A group of stakeholders in the housing industry has petitioned the Minister of Lands, Housing and Urban Development, Mr. Nduese Essien, calling for a probe of the finances of the Federal Mortgage Bank of Nigeria (FMBN).
In the petition, the stakeholders also urged the minister to urgently reconstitute the board of the apex mortgage institution in the country. They claimed that the board of FMBN, as currently constituted, is a violation of the FMBN Act, the CBN Code of Corporate Governance, and international best practices.
To buttress their point, they noted that section 2 (1) of the FMBN Act (No. 18 of 1983), which provides for five non_executive directors and four executive directors including the MD/CEO, has not been complied with in the current composition of the board. The present FMBN board has only two non_executive directors and six executive directors.
Section 2(1) of the FMBN Act states that the Board of Directors shall comprise a Chairman, and a representative of the Federal Ministry of Works and Housing, two representatives of the CBN, one person to represent the general interest, the FMBN MD, and three executive directors of the bank.
However, according to the petitioners, the current Board of FMBN comprise the Chairman, the MD/CEO, 5 Executive Directors for Policy and Strategy, Securities Issuance and Market Development, Loan Set up and pay off, Loans Production, Organizational Resources, and one non-Executive Director.
This, they contend, is in violation of the CBNâ€™s code of corporate governance for Banks and Other Financial Institutions Paragraph 4:10 which states that â€œthe number of non_executive directors should exceed that of the executive directors.â€
The current FMBN board, they noted, has 8 members out of which 2 are non-executive directors while 6 are executive directors, which is at variance with the boards of FERMA and FHA that were constituted on the same day, and further noted that the current board does not have board committees.
â€œFHA has 16 board members in which 11 are non-executive while 5 are executives, and FERMA has 19 board members with 13 as non-executives and 6 as executives. Why then is the constitution of FMBN different?â€ the petitioners queried.
They contend that the lopsided nature of the FMBN board gives the executive management unlimited and excessive powers to run the institution arbitrarily without checks and balances.
Other allegations in the petition include: absence of board committees meant to separate policy formulation from policy implementation and thus ensure transparency; over-promotion of some staff members of the bank; failure to declare a profit since 1993; total reliance on contribution from the National Housing Fund for its operations; most loans for both estate development and primary mortgage are non-performing; and except for 2005, FMBNâ€™s accounts have never been audited and printed.