By Babajide Komolafe & Michael Eboh
Perpetrators of infractions in the financial system should be made to face heavy sanctions, if the goals of the reforms in the sector by the Central Bank of Nigeria (CBN) is to be achieved, an economic expert, Dr. Biodun Adedipe has said.

Speaking at the Central Bank of Nigeria’s (CBN) seminar for finance correspondents in Benin City, Edo state, Wednesday, advocated a proper structured, better organised, closely supervised and highly regulated banking sector. “I am an advocate of heavy sanctions for law breakers, and also that sanctions should be commensurate with infractions,” said Adedipe, who is the Managing Partner, Biodun Adedipe Consulting.

According to him, this will encourage and demand right behaviour from those entrusted with commonwealth and other people’s assets. “The Nigerian banking system,” he said, “needed the kind of
shock therapy that the ongoing reforms seem to be many people.” He explained that a robust financial system drives economic growth and connects the local economy with the global economic landscape, providing an opportunity for capital flows and current account transactions.

He blamed the crisis in the banking sector to the failure of banks to live up to their primary responsibilities, due to the greed associated with the actions of top officials of the banks.”The historical fact is that banks have failed primarily because of greed of the major actions; they are still failing and they will continue to fail.

“The failure phenomenon in banking episodic, because man is naturally greedy and and only comes to his senses temporarily whenever he get his fingers burnt.

“By half_year 2009, most of our banks had been weakened by the global financial crisis and we failed to admit that. A number of the banks became weak due to foggy strategy or their management simply lacked the capacity to implement the strategies they had designed.

“No doubt, all the banks had corporate governance issues and this is one sure factor that can compromise even the best of strategies. Greed was the major problem, along with the seeming ‘wide latitude to’ break the rules without sanction.

The special purpose vehicles (SPV) discovered in some of the troubled banks were legal quite alright, but the motive was against public good. Most of those SPVs were outright fraudulent.

“It is obvious that the ongoing reforms in Nigerian banking weighs in more on the side of too_big_to_fail than too_big_to_rescue. This means that the most sophisticated regulatory framework is also vulnerable, especially where operators and stakeholders pursue their own selfish interest. More of banks’ director should have financial background and be truly independent of the dominant shareholders or core investors.”