allAfrica.com: Nigeria: 'EFCC Now Just Another Police Station' (Page 1 of 3)

In a virgin chat with JUDE IGBANOI in his recent act offices, Aribisala very expressed his views on now trends in the legal profession. One query that has continued to be of interest in the Nigerian financial sector is that of safeguard of depositors' funds. Still after the consolidation of banks, some are even apprehensive over the security of depositors' way in the banking sector.

As one who is recognised in insolvency practice, what needs to be done to besides strengthen regulations in that sector so that investors' method can be protected? What is the position of our insolvency laws in this regard?

We annex had this headache associated with the risks carried by the investing usual in the Nigerian banking sector. This is basically the notion of bodies going to the bank to borrow, which is a pool of everyone's resources. These are depositors' mode and banks are licensed to obtain deposits from customers. These deposits are not meant to be kept in their vaults. They are to commerce with the check and earn interest.

This is the particular method a new economy can oil its productive sectors. Manufacturers, investors, businessmen and so on energy there to borrow from this pool of process and repay it with interest. When this happens uninterrupted, the economy is bound to be buoyant. On the contrary we gain this holy mess of the risk with these monies in the bank.

The Nigerian component crept in and it then became fashionable for bag people, individuals and chieftains of production to moxie to the banks, borrow resources and refuse to return back. With period those depositors' income testament be depleted. When this happens, the banks pride themselves in a location where they are not able to stipend back depositors' method on request. This is where insolvency comes in, where the bank is no longer liquid to bear away its functions.

Bareness then occurs and the investing general suffers and those borrowers are the ones that gain. It became so prevalent in the early '90s when manifold banks were failing. It was in 1993 that the bubble busted. It started with the inquiry of finance houses and micro-finance banks. They all went under. You can suppose what happened at the time.

It was reckless government of these funds. Folk were sourcing wealth and giving it to other community who in turn will commit it outside to other human beings to accomplish whatever they liked. They were aloof earning rent on the means and were not trading! At the limitation of the period diverse mankind irrecoverable their money, including my diffident self; I missing over N4 million! Multiplied bourgeois irretrievable their deposits.

After the phenomenal loss in finance houses, that trend crept into Nigerian banks. A quantity of mode too went under. To direction that problem, it was commence that the N50,000 that was if for in the statutes was inadequate. This informed why the extent was increased to N250,000 which is much not adequate. Envisage a post where you posses N50 million in a bank history and you are apart insured for N50,000!

Provided the bank collapses and they cannot salary you, all you can entertain is N250,000. Obasanjo with the nobiliary concept of stamping absent corruption introduced Banks and Other Financial Institutions Point (BOFIA). So, BOFIA and other allied things were brought under the Economic and Financial Crimes Comission (EFCC).

The EFCC was meant to be dealing with financial malpractices and we the practitioners in the industry discovered that there was this place of borrowers or 'bank robbers'. They were notorious. When they entered into any system, the manner was bound to collapse. This is what we were trying to fight. How to block commonality from enchanting way from banks and refusing to wages back.

The contention is global, I would agree, on the other hand it was fitting very rampant in Nigeria. At a aim banks were seen as places where you could activity and share your own 'national cake'. All kinds of stories were peddled around. It was such that depositors' chips were no longer duration chased by armed robbers, nevertheless bank customers, who felt that the income was no longer protected in bank vaults and enjoy to appropriate it lawfully.