Obono Obla Berate CBN and C’River Assembly
story by crossriverwatch admin
Commercial banks were in the country were yesterday directed not to grant further credit to Cross River States because of the failure of the USD 350million Tinapa Business Resort.
In a move said to be aimed at strengthening financial stability and instilling discipline in the banking sector, the Central Bank of Nigeria (CBN) also barred banks in the country from extending further credit to 113 companies and 419 directors/shareholders, including those belonging to Mr. Femi Otedola, Alhaji Sayyu Dantata, Sir Johnson Arumemi-Ikhide, former Power Minister, Prof. Bart Nnaji, Mrs Elizabeth Ebi and Dr. Wale Babalakin as well as the Zamfara State Government.
The CBN arrived at this decision as a result of the reluctance by the debtors to pay back their loans despite the purchase of the debts at an agreed price by the Asset Management Corporation of Nigeria (AMCON).
In a new circular dated September 17, and obtained today by crossriverwatch, the central bank stated that the restriction would apply to individuals, organisations, companies as well as principal shareholders and directors of companies where the outstanding value of loans purchased by AMCON amounted to N5 billion or above as at the day of purchase, without regard to the actual amount paid by AMCON.
The circular, which was signed by CBN’s Director, Banking Supervision, Mrs. A. O. Martins, stated that “it has become necessary to stop debtors who failed to repay their loans to banks and had these loans subsequently transferred to AMCON, from further enjoying credit facilities from Deposit Money Banks (DMBs) until they fully repay agreed outstandings to AMCON.”
The restriction, according to the central bank, came into effect from the date of the circular and shall remain “until full liquidation of agreed indebtedness to AMCON”.
To ensure compliance, the CBN warned that any bank that flouts the guidelines would be made to make an immediate provision of 100 per cent of total principal and interest outstanding in the account of the customer and related parties, in addition to whatever regulatory penalties the CBN may decide to impose.
In a telephone chat with crossriverwatch, the State Commissioner for Finance, Mr. Caifas Etim told us that “I think one person has earlier called my attention to that. I have not seen the paper or the circular. You know this is government matter. I cannot just jump into talking. When I see the paper, I will then know what to say”
When crossriverwatch tried to reach the State Commissioner for Information, Mr. Akin Rickett, his mtn mobile phone was switched off.
But a lawyer and human right activist Bar. Obono Obla told crossriverwatch that the directive is a death knell on Cross River State: “the ban coming on the heels of the recent Judgment of the Supreme Court of Nigeria that divested the Cross River State of the ownership of 76 oil wells and vested same on Akwa Ibom State is decidedly a death knell for Cross River State. I am at a complete loss and indeed flummoxed on the rationale for such a drastic decision against the Government of Cross River State since the Tinapa Business Resort is a legal and corporate entity incorporated under the Companies and Allied Matters Act, 2004”.
“The fact that the Tinapa Business Resort is owned by the Government of Cross River State does not mean that the Government of Cross River State should be held responsible for the Tinapa Business Resort to honour its contractual obligation to these banks. Tinapa Business Resort is a legal and corporate entity that is separate and distinct from the Government of Cross River State and therefore goes without saying that the Government of Cross River State cannot be held responsible”.
He said “In any case, which law gives Central Bank of Nigeria such wide sweeping and drastic powers to interfere in the right of contract Tinapa Business Resort has with these Commercial Banks. The action of Central Bank of Nigeria in placing such a sweeping ban on commercial banks from granting credit facilities to the Government of Cross River State amounts to declaring the Government of Cross River State bankrupt. It is clear that the action of the Central Bank of Nigeria against the Government and people of Cross River State is arbitrary, capacious and impetuous. The decision of the Central Bank to place such a ban on commercial banks from contracting with the people and Government of Cross River State is an egregious injustice and tantamount to an infraction of the right to fair hearing on the government and people of Cross River State as secured and guaranteed by the Section 36 subsections 1 & 2 of the Constitution of the Federal Republic of Nigeria, 1999”.
“It is unfortunate that Central Bank of Nigeria, an institution that should be circumspect in taking decisions that are hasty would proceed to take and make public such a far reaching decision that is capable of destroying the economics of a State without affording such a State the opportunity of being heard. However, the chicken has come home to roost. Recently I call on the Cross River State House of Assembly to be alive to its constitutional responsibility immediately investigate the circumstances surrendering the huge debts incurred by the Government of Cross River State during the administration of former Governor Donald Duke (1999-2007). But my patriotic call was treated with ignominy. The chicken has indeed come home to roost”!
Dreamt by Donald Duke, the former governor of Cross River State, Nigeria, Tinapa Business Resort was designed to be a business resort and platform for Calabar and Cross River State activities around tourism. However since it was commissioned in April 2007 it has remained an empty white elephant project.
Since You Are Here, Support Good Journalism
CrossRiverWatch was founded on the ideals of deploying tech tools to report in an ethical manner, news, views and analysis with a narrative that ensures transparency in governance, a good society and an accountable democracy.
Everyone appreciates good journalism but it costs a lot of money. Nonetheless, it cannot be sacrificed on the altar of news commercialisation.
Consider making a modest contribution to support CrossRiverWatch's journalism of credibility and integrity in order to ensure that all have continuous free access to our noble endeavor.