October 11, 2010 / 1:56 PM / in 7 years

Nigeria banker's fall a symbolic step in graft war

* Forfeited assets include 94 homes

* Assets will help recapitalise bank

* Politician’s graft cases still languish in court

By Nick Tattersall

LAGOS, Oct 11 (Reuters) - When Nigeria’s central bank sacked eight of the country’s most senior bankers last year during an unprecedented $4 billion bailout, many doubted they would be prosecuted, let alone jailed.

Just over a year later, Cecilia Ibru, the former head of Oceanic Bank OCEANIC.LG, was sentenced on Friday to six months in prison for fraud and agreed in a plea bargain to hand over an eye-popping 190 billion naira ($1.2 billion) worth of assets.

The assets, made up of 94 properties in countries including the United States and Dubai and stakes in 100 mostly Nigerian-listed companies, will be enough to ensure Oceanic’s survival as a company, the central bank said.

They will be managed by a state asset management firm set up to help recapitalise the rescued lenders and would allow Oceanic to repay the 100 billion naira it received in emergency funds.

“The actions of the central bank in removing the managing directors of the eight affected banks had drawn criticism and allegations of regional, religious and even personal agendas,” central bank spokesman Mohammed Abdullahi said.

“This decision by a court of competent jurisdiction, and the magnitude of the recovery, has put a lie to all those claims.”

Ibru is from one of Nigeria’s leading business families, with interests from shipping and hotels to oil and media, and her fall sends a signal that even the most powerful -- in the private sector at least -- can no longer expect immunity.

“Cecilia Ibru was easily the doyenne of women bankers in Nigeria, if not in Africa ... The judgement by Justice Dan Abutu against (her) sent shock waves through the banking world,” former central bank deputy governor Obadiah Mailafia said in a column in the Next newspaper on Monday.

But while her sentencing may be seen as a victory for justice in a nation ranked one of the world’s most corrupt, it also highlights how inefficient the system is when it comes to prosecuting high-profile public sector offenders.


More than a dozen former state governors and ministers face graft charges brought by the Economic and Financial Crimes Commission (EFCC), Nigeria’s anti-corruption agency, but their cases have languished in the courts over the past three years.

“I am pleased that one of the executives of the banks had a conviction. This was the work of the central bank,” said the founding head of the EFCC, Nuhu Ribadu.

“But I want to see public officers, public servants, being held accountable and being forced to return money they had taken,” Ribadu, who plans to stand in presidential elections due next year, told Reuters.

Ribadu won international praise for pursuing cases against politicians including ex-state governors, but was fired in late 2007 and only returned to Nigeria four months ago after fleeing to Britain and the United States saying his life was in danger.

Last year’s bank bailout was triggered by lax governance, which allowed the rescued lenders to become so weakly capitalised that they posed a threat to the whole banking system in sub-Saharan Africa’s second-biggest economy.

The episode highlighted the extreme poverty gap in Africa’s most populous nation and helped quantify the extent to which corruption exacerbates the divide.

The 1.14 trillion naira ($7.6 billion) in bad loans run up by just the first five lenders to be bailed out was roughly equivalent to the combined annual income of Nigeria’s poorest 20 million people, each of whom live on around $1 a day.

Other bank executives may well follow Ibru’s path to prison, but until those outside the private sector also face justice her demise will serve as little more than a cautionary tale.

"Many benefited from her largesse. It is rather unfair that only bankers are being made the fall guys for a system in which knavery has spread itself like a cancerous wound," Mailafia wrote in the newspaper column. (For more Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com/ ) (Editing by Giles Elgood)

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