Let’s start with Nigeria’s financial system. As a former management staff in reputable banks and given your foray into corporate governance, what would you say is responsible for failure of banks?
There are many factors that have contributed to banking failure in Nigeria and they range from poor management, failure of governance and internal control systems, corruption, poor Board governance and ineffective banking regulation. The problems are multifaceted. Sometimes, it comes from poor oversight by the board and poor management by senior executives of banks. The most recent one, Heritage Bank’s situation is a peculiar one.
This was a promising Bank that started with some explosive innovations in the system but the problem of the Bank can be attributed to poor management. In my opinion, in selecting leadership of a bank in Nigeria, our regulators need to be more involving, it is not just enough to pass names and credentials for approval, there should be a form of public assessment to enable the investing public air their views about such person. I understand that boards now have Nominations Committee who has the responsibilities for selection of senior management as recommended by the Nigeria Code of Corporate Governance 2018 and CBN Guidelines on Corporate Governance 2023.
The committee should do a bit more than engaging a rigorous selection process, there should be a public presentation and assessment to serve as part of due diligence process for integrity and financial probity. If you look at cases of banking failures between 2004 and date and even more recently using the case of Francis Atuche, the erstwhile CEO of Bank PHB, you will realise that these Bank CEOs had their agenda which were not necessarily in alignment with the objectives of the organisation, they engaged in a lot of unethical practices that sank the banks. A rigorous process providing opportunity of public presentation of such persons could well avert engagement of such persons as leadership of the banks.
They say ‘fish rots from the head’, where the headship is weak, corrupt and lack integrity, you can only but imagine what becomes of such organisation.
If you look at the cases of the failed banks, the same line staff and managers leaving the banks will eventually find themselves in other banks where leadership is focused on achieving the corporate objectives as opposed to their own personal agenda. Leadership is, therefore, pivotal to the success of the organisation. Most boards have also been found to be abdicating responsibilities in the face of conflicting agenda of individuals.
I believe the regulation should demand more disclosure and compliance reporting from the Board to ensure proper control and entrepreneurial risks assessment aimed at achieving result oriented oversight of the company by the Board of Directors.
When banks fail, it impacts the economy, it creates loss of jobs and investments and it directly or indirectly affects the businesses of various stakeholders to the system. Corporate Governance is, therefore, pivotal to the success of the banking system and should be given a pride of place by all and sundry.
Using the tool of corporate governance, how can failure of banks and quoted companies be curtailed?
The business regulatory environment has continued to enhance regulation to stabilise banking system but beyond that, there is a need for conscious self-regulation by the operators as well. There has been so much said about imbibing the culture of good governance across board but there is no better time than now for all the banks Board and management to take sustainability and regulatory compliance and enforcement more seriously than ever. It is a national issue. It was recently said that some key multinationals are finding the business clime in Nigeria uninteresting and some quarters are calling for government effort to encourage foreign investments. It is good to encourage foreign investments but it is even more important to take our destinies in our own hands, when we pay deliberate attention to good governance in accordance with international best practices and we are more conscious of doing things right and at the appropriate timing, even businesses in the local environment will thrive and foreign investment attractions will simply be enablers. The international community seeing our compliance and enforcement culture will be even more comfortable doing business with us and that translates to business growth and national development.
There is no doubt that small companies in the MSMEs space contribute significantly to GDP. Are principles of corporate governance applicable to them?
Principles of corporate governance are more than applicable to Nano, and MSMEs. Remember what we discussed about developing a culture of good governance no matter the size of your business. More recently the Financial Reporting Council of Nigeria launched Code of Corporate Governance for MSMEs. This category of businesses is certainly a major employer of labour and putting in place a code to see how they are being managed and controlled is a good development in the right direction. This should, however, be done bearing in mind the need for operating in terms of cost of governance.
You run a registered non-governmental organisation, the Centre for Enterprise Governance (CEG). Can you tell us what gave rise to its conception, its activities and impact?
Our Centre, Centre for Enterprise Governance was born out of passion to give back to the society. It was a giving-back Corporate Social Responsibility (CSR) initiative of H. Michael & Co, a Law Firm founded by me. After 10 years of existence of the firm, we thought of what project to sponsor as a CSR and the idea of annual corporate governance lecture was mooted. Discussion upon discussion and smothering of ideas eventually dovetailed into establishing a Centre for Enterprise Governance. With the support of well-meaning Nigerians and experienced thought leaders, we have a full-fledged Centre and a well complemented Advisory Board members steering the affairs of the Centre. We currently convened a Biennial Corporate Governance and Enterprise Development Conference and we are focused on Governance and Enterprise Development activities collaborating with like-minded organisations to achieve our objectives. The Centre is headquartered in Ikoyi, Lagos, the Advisory Board is chaired by Mr. Olu Onakoya. Other members of the Advisory Board include Mr. Abiodun Olatunji, SAN; Hadjia Shadiyya El-Rufai; Mr. Oluwaseyi Ogunseye; Mr. Ifeanyi Asiodu, and Dr. Adeyinka Hassan.
Let’s go personal – let us into your academic background?
I studied law for my first and second degrees at Obafemi Awolowo University, Ile Ife. My career in banking exposed me to the business world and I developed interest in pursuing a degree in Business Administration. As they say, knowledge is the key to success. My quest for knowledge made me to see the marketing side of business and that made me to dig further by acquiring a master’s degree in Business Administration specialising in marketing management from Ladoke Akintola University of Technology (LAUTECH). At a point in my professional career, I surprised my employers by asking to switch from managing Board to running business. After being a business manager for about two years, I observed a lot of problems with the governance part of business and I thought to research the cause of corporate failures. I proceeded to the London South Bank University in the United Kingdom to study for a master’s degree in Corporate Governance specialising in Banking Regulations. The interest on corporate governance became deeper given my professional background as a lawyer providing services and supporting businesses. I later proceeded to studying for a Ph.D in Business Administration at Babcock University, Ilisan Remo, Ogun State, with research interest in Enterprise Governance. My Ph.D thesis was focused on Corporate Governance & Enterprise Success of selected money deposit banks in Nigeria.
As an authority with intellectual pursuits in the space of corporate governance, is your interest a mere coincidence or by choice?
I don’t consider my interest in Corporate Governance to be a coincidence as there are some elements of divine calling to it.
I set out to be a Lawyer from my graduation and I decided to pursue a career in the banking industry. I was exposed to the boardroom strategies at the early stage of my career and that made me develop interest in organisational management. Along the line of my career growth, I rose to become the Company Secretary and Legal Adviser of a commercial bank, the experience was an eye-opener for me, affording me the opportunity to understand Board role in providing oversight for companies, Management’s role in driving strategic plans of the business and the role of various stakeholders of the organisation and how relations are managed amongst them, observing the fundamental principles of corporate governance.
This made me become more deliberate and strategic about pursuing interest in corporate governance. I later qualified as a Chartered Secretary and Administrator in the UK and in Nigeria. I also explored other professional organisations and qualified as their member. Today, I am a Fellow of the Institute of Chartered Secretaries and Administrators of Nigeria, Chartered Institute of Administration, Chartered Institute of Directors, Nigeria, and also a member of Nigerian Institute of Management and other professional Associations with interest in corporate governance.