable decisions but there were not enough laws for checks and balances except his voluntary resignation or intervention of the presidency which looks like a very long stretch,” Luqman Agboola, head of research at Sofidam Capital, said.
Calls for Emefiele’s resignation mounted after he approached a Federal High Court seeking validation of his interest in the presidential ticket of any political party in the February 2023 elections.
According to a court filing signed May 5, 2022 and seen by BusinessDay, Emefiele said he was not a political appointee but a public servant and had brought the suit “to urgently challenge the attempt to disqualify and exclude him from participating in the parties’ presidential primaries” slated for that month. The high court dismissed the request.
“Meffy’s tenure as a CBN gov is worth studying in a business school so that students would know how not to run a central bank,” a former attorney-general and commissioner for justice said.
“I hope the investigations will unravel what truly transpired at CBN; I hope there are minutes of meetings to show what truly transpired between Emefiele, deputy governors, and the board of directors,” he added.
On Saturday, BusinessDay confirmed the Department of State Services (DSS) had released Kingsley Obiora, deputy governor of the CBN in charge of Economic Policy, after detaining him for four days in its custody.
Although neither the CBN nor the DSS confirmed Obiora’s fate at the time of filing this report, sources linked his initial arrest to the Jim Obaze-led special investigations panel which had “requested for several documents from many departments as part of its investigation to unravel what transpired in the CBN under Godwin Emefiele”.
Before Obiora’s alleged arrest and release, Abbas Masanawa, a former top official and managing director of Nigeria Incentive-Based Risk Sharing System for Agricultural Lending had been arrested for his alleged role in the ongoing corruption probe of Emefiele. (BusinessDay)
