Friday, 18 September 2009

The Treachery of the Intellectuals

Dr. Sam Egwu is currently Nigeria's Minister of Education.

Federal universities are currently closed because the Academic Staff Union of Universities (ASUU) has gone on strike over low salaries, among other issues.

As a result, the universities have been shut for 3 months, since the strike began in June.

Against this backdrop, Dr. Egwu decided to throw a 'lavish' party to celebrate that oh-so-special marital milestone, the silver jubilee.

Allegedly, he spent N120 million (about $800, 000 USD) on this party.

Before I pass judgment, let me introduce you, dear reader to Mr. Alan Duncan:

Alan Duncan was until the 7th of September David Cameron's shadow leader of the Commons. Mr. Duncan made his fortune working in the oil industry as an oil trader, before he decided to offer his services to the British public. Worth an estimated N540million, his basic take home salary as a member of parliament (MP) is N1.4 million a month, before his claims for expenses are even conjured up.

Recently, Mr. Duncan, MP, was caught on camera whining, at the height of the recession, that MPs "...have to live on rations and are treated like sh*t."

A few days later, he jetted off to enjoy a $16,000 USD luxury holiday with his partner on a secluded paradise island.

David Cameron promptly sacked him, relegating him to a lesser role as shadow junior justice minister with responsibility for prisons.

The End.

For the Minister of Education to have thrown a huge soiree while students languished at home, and lectures begged for their daily bread, was ill-advised, to put it mildly. It doesn't matter how much was spent, or where the money came from; it was not the smartest thing Dr. Egwu has ever done. In fact, it was almost callous in its insensitivity.

You sacrifice your privacy once you take that oath of public office; Dr. Egwu knows this! He served as Governor of Ebonyi State for eight years, so more than most he knows that public perception is public reality.

In fact, no explanation is required, as none would suffice. Apologise and be done with this infernal public relations disaster!

Sunday, 13 September 2009

The Truth According to Ose

I have found that the most difficult thing to say is the truth. It has a way of erecting seemingly insurmountable walls between where one is, and where one wants to be.

As humans, and especially as politicians, we fudge, fib, we lie, we colour, we embellish to get from point A to point B; to get money, sex, a job, food, admission into elite schools, tax benefits, to avoid hurting or disappointing someone, etc.

But the chain can be broken; the monkey on my back can be dislodged. I'm going to start telling painful truths, as I see, them, because I want to be different, because I want to make a difference. I just hope I don't torpedo my young political career.

So I'll start posting Truths According to Ose (Taos), and we’ll see where the rollercoaster takes us.

Saturday, 12 September 2009

Sanusi the Cowboy (The Politically Correct Version)

The CBN Governor's new position is that the funds, not bailouts, were given as loans to the distressed banks. He rightly states that he is empowered (under Section 42.2) to give loans to banks that are unable to raise capital from any other source. This is the lender of last resort role the CBN plays.

In truth, however, the banks must approach the CBN for a loan. And as far as I can tell, this did not happen.

Being a lender of last resort basically means that you are in a position to lend money to an institution that is unable to raise credit from other sources. It is not a status exclusively reserved for central banks, so the suggestion that it carries with it a responsibility for compulsory, pre-emptive action is flawed.

For the CBN, being a lender of last resort simply means that the distressed bank has approached other banks or financial institutions, was unable to get credit, and is now approaching the CBN as a last resort. Simple, when you think about it, isn't it?

The clause that brings the CBN Act into play here is the one that specifies that the bank must be experiencing liquidity problems. When the CBN determines this, it is then empowered to lend money to the distressed bank if it chooses to do so, and under this clause it can set any interest rate, any repayment schedule, etc. What Sanusi is cunningly implying is that once a bank is in distress, the CBN can inject a loan even if no approach has been made by the distressed bank.

According to Sanusi, “the reinforcing provisions of Section 42 (2) of the CBN Act allows CBN to inject capital into any bank facing liquidity problems by way of loans and other accommodation facilities on terms it deems fit, notwithstanding the restrictions imposed by Sections 29 (1) and 34(d) of CBN Act."

That is a lie.

Only in Nigeria could it be suggested that a fund injection is the same as granting a loan.

What the Act actually says is that "The Bank may grant any bank which may be having liquidity problems."

The banks, since they haven't been nationalised, are still independent entities. So how can Sanusi claim that the CBN has the right to issue unsolicited loans to institutions it does not control? The CBN is empowered to replace bank executives, but no law ever gives the CBN direct control over the affairs of any bank, ever. Instead, the BOFIA states that if the CBN is not satisfied with a bank's current state, it may turn control of the bank over to the NDIC. Quoting section 42 of the CBN Act that says "the CBN may grant any bank" is a different kettle of fish from saying "the CBN can inject funds into distressed banks ".

The funny thing (not ha-ha funny, but sad-funny) is that the CBN is actually empowered under the BOFIA (section 33.2.b)to require a bank to undertake a certain course of action. All Sanusi had to do was instruct the banks to request for the loans. They would have had to comply.

It's a procedural error, and it's one that shouldn't be swept under the carpet.

The devil's in the details, when he's not fishing for souls (or fish).

But on a more positive note for Sanusi (the sun does shine on a dog's ass some days), he completely annihilated the members of the House of Representatives who invited him to the National Assembly for a question and answer session. How he manged to do this, with half-baked arguments, should be a source of concern to every Nigerian who expects proper representation from their legislators.