By Abimbola Akosile, 09.25.2009

Nigeria’s banking sector has been criticised for “corruption”, which was described as partially responsible for the collapse of many banks in the 1990s and losses to depositors and stakeholders.
This was contained in a country report on Nigeria, which formed part of a new Global Corruption Report (GCR) 2009 released yesterday by Transparency International (TI), the global civil society organisation leading the fight against corruption.
The 496-page global report, with a theme “Corruption and the Private Sector”, said the massive scale of global corruption resulting from bribery, price-fixing cartels and undue influence on public policy is costing billions and obstructing sustainable economic growth.
In the country report on Nigeria, TI said the failures in the banking sector were ascribed to fraud “committed by bank owners and managers, who had granted unsecured loans, resulting in high levels of bad debt and a loss of liquidity”.
The bank owners and managers were also said to have “failed to maintain a strong capital base, granted unsecured loans to friends and bank owners or managers; and in some cases, embezzled funds outright”.
Interestingly, the report does not cover the tenure of Mallam Sanusi Lamido Sanusi, the current governor of the Central Bank of Nigeria (CBN) who recently removed five bank CEOs over the huge non-performing loans of their banks and other alleged financial abuses.
TI, which admitted that a few cases were brought to court in 2008 under the Failed Banks Decree 1994, however said none of the cases has reached a conclusion.
“Their successful conclusion would show the law’s ability to bring corrupt individuals to justice, but the persistent number of abuses, even after the collapse in the 1990s, raises the question as to whether there is currently adequate oversight in the system,” the report said.
Highlighting a few cases involving banks such as the defunct Triumph Bank and current Wema Bank, TI maintained that the Fiscal Responsibility Act 2007 has the potential to improve budgeting and in turn reduce opportunities for corruption.
The Global Corruption Report 2009 presents perhaps the most comprehensive and multifaceted selection of case studies from around the world on corruption risks and anti-corruption measures in the private sector, according to a statement by the organisation.
TI’s global movement of national chapters contributed 46 detailed perspectives, representing all regions and levels of economic development.
The contributions cover events in 2007 and 2008 and provide a country-specific approach to a sector that increasingly transcends national boundaries.
As such, the case studies highlight not only the similarity of major corruption risks that echo throughout the world, but also the interdependence of states often linked primarily through trade and commerce.
The collection as a whole illustrates how difficult it is to talk about national economies without considering how they interact with the global economy; the same goes for corruption in this sector and, consequently, efforts to combat it.
“In the last two years alone, companies have had to pay billions in fines due to corrupt practices. The cost extends to low staff morale and a loss of trust among customers as well as prospective business partners,” according to the report.
Under the Regional Highlights on Africa in the Global Corruption Report 2009, the informal sector amounts to more than 40 per cent of the economy in many countries, reaching well over 50 per cent in Nigeria and Tanzania.
The lack of legal protection and the desire to dodge regulations makes the informal sector easy prey for extortion and the solicitation of bribes by corrupt officials.
According to the Executive summary, the private sector can be a source of dynamic innovation and growth.
“The scale and scope of bribery in business is staggering. The consequences are dramatic. In developing and transition countries alone, corrupt politicians and government officials receive bribes believed to total between US$20 and 40 billion annually – the equivalent of some 20 to 40 per cent of official development assistance. The cost is measurable in more than money.
“When corruption allows reckless companies to disregard the law, the consequences range from water shortages in Spain, exploitative work conditions in China or illegal logging in Indonesia to unsafe medicines in Nigeria and poorly constructed buildings in Turkey that collapse with deadly consequences,” it added.
On recommendations, the report urged businesses to join and actively promulgate collective action frameworks for corporate integrity, which exist for anything from individual tendering processes and sectors to supply chain integrity, or multi-stakeholder action in key development areas from extractive industries to health and construction.
“Governments and regulators need to make enforcement efficiency and effectiveness more transparent and accountable. They need to pay more attention to ensuring that adequate resources for regulators and enforcement activities are made available,” it stated.
On the global Corruption Perception Index (CPI) 2008, which was released on September 23 last year, Nigeria moved up 27 places ranking 121 out of 180 countries surveyed by TI the global anti-corruption watchdog.
According to the detailed Index, which was released in Berlin, Germany, Denmark, New Zealand and Sweden shared the highest score at 9.3, followed immediately by Singapore at 9.2. Somalia was ranked at the bottom at 1.0, slightly trailing Iraq and Myanmar at 1.3 and Haiti at 1.4.
Nigeria, which TI described as having improved significantly in her corruption perception ranking, obtained a score of 2.7 out of a possible 10. She was also ranked 22nd out of the 47 nations surveyed in Africa, in terms of level of perceived corruption, having placed 148 in 2007 and 153 in 2006, out of 180 countries globally.