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BusinessDay 16 Apr 2018


Monday 16 April 2018 10 BUSINESS DAY C002D5556 COMMENT comment is free Send 800word comments to Severe head injuries (trust, deception and good neighbours) BASHORUN J.K RANDLE Randle is Chairman/Chief ExecutiveJK Randle Professional Services Chartered Accountants While we may differ over the coup d’état of 15th January 1966 and the counter coup of 29thJuly, 1966, forensic auditors have submitted their cryptic report: “The Nation Was Left With Severe Head Injuries” That is what prompted Bill Gates, the second richest man in the world who was at the Special Session of the National Economic Council held at the Presidential Villa on Thursday March 22, 2018, to declare as follows: “Nigeria is one of the most dangerous places in the world to give birth, with the fourth worst maternal mortality rate in the world, ahead of only Sierra Leone, Central African Republic, and Chad. One in three Nigerian children is chronically malnourished.” “The Nigerian government’s Economic Recovery and Growth Plan identifies “investing in our people” as one of three “strategic objectives.” But the “execution priorities” don’t fully reflect people’s needs, prioritizing physical capital over human capital.” Here you can see Nigeria’s per capita GDP growth from 2000 until today. If current education and health trends continue—if you spend the same amount in these areas and get the same results—per capita GDP flatlines, with economic growth just barely keeping up with population growth. In 1978, Dr. OlikoyeRansome- Kuti, who later became the Nigerian minister of health, helped establish primary health care as the global standard.Tragically, 40 years after Dr. Ransome-Kuti helped other countries set a course for the future, the Nigerian primary health care system is broken. The evidence for this can be found in the epidemic of chronic malnutrition, or stunting.” We also have the following front page report from “The Nigerian Tribune” newspaper of 26th March, 2018: Headline: “How CBN moved over N100 billion to Jonathan’s residence ahead of 2015 poll” – Presidency Sources This is nothing but desperation – Jonathan’s aide “Few days after Vice-President Yemi Osinbajo alleged that billions of naira were withdrawn by former President Goodluck Jonathan-led government and shared a few days before the 2015 elections, more details are emerging, showing how several tranches of funds were illegally removed. According to a Presidency source, some new but dramatic details of how some of the funds were illegally transported from the Central Bank of Nigeria (CBN) to the private residence of the former President Jonathan had now emerged. In that particular case, the former NSA [National Security Adviser] personally supervised the physical transfer of the money from the CBN vaults to the private residence of the former president. “In one particular instance, over N70 billion was released in parts from the national treasury between January 8 and February 25, 2015. The over $289 millionwhich was also referenced last week by the vice president is said to be included in this particular “Nigeria is one of the most dangerous places in the world to give birth, with the fourth worst maternal mortality rate in the world, ahead of only Sierra Leone, Central African Republic, and Chad. One in three Nigerian children is chronically malnourished.” series of illegal transactions,” the source stated. The Presidency source also said minutes of the CBN board meeting of August 25, 2014 indicated the board’s approval of another N60 billion requested by the former president and released later by the apex bank. A Presidency source said the sum, which was okayed by the CBN board, was not tied to any project or procurement and was meant and disbursed purely for campaign purposes, through the office of the then NSA and the State Security Services (SSS) leadership at the time. Specifically that N6o billion that was okayed by the CBN on August 25, 2014was said to have been shared between the two security agencies thus: N40 billionwent to the NSA while N20billion was released to the SSS,” it added. While some of these newly emerging fund disbursements have been traced to the former NSA, there were indications that some of the funds were unconnected to the ongoing defence contract trials of the former NSA. The $289 million mentioned by the vice president last week at the seventh Presidential Quarterly Business Forum for private sector stakeholders was released on February 25, 2015. “Documents, including cash vouchers, indicate that $289,202,382 was released in cash to the NIA by the Central Bank of Nigeria from the Joint Venture (JV) Cash Call Account No. 000-0000- 11658-366 of the NNPC/NAPIMS with JP Morgan Chase Bank, New York, USA. At the exchange rate then of N199 to a dollar, $289 million is equivalent to about N60 billion. But had the money not been stolen, it would be at today’s rate over N104 billion,” it added. According to the Presidency source, another set of illegal fund was withdrawn under one week between January 8 and 16, 2015. It said the sum of N1.5 billion was released in three tranches of N300 million, N400 million and N800 million. “This money was released from the MEA Research Library Account to the Join-trust Dimension,” an official source with knowledge of the transaction disclosed. The source further said the sum was transferred to their various political associates, which included a former minister. Further findings showed that N350 million was allegedly transferred to one of President Goodluck Jonathan’s ministers on February 2, 2015 and another N250 million was allegedly transferred to him on February 19, 2015. A document further showed that yet another N10 billion was released to the Office of the NSA by the CBN on September 15, 2015. The money was said to have been released in tranches of foreign exchange of $47 million, $5 million, 4 million euros and 1.6 million euros. A letter from the Office of the NSA in November 2014 further showed that the money was released by the CBN as ‘funds for special services’. Findings also showed that this particular CBN release of N10 billion was sourced in November 2014 from a N40 billion CBN released funds meant for Corporate Social Responsibility (CSR). It was this N10 billion that the source claimed former President Jonathan instructed the CBN governor and the then NSA to deliver to him personally in a private residence in Abuja. Sources said the money was illegally transferred using CBN van for the use of “PDP presidential primaries.” Responding to the allegations, special assistant on new media to Dr. Goodluck Jonathan, Reno Omokri, said “this is nothing but the desperate last throes of a government that came in through propaganda and is about to go out because of a lack of proper agenda.” In a statement on Sunday night, Omokori said the allegation was false, adding that the former administration was acknowledged globally for its anti-corruption drive. “President Jonathan’s administration has the enviable record of advancing Nigeria’s anti-corruption war and delivered results to the point where we made our best ever improvement in Transparency International’s CPI in 2014, when we moved eight places forward from 144 to 136,” he said. He said there was nobody involved in ensuring the emergence of President Muhammadu Buhari who had not secretly or openly regretted it, adding that “even his own wife, Aisha, is full of regrets and has not hidden it.” Send reactions to: BISI ADEYEMI Bisi Adeyemi is the Managing Director of DCSL Corporate Services Limited. For comments and reactions, kindly contact Executives inevitably see themselves as responsible for the success of their organizations - and perhaps blame the microeconomic environment and other factors when they fail. This sense of accomplishment oftentimes comes with a surreal feeling of invincibility and executives sometimes have a sense that with all the responsibility on their shoulders, Non-Executive Directors should not question their proposals as that would only distract them.Thus, they sometimes tend to take excessive risks which could put shareholders value at risk. Where these pay off, they feel justified to “extract” excessive Preventing ethical misconduct compensation. However, there is a thin line between excessive risk taking and unethical conduct. In the continuous effort to align shareholder value with those of Managers, the Board seeks ways of linking executive compensation to corporate performance. Performance bonuses based on profit and other metrics, share options and grants are incentives that seek to achieve this alignment. For the most part, these are effective. However, where the Board has not hired executives with high ethical values, these tend to engender bad behavior- performance at all cost. This is not to say that all that is required is seeking and hiring “honest, morally upright and good people”. Executives with a track record of “moral uprightness” have been known to “turn coat” or “succumb to temptation”. In the same vein, formulating a detailed written statement of ethics or specific documented policies do not necessarily prevent ethical misconduct. The 65-page Enron Corporate Code of Ethics was intended to help guide employees in “conducting the business affairs… in accordance with all applicable laws and in a moral and honest manner.” Things didn’t quite pan out as envisaged. What then should the Board do? Typically, the start point is for the Board to define the culture of the organization. This is a major responsibility of the Board which it cannot delegate to Management. Clearly, drilling down across the organization will be the responsibility of Management and monitored periodically by the Board. What values do we want to espouse? What kind pf people do we want to be? How do we want to do business? Once the Board has clarity on this, it needs to have this documented in the form of a Code of Ethics, which provides guidance on compliance expectations. As much as possible, the Code should provide examplesto guide employees and clarify expectations. A Whistle Blowing Policy and appropriatemechanism for implementation should also be put in place. The Board then needs to set the appropriate “tone at the top” by demonstrating a commitment to the ethical values it has defined. Designating a corporate ethics officer of sufficient seniority, reporting to the Board (this is critical) and an ethics management team to manage Corporate Ethical Culture is an indication of the Board’s commitment and sends a message that the Code of Ethics and related policies are not perfunctory. In addition,hiring and firing decisions must incorporate the organization’s values. The performance appraisal process must tie reward systems to indicators of integrity as well as to other measurements of productivity. Furthermore, it is important to consistently reward integrity and to make sure that these instances are publicized throughout the organization. It is also important that a transparent disciplinary process is in place to deal with violations.There should be no “sacred cows” and decisive action should be taken where violation is established – at whatever level. The Board should ensure that there is on-goingethicaltraining, not just for employees, but for third parties the organization deals with – vendors, suppliers, consultants, regulators, etc. As much as possible, practical sessions should beincorporated into the training programs to ensure clarity. Having set out the ground rules, the appropriate tone, there should be asystem in place to monitoremployee conduct to ensure there is alignment with expectations. A periodic review of the various decision-making systems and critical points where the organization may be vulnerable should be undertaken. The Board should ensure that the Whistle Blowing Mechanism continues to be effective and that whistle blowers are adequately protected. It is good practice to outsource the whistle blowing mechanism to ensure confidentiality and encourage employees to use it. To ensure that it is not perceived as a “feel good” or “nice to have”, it is imperative that decisive action is taken against ethical misconduct – no matter who the culprit is. Send reactions to:

Monday 16 April 2018 COMMENT C002D5556 BUSINESS DAY 11 comment is free Send 800word comments to Buhari’s insincerity on corruption portends future failure OLADIRAN OLA BELLO Dr. Bello, holds MPhil and PhD degrees from Cambridge University and is the Executive Director of Good Governance Africa (GGA). Analysts are likely to look back in a decade from now and adjudge President Buhari’s floundering anti-graft efforts as a case-study in how not to fight corruption. This is given all the challenges – many endemic, some recently self-inflicted – that Nigeria continues to grapple with. Issues that have hampered the ongoing attempts to tackle theft and wilful mismanagement of the country’s resources are legion. They range from operational lapses including institutional gaps, wrong tooling, a proclivity for media spectacle instead of serious investigative work, and a counter-productive tendency to disregard due process. This is not mentioning the political failings evident in the government’s lack of political will, balance, sincerity, and the naked politicisation that has created sacred cows to the detriment of Buhari’s very credibility. Whilst the above needlessly hobble government efforts to rein in corruption, the absence of an informed and engaged citizenry has also not helped. We must be more willing to transcend the ethnic and the other distractions better to maintain effective vigilance over our public functionaries. The immediate spur for this article is the N1.4tn, which according to the junior oil minister, is now being spent annually on oil subsidy outside the regular budget. Essentially, the difference between the N171 cost of importing petrol per litre and the regulated N145 pump price is being funded from the accounts of the Nigerian National Petroleum Company (NNPC) as “under recovery”. We have simply moved from a not very transparent subsidy system under the previous administration to an extremely opaque one in the current dispensation. The NNPC spends what is effectively billions of dollars on petrol subsidy, without any detailed account being rendered publicly or the underlying mechanisms transparently explained. Little wonder that the NNPC has quietly stepped away from its widely commended move in 2016 towards the monthly publication of its detailed financial position. With much of the earmarked subsidy disappearing into private pockets in years past, Nigeria now has even less of a chance at ensuring accountability with the present arrangement. The extant NNPC subsidy programme and the obfuscation over how it is financed away from legislative oversight is the biggest economic corruption scandal that Nigeria has seen in the past three years. And that is leaving aside the currency subsidy in the form of the N285 concessional rate at which the NNPC accesses dollars from the central bank for fuel importation. Faulty foundation Evidence of the logical and procedural flaws in Nigeria’s battle against graft are littered all around us and threatening to drown the nation. The Buhari government’s lack of consistent attention to strengthening procedural accountability remains all-too-central to the difficulty dogging fiscal administration and reform. Changing this will be vital to improve our perception in the Transparency International ranking. For a government that prides itself on its anticorruption stance, the “invisible” subsidy represents a regrettable step backwards in terms of embedding transparency in the workings of government. What is most pressing is not loot recovery or naming and shaming perpetrators. It is the reshaping of institutions and fine-tuning of processes throughout government to make it difficult to divert or intentionally mismanage public funds in the first place. Just this week, a call went out from the administration for the EFCC and ICPC to investigate violations of the Public Procurement Act of 2007. Many observers doubt the sincerity or even the political neutrality of this sudden show of interest in regularising procurement. It normally should be a routine, institutionalised process overseen by empowered bodies such as the Auditor-General’s office. The latter though remains of marginal relevance even as Nigerians agitate unsuccessfully for the public disclosure of the emolument package of national lawmakers. Neither the demand side petitions using Nigeria’s Freedom of Information Act of 2011 nor the supply side relying on the discretion of the Auditor- General’s office have led to this information being published. The Public Complaints Commission (the Ombudsman) remains moribund, which arguably suits errant functionaries. Meanwhile, the limitations of the Revenue Mobilisation and Fiscal Allocation Commission Board have been exposed with the March2018 revelation by Senator Shehu Sanni of the unappropriated “running expenses” of N13.5m paid to each Nigerian senator monthly and a slightly lesser sum given to those in the lower legislative house. This was just one in a series of revelations that should normally cause outrage among Nigerians. Citizens though have failed consistently to leverage the sort of opportunity for mass action for change that such occasions present. The bar for anti-corruption has been set so low in Nigeria that citizens Why didn’t the squabbling political actors save face by requesting the secondment of a suitably qualified anticorruption technocrat from the UK to replace Magu?... Nothing is more injurious to Nigeria’s bid to instil discipline, probity and accountability than a government which undermines the law in its ill-conceived and incompetent pursuit of justice willingly credit Buhari’s mediocre achievement on graft. The dominant incentive pattern determines the morality of a society. Alleged mismanagement of Nigeria’s treasury is left unpunished. From the outgone president, Goodluck Jonathan, to his predecessors, all remain immune. It is inconceivable that we could deter would-be offenders when current and past misdeeds are papered over. A bold anti-corruption leader would take risks in seeking exemplary prosecutions that touch errant public office holders from all of Nigeria’s geopolitical zones. That surely would give the lie to politicians who have always exploited our dysfunctionality and ethnic and religious fractiousness to allege that anti-corruption prosecutions are sectional or biased. Brazil’s former president Lula began a twelve year jail term this week after being convicted for corruption. Jacob Zuma, South Africa’s immediate past president, is being swiftly brought to justice. In Nigeria, meanwhile, those who pocketed multiples of Zuma’s corruption proceeds still walk free. Stuck in a rot The false foundations and procedural weaknesses in President Buhari’s anti-corruption war have been glaring from his first weeks in office. He started well by implementing the treasury single account initiative began by his predecessors. Buhari’s government then controversially introduced multiple windows for foreign exchange. This remains one of the biggest opportunities for unearned income and large-scale financial transfers ever seen in Nigeria. The damage is only being partly mitigated by the recently introduced and more transparent investors and exporters segment. In legislative terms, the idea of a special anticorruption court has been mooted but its lethargic consideration by our lawmakers contrasts sharply with their enthusiastic pursuit of the death sentence for kidnapping and hate speech crimes leading to the loss of victims’ lives. Evidence of the duplicity in Buhari’s anti-graft fight continues to mount. This includes cases such as that of Babachir Lawal, former scribe to the government, and his alleged diversion of N220 million intended for those displaced by Boko Haram in the northeast. Ambassador Ayo Oke, former head of the National Intelligence Agency, allegedly hid $43million of government’s fund in a Lagos apartment. The National Health Insurance Scheme’s boss, Professor Usman Yusuf, was reinstated despite being under investigation for fraud involving N919 million. Abdulrasheed Maina, who escaped being arrested for a N2.7 billion pension scam, was brazenly reinstated into the civil service with a promotion. Although directives have been given by President Buhari that all personalities involved in the cases should be investigated, the delayed action from the top came mostly after public pressure. For those seeking serious examples in prosecuting graft, the recent announcement of a partial and politicised list of so called treasury looters by Nigeria’s information minister is unlikely to inspire much confidence. By contrast, Ghana’s president set a good example in his surprising appointment of Martin Amidu, a respected and uncompromising anti-corruption crusader from the rank of the country’s opposition, to head his new anti-graft agency. With this appointment, Ghana’s president won the public over, sending out an unequivocal message about the genuineness of his effort. A few public figures once considered untouchable from both side of Ghana’s great political divide have since been hauled before the special courts for corruption. Ghana’s achievement here is not a one-off. The revelation in 2015 by a brave investigator, Anas Aremeyaw Anas, who secretly filmed justices receiving bribes, led to the jailing and the premature termination of the career of several judicial functionaries. Nigeria, by contrast, was lethargic in dealing with revelation of justices stashing away corruptly obtained funds, including in a bathroom in one of the cases. The best that Nigerians got was obfuscation and a rare guard action of the sort that has effectively left disciplinary procedures for errant justices in the hand of the National Judicial Council. The body itself is perceived by many to be far from neutral and it can, in any case, only dismiss judicial officers. Its power does not extend to meting out sentences for wrong doers. What incentive patterns are being created when incidents of corruption involving judges cannot be prosecuted in normal courts presided over by one of their own peers but hushed away within disciplinary procedures? Try a new tack Nigeria continues to sustain serious economic damage owing to the unwillingness of those in government to launch a no-holdsbarred anti-corruption war. After clashing over the EFCC head, Ibrahim Magu, Nigeria’s presi- dent and lawmakers began a long standoff which prevented the Central Bank’s monetary policy committee from meeting for months as lawmakers refused to conduct confirmation hearings for nominees to a slew of public offices. Why didn’t the squabbling political actors save face by requesting the secondment of a suitably qualified anti-corruption technocrat from the UK to replace Magu? The UK’s Serious Fraud Office has been almost exclusively in charge of all the high corruption cases successfully pursued against Nigerian functionaries in the past two decades. British prosecutors led the prosecution of Nigerian politicians from Alameseigha to Dariye, through Ibori to Deizani Alison- Madueke. The latter’s case is still ongoing in London. A top level international hire to lead the EFCC will likely inspire the younger generation of Nigerian prosecutors to high professionalism. Exposure to a different managerial culture at the helm may encourage them to properly prioritise water-tight investigations before indictments are unsealed. Defects in the EFCC’s operational culture reflects the background of its headsto date. From Nuhu Ribadu to Farida Waziri all the way to Ibrahim Lamorde and Ibrahim Magu, each has been a career police officer. Leading the EFCC effectively requires skillsets beyond the core policing functions. Serious damages have been incurred as government unwisely side-steps the rule of law. Examples include the continuing detention of Sambo Dasuki, former National Security Advisor, in disregard of court orders. Nothing is more injurious to Nigeria’s bid to instil discipline, probity and accountability than a government which undermines the law in its ill-conceived and incompetent pursuit of justice. A foreign EFCC head will operate in the full glare of the international community, likely enhancing their immunity from political pressure, manipulation or even blackmail. This is not to suggest that Nigeria lacks suitably qualified citizens who can do the job or that a foreign recruit will approximate a saint. Rather, it is a call for the closing of the circle, to welcome direct and constructive inputs from better-equipped partners that have given Nigeria copious anti-corruption support in recent years. UK prosecutors are especially well-positioned with the unrivalled wealth of financial intelligence they possess on corrupt Nigerian individuals. If Buhari dared, he might have found in a foreign anti-corruption czar an invaluable ally and wise counsel that could boost his ostensible bid to save Nigeria from corruption. That might also strike fear into a few incorrigibly corrupt figures in high places. Send reactions to:

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