Mishandling of CBN investigation report can create distrust, panic – Experts

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Financial experts and seasoned economists have sued for caution in the way and manner the Special investigation report on the Central Bank of Nigeria (CBN) is being handled to forestall the possibility of eroding public confidence in the institution.


The leaked report raises serious allegations against various officials within the CBN, including the former central governor, Godwin Emefiele who is currently facing charges of fraud from the Economic and Financial Crimes Commission (EFCC). The deputy governors of the central bank who served under him were also accused.

The report also alleged a maze of cobwebs woven around acquisition of the Union Bank of Nigeria, Keystone and Polaris Banks by former CBN governor, Godwin Emefiele.


Experts have suggested that the controversy surrounding these allegations could have a significant impact on both the CBN and the commercial banks, particularly concerning customer confidence and market perception.

They argued that the banks could face reputational challenges as the controversy continues to attract public and media attention.

Former Economist and Head, Investors Relation at the United Bank for Africa, Abiola Rasaq said the CBN is an important sensitive institution not just to the stability of the financial system but also to the overall economy. “It is on this premise that there is need for diligence and care in dealing with issues relating to such institutions of relevance.

He said: “Whilst most people, if not everyone, would acknowledge the need to correct some errors of the previous CBN leadership, including but notified to the need to understand the contravention and governance issues that undermined the independence and effectiveness of the institution over the past 9 years, it is perhaps more important to do so in a way that does not further destroys the integrity of the system.

“I think the investigation may have become sensational and it would be important to focus on substance over form, in ensuring that all facts relevant for effective policy making and corrective measures are taken.”

Professor Michael Obadan, member of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN) in his reaction said: “It’s unfortunate that the reports of the Special Investigator have been leaked to the media even before the President of the Federal Republic considers them.

“It is unprofessional and against public service practice, which normally relies on government White Paper on such reports to make government decisions known. I do not know what the objectives of the leakage are.

“But unhealthy media reactions and war have ensued. In normal economies, such actions, which constitute shocks, would jolt the financial sector, in particular, the capital markets. Stock prices tend to be affected.”

He however argued that the Nigerian economy is characterised by imperfect markets. Shocks do not have much impact on such markets. “And so, I will not be surprised if activities in the financial sector are insensitive to the Special Investigator’s report and the subsequent reactions.”

Professor of capital Market, Uche Uwalake submits that the financial system is highly fragile and information sensitive. This is why every effort must be made by the Special Investigator to be discrete in his assignment till the job is completed and the report submitted to the president.

Uwalake said: “The more the scandalous allegations become public knowledge at this stage, the higher the chances of contagion in the banking industry as depositors make panic withdrawals, which could trigger a run on the affected banks in question namely Union Bank, Titan Trust and Keystone.

“This must be borne in mind, especially now that the banks are having challenges mobilising deposits due to confidence-erosion in the system stemming from the failed currency redesign exercise, which in part is responsible for the present cash crunch situation.

“The CBN has responded promptly by assuring members of the public that their deposits in the banks are safe. However, going forward, it is important that the Special Investigator is made aware of the consequences of premature release of his reports to the press so he can put in place adequate measures to prevent unauthorised disclosures.”

Dr Uju Ogubunka, Former President, Bank Customers Association of Nigeria (BCAN) suggests that an independent/neutral third party, perhaps, needs to be chosen from among professionals -accountants and bankers – can be appointed to verify and authenticate the issues of concern and interest.

In a swift reaction to the speculations that have already enveloped the air, the Ag. Director, Corporate Communications, Mrs. Hakama Sidi-Ali in a release stated that Nigerian banks remain safe and sound, urging the public to continue their regular activities without being alarmed by reports that have not emanated from the CBN about the health status of Nigerian banks.

She noted that the CBN is fully equipped to carry out its statutory duty of upholding a stable financial system in Nigeria.

“We assure the general public and depositors about the safety of their funds in Nigerian financial institutions. Bank customers are therefore advised to proceed with their banking transactions as usual, as there is no cause for concern,” she added.

Daily Trust