It was Lord Acton, a British historian of the 19th and 20th centuries who made the statement to the effect that ‘Power tends to corrupt; absolute power corrupts absolutely’. An observation that a person’s sense of morality lessens as his or her power increases.
Similarly, the concept of separation of powers was coined by Charles-Louis de Secondat, baron de La Brède et de Montesquieu, an 18th century French social and political philosopher.
Emphasizing on the need for seperation of functions among organs of government, he wrote that government is morally obligated to serve people, namely by protecting their natural rights of life, liberty, and property.
Such a separation, it has been argued, limits the possibility of arbitrary excesses by government or its agencies since the sanction of all three branches is required for the making, executing, and administering of laws.
The postulations of these philosophers decades ago are more apt with regards to what the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) are seeking under the current review of the Banks and Other Financial Institutions Act (BOFIA) of 2004 by the National Assembly.
The lawmakers have commenced the process of repealing/replacing BOFIA 2004 with the re-enactment of BOFIA 2020. However, a particular omission in the new bill is making CBN worried that it might render its fight against financial crimes ineffective.
But, in what some analysts see as re-enactment of the old and silent animosity between the two institutions, NDIC believes that as the undertaker of failed banks, it should have singular powers on some issues without recourse to CBN.
Specifically, NDIC, on the other hand is seeking for an independence of some sort so as to be able to carry out some functions without consulting its ‘big brother’ CBN.
But their submissions may have put the two agencies under scrutiny as some analysts see their action as ‘self seeking’ and capable of endangering the fragile economy and the banking system in particular.
In fact, the analysts see the two agencies going beyond their mandate, querying, for instance the medlesomeness of CBN in its direct interface with farmers visiting farmlands by its officials. They are calling for a clear distinction of its role as a supervisor/regulator and development agent.
NDIC, the official undertaker, is believed to be bogged down by bureaucracy and inefficiency up to the point of not having a functional website or lacking regular updates.
For instance, CBN is seeking for statutory powers from the Nigerian Senate that will enable it freeze bank accounts that are linked to criminal suspects.
CBN’s director in charge of legal services, Kofo Salam-Alade made the demand on wednesday while appearing before a Senate Committee Hearing for a new Act seeking to replace the Banks and Other Financial Institutions Act (BOFIA) of 2004.
Salam-Alade in his presentation to the lawmakers pointed out that the new BOFIA bill has ‘inadvertently’ omitted a clause that should normally grant the CBN Governor the power to freeze any bank accounts linked to criminals, using of a court order. The BOFIA 2004 contained this clause.
However, the new bill seeking to re-enact BOFIA does not have it. Interestingly, this new bill has passed its second reading at the senate, a development that is giving CBN real cause for worries.Speaking further, Salam-Alade argued that the clause should be re-introduced into the new BOFIA bill in order not to frustrate the apex bank’s fight against fraud and other financial crimes.
“This omission erodes the powers of the CBN and creates a huge gap in the regulatory and resolution framework. Therefore, we propose that the extant provisions should be reinstated,” Mr Salam-Alada noted.
But, a source familiar with the goings on at the National Assembly and particularly with the committee Said it was not an omission as such but deliberate action at checkmating abuses by CBN.
CBN’s director in charge of legal services, Kofo Salam-Alade made the demand on wednesday while appearing before a Senate Committee Hearing for a new Act seeking to replace the Banks and Other Financial Institutions Act (BOFIA) of 2004.
Salam-Alade in his presentation to the lawmakers pointed out that the new BOFIA bill has ‘inadvertently’ omitted a clause that should normally grant the CBN Governor the power to freeze any bank accounts linked to criminals, using of a court order. The BOFIA 2004 contained this clause.
However, the new bill seeking to re-enact BOFIA does not have it. Interestingly, this new bill has passed its second reading at the senate, a development that is giving CBN real cause for worries.Speaking further, Salam-Alade argued that the clause should be re-introduced into the new BOFIA bill in order not to frustrate the apex bank’s fight against fraud and other financial crimes.
“This omission erodes the powers of the CBN and creates a huge gap in the regulatory and resolution framework. Therefore, we propose that the extant provisions should be reinstated,” Mr Salam-Alada noted.
But, a source familiar with the goings on at the National Assembly and particularly with the committee Said it was not an omission as such but deliberate action at checkmating abuses by CBN.
“The public is becoming wary of some actions of CBN in stabilizing the economy and the banking system in particular that are counterproductive and as such investing more powers in a person can lead to anarchy. So what the committee has done was to act in response to demands of majority of Nigerians in expunging that clause from BOFIA under review,“ he said.
Speaking further, he said, “the action is not targeted at the current governor in spite of misgivings about some of the monetary policy measures, but an action directed at making a saner society and reducing arbitrariness in decision making.“
In a release by NDIC on wednesday , titled,
“CLARITY IN NDIC AND CBN ROLES IN PROPOSED AMMENDMENT OF BOFIA CRITICAL TO EFFECTIVE REGULATION OF BANKS” by its MD, the corporation averred that in a bid to establish effective legal instruments to secure the safety and stability of the nation’s financial system, there is a need to closely examine enacting laws with a view to harmonising the positions of NDIC and CBN in the NDIC Act 2006 and The Banks and Other FinancialInstitutions Act (BOFIA) 2004.
Umaru Ibrahim, the corporation’s chief executive said at the presentation that variances in the Bills that may be perceived as overlapping mandates between the NDIC and the CBN should be clarified in order to avoid any ambiguity in the laws governing their operations and should be reflected in the BOFIA 2020.
According to him, this was specifically critical in the area of the resolution of failing banks where the NDIC should be recognised as the primary actor in the resolution process while the CBN intervenes in the event of systemic crisis.
He also expressed the need for the Corporation to be involved in the process of licensing banks in collaboration with the CBN in order to ensure the necessary fit and proper checks and to establish clearer assessment of the status of financial institutions before licensing. He also noted that the bill seems to suggest the option of the appointment of other entities in the liquidation of failed banks adding that the Bill should be amended to reflect the NDIC as the sole liquidator of failed banks based on the Corporation’s core mandate of Bank Liquidation.
He said, the clear delineation of roles between the NDIC and CBN would strengthen the legal framework and contribute towards effective and efficient collaboration in the supervision and regulation of the Banking Sector.
Friday Ameh, Lagos based analyst sees the exercise as exposing the inordinate ambitions of some individuals under the guise of protecting the economy.
According to Ameh, the current power play between the executive and the Judiciary should be a pointer to the need for checks and balances among government organs and agencies.