Last week, the Corporate Governance code of the Central Bank of Nigeria (CBN), which limits the tenure of banks ‘directors to 12 years  consumed another banking titan, Mr. Oba Otudeko, and three directors of First Bank Nigeria PLC.

After just one year as chairman of the bank and 12 years as a director, Otudeko retired from the bank in compliance with the CBN term limit. Otedeko has a 40 years banking career which started with Cooperative Bank PLC, Ibadan  in 1960.

The other directors affected are  Alhaji Abdullahi Mahmood, General Garba Duba (Rtd.), and Mr. Oye Hassan-Odukale. Their forceful retirement was announced by the   Group Managing Director (GMD), First Bank Plc, Mr. Bisi Onasanya , last week through an internal memo to employees of the bank.

Oba Otudeko

Consequently, the Board of Directors announced the appointment of Prince Ajibola Afonja as its new Chairman. And to replace the retiring directors, the bank appointed Ibrahim Dahiru Waziri; Tunde Hassan-Odukale (his family owns majority shares in Leadway Insurance); Khadijah Alao Straub; and Obafemi Adedamola Otudeko as Non-Executive Directors.

Section 5.3.10 of the  Code of Corporate Governance for banks issued  by the CBN in 2006 states that, “In order to ensure both continuity and injection of fresh ideas, non-executive directors should not remain on the board of a bank continuously for more than 3 terms of 4 years each, i.e. 12 years.” The Code also limited the tenure of banks’ chief executives to maximum of ten years.

In 2009, the CBN directed all banks’ chief executives  who have spent ten years should quit on or before July 31st 2010 in compliance with the code. Consequently, Mr. Tony Elumelu of UBA, Mr. Jim Ovia of Zenith Bank and Mr. Akinsola Akinfemiwa of Skye Bank in July retired as chief executives of their banks having all spend more than ten years in that capacity.

Otudeko was appointed as director of First Bank May 18th   1997 became Chairman November 2009, and hence has been on the board for 13 years, one year more than the 12 years limit.

Reacting to Otedeko’s sudden retirement, shareholder groups commended the enforcement of the code of corporate governance saying it is good development for the industry. They said this would help in checking excessiveness of banks’ directors.

Chairman, Advancement for the Rights of Nigerian Shareholders,  Dr. Faruk Umar, said, “ The CBN must be commended for coming up with tenure limit for directors of banks operating in the country. If not for this new corporate governance from the CBN who knows how long a director would be on the Board? The tenure limit is a good development in the industry as nobody can stay on the Board in perpetuity.

We also commend Alhaji Mutullab who retired before Otudeko. The cordial relationship on the  Board of the bank is a welcome development. The dividend and bonus policy of the Bank have been sustained over the period that both Mutallab and Otudeko had been in office. Their stakes in the Bank is not in doubt.

“We must commend Otudeko for his contribution towards the growth and development of the bank. Even when the bank had problem with Investors International (London ) Limited (IILL) over the granting of  $131.7million (about N15billion) for the acquisition of 51 per cent of Nigeria, First Bank went ahead to pay dividend to shareholders for the period in question.

You know that the Bank lost that money given to ILL because it did not meet the deadline for the full payment of NITEL to Bureau of Public Enterprise (BPE). In fact, ILL forfeited the $131.7million, being the 10 percent non refundable deposit, to the Bureau for Public Enterprise (BPE), after it failed to pay the whole sum, within the agreed time. So we thank God for the strong foundation the bank was built upon.

“It is just unfortunate that Otudeko is leaving the Bank in a short while as chairman of the Bank, but he has to succumb to laws  and rules of the game. No doubt his experience in the industry cannot be contested. He is leaving a legacy behind which other people coming on Board will follow.

We wish him well in his other engagement in the corporate world. The appointment of his successor, in person of Prince Ajibola Afonja is good for the shareholders. We shareholders have confidence in him as he will continue from where his predecessors stopped

In his own reaction, National Co-ordinator, Independent Shareholders Association of Nigeria (ISAN), Sir. Sunny Nwosu commended the corporate governance in place, adding that shareholders and other stakeholders would have been consulted to make input and approved it.

According to him, “ I am a bit worried with the corporate governance because the issue of family relationship must be addressed. When somebody is leaving and another family member replacing him or her is not yet clear. Where is the corporate governance then? So this must be clearly stated. People should be appointed on Board base on performance and competence and not on family or friendship consideration.

“Well for Otudeko, he is a well experienced banker and industrialist but his one year as chairman is not really enough to access his performance in the bank. All I can say now about his performance during his one year in office as chairman is that he did succeed  in forming Group structure for the organisation”.

Reacting as well, Chief Aderemi Oyepeju, Chairman, Ibadan Zonal Shareholders Association said, “Oba Otudeko has served the bank meritoriously. So the bank and the shareholders will be missing him. There is nothing we can do about it since the tenets of corporate governance must be followed. His tenure as chairman in the bank is short, though he has been in the bank as director.

I wish him well in his future endeavour. We as shareholders don’t want to miss him but he has to bow out following the corporate governance in place. We commend the CBN for the reforms being put in place. All these will help checkmate the various abuses of directors on the Board of companies”.

Career and Educational Background
Born on 18th August 1943, Oba Otudeko started his career as a banker at Cooperative Bank Plc., Ibadan in 1960. Professionally, he is a Fellow of the Chartered Institute of Bankers, UK; Fellow of the Institute of Chartered and Corporate Accountants, UK; Fellow of the Institute of Chartered Accountants, Nigeria and Fellow of the Institute of Chartered Secretaries and Administrators of Nigeria.

He formally disengaged from Cooperative Bank in 1983 to focus his attention on the family’s fledgling trading business. For over twenty years, he has been Chairman of the Honeywell Group, which he  nurtured into a conglomeration of highly successful businesses, comprising investments in energy, foods, infrastructure, real estate and services. An astute and highly visionary investor cum entrepreneur, his domestic and foreign interests cut across diverse economic sectors. In September 2006, he was elected the 16th President of the Nigerian Stock Exchange thereby assuming the responsibility of inspiring step change transformation of the Nigerian capital market.

Otudeko is presently the Chairman of the Board of FBN Bank (UK) Limited, First Trustees Nigeria Limited, Fan Milk of Nigeria Plc., and the Nigeria South Africa Chamber of Commerce. He was the founding Chairman of Econet Wireless Nigeria Limited and remains a Director of  the company now known as Airtel . He is also on the board of  Lagos Sheraton Hotel, Nigerian Netherlands Chamber of Commerce, and Khalil & Dibbo (Haulage) Limited.

A  public-spirited leader, he was formerly Chairman of the National Maritime Authority; Director, Central Bank of Nigeria; Member, Constituent Assembly responsible for drafting a new Constitution, 1988 to 1989, and Council Member, Manufacturers’ Association of Nigeria. Outside Nigeria, Otudeko  holds directorship positions in private companies operating in real estate, international trade and finance, including the West Africa Banking Group, Ecobank Transnational Inc., Togo.

Over the years, he has attended management courses at several prestigious institutions, amongst which are the Harvard Business School, the International Institute for Management Development in Lausanne Switzerland, and the Arthur D. Little School of Management.
Presently, he is the Chancellor, Olabisi Onabanjo University (formerly Ogun State University), Ago-Iwoye,  and a member of the Africa Regional Advisory Board of London Business School.