Igbrude Moses is the General Secretary of the Independent Shareholders Association of Nigeria (ISAN). In this interview, he spoke on the plan by the Central Bank of Nigeria, CBN, to sanction banks’ directors whose banks default in filing their financial reports.
By Nkiruka Nnorom
WHAT is your opinion on the plan by the Central Bank of Nigeria, CBN, to sanction bank directors whose banks are defaulting in report filing?
It is good for managers of companies to give account to their shareholders in respect of what they did within a particular reporting period. The regulators are there to ensure that managers of companies obey such rules as stated by law.
The rules are meant to strengthen the institutions, to make them function effectively and ensure that managers of such companies are cautious that there are people watching them. To me, it is a good development. Besides this, when a particular company or firm is consistently not reporting or not meeting up to the directive, there must be something wrong.
Now, the regulator is not just there to push out laws; the essence of it is to strengthen the institutions for the good of all the stakeholders (bankers, workers and shareholders).
They should be able to engage the banks to find out what is making them not to comply. If there are issues they cannot resolve, they should assist them in order to solve the problem. If the measure also fails, such bank/company should be sanctioned.
A window should also be opened that if after three months a bank is not able to file its report, it should reach out to the regulator to explain the reason for the delay. Nigerian Stock Exchange, NSE, is now doing this where you see companies publish in National Dailies why they could not meet up with the deadline.
Those managers should key into that window; any manager that fails to key into the window should be sanctioned. But sanction is not the only way to make people comply to rules. There could be awards, compensations and persuasions. Focus should not always be on financial sanction as if it is a key revenue generation drive for the regulators.
Are there measures you think should be adopted by the banks to ensure compliance?
We always advise management of companies to employ key officers whose role should be to anticipate, monitor and ensure compliance with regulations. The Compliance Officers are supposed to be looking at all these things – what are the rules that have been issued. How are we going to comply with them, what are the things that could militate against our compliance?
Those officers should be employed, trained and equipped in order for them to do the job. After you have done that and you are still seeing sanctions and penalties, such officer should be sanctioned directly, not the bank, not the institution because when you take the money from the institution, you are punishing the shareholders and the other stakeholders.
Do you think it is right to sanction individual officers like you suggested since there could be other internal factors that could hinder smooth operation?
We have talked and engaged managements that paying penalty is a sign that you are not doing the right thing. Now, if you are not doing the right thing, you need to employ a specific compliance officer’; that is the job. If in the course of carrying out the job there are constraints, the officer in charge should report to a higher authority.
Where you have done that and passed it to a higher authority and the higher authority is the one delaying the job, then he or she should be punished. What we are saying is that they should comply with the regulation. That is why we are saying that when you employ Compliance Officers, you should train and equip them to do their job and when they do their job, we will not pay fine.