Three years ago the Central Bank governor, Chukwuma Soludo, installed his wife, Nonye, and their two children in a mansion bought for half a billion naira in the tony London suburb of Brondesbury Park.
One of their two children is enrolled at Ampleforth College, an elite parochial school known as “the Catholic Eton,” and where the Central Bank governor pays an annual fee of £25,000 for this privilege— roughly half his annual salary. The other child attends a similarly expensive public school— which in Britain actually means private school— so that in theory Mr. Soludo’s entire earnings of about N12 million a year hardly covers his children’s school fees.
Since he was appointed by former President Olusegun Obasanjo to his current position five years ago, Mr. Soludo, who was a university lecturer before joining the Obasanjo administration, has demonstrated a taste for high living, travelling in convoys of as many as seven vehicles, impeccably and expensively dressed in bespoke suits and heirloom watches, and generally enjoying a lifestyle that cannot be afforded by anyone earning about N1 million a month.
The mansion occupied by his family in the exclusive London suburb is registered to Universal Energy Limited, an offshore company controlled by Emmanuel Ojei, the flamboyant tycoon with many business interests, including oil and gas.
It is not clear under what arrangement the Soludos live in this £2.1 million home; Mr. Soludo is not telling us. He has spent the past three weeks avoiding us and made promises to answer our questions that he has not kept, hoping that we will simply go away.
Fighting for a second term
As he wages a fierce campaign behind the scenes to be reappointed our central banker two months before his five-year term expires, Mr. Soludo has stymied all attempts to give him a fair chance to respond to the growing criticism around his personal conduct while in office, as well as the tactical and strategic decisions he has made as our Naira has collapsed, many of our banks are short of cash, and our economy has threatened to unravel.
Mr. Soludo has been telling friends, our reporters learned, that he believes his reappointment is in the bag, largely on the basis of a claimed closeness to the wife of the President, Turai Yar’Adua and her daughter, Zainab. Of course, many people often claim close relationships with the powerful— and our First Lady is widely acknowledged as perhaps the most powerful person in our political firmament— that are not necessarily so.
He does have supporters, those in the banking industry for whom he has done many favours, or others who simply look at the signature achievement of his tenure— bank consolidation—and conclude that he deserves one more term. “To the extent [that] we now have a number of manageable banks in Nigeria; and from the profit posted by these banks and their annual accounts... If there’s anything that will have the emblem of Mr. Soludo in the CBN, it is the recapitalisation of the Nigerian banks... this can be said to be the biggest achievement of Mr. Soludo as the CBN governor” says Ogbuefi Ozomgbachi, Chairman of the House Committee on Banking and Currency who favours a second term for him.
Mr. Soludo also faces an array of critics determined to stop him from remaining central banker past his sell-by date of May this year, including several chief executives of the banks he supervises, former lieutenants, and prominent lawmakers. And hanging over his head is a damning official finding that investigated his highly questionable establishment and chairmanship of the African Finance Corporation.
The probe panel set up by the Federal Government found that the Central Bank governor was “liable for gross negligence, recklessness, and gross abuse of office.” While Ahmed Markarfi, Chairman of the Senate Committee on Finance, and a former governor in Kaduna State, bitterly considers “the last five years [of the CBN] under Mr. Soludo,” as cheerless, former presidential candidate, and one-time president of the Nigerian Chartered Institute of Stockbrokers, Gamaniel Onosode, is unrestrained at savaging the very heart of the Mr. Soludo policy trust which he identified as the foundation of the current Nigerian financial and economic woes.
“Universal banking has not served us well”Mr. Onosode said. The blurring of functional lines between general commercial banking on the one hand, and investment banking activities, in the view of Mr. Onosode, precipitated the current crisis in the financial market, and as far as he is concerned, “universal banking must accept responsibility for the current financial meltdown [in Nigeria] and the abuse of national resources.”
From obscurity to world stage
Last year December, a day after Christmas, at his home town of Isuanioma near Isuofia, in Anambra State, Mr. Soludo transformed a sleepy settlement into a festive vision when he brought the elite of the Nigerian financial and bureaucratic tribe to come help him launch the Mgbafor-Soludo Diagnostic Centre.
The multi million naira project is envisioned to be a state of the art hospital/diagnostic centre that includes a school of specialised nursing, and doctors’ quarters.
When Mr. Soludo was eight years old, he lost his mother, Mgbafor, but on this festive day at Isuanioma, at the 40th anniversary of her passage, the mood was not sobriety but effervescence. Mr. Soludo, from modest beginnings, recently completed his palatial country home, and has now completely ignited the community spirit; the transformation of what was formaly a quiet and serene town is almost surreal.
A shop attendant in the town, caught in awe, summarises the mood of the moment saying the event carried meaning beyond the launch of a mere hospital. “This is big and pregnant” said Emeka, referring to the community’s feeling that Mr. Soludo could be eyeing some political future. The nation’s central banker has lately been in a mood quite at odds with that of the country.
Rather as Rome burned and the Emperor fiddled, he promised that the economy is immune from the global economic crisis. However, loudly Mr. Soludo shouts about the imperviousness of the Nigerian economy, reality has proved him wrong.
The capital market, at any rate, is in virtual collapse, with over N13 trillion naira lost; the external reserves are being depleted at a fast clip, from $62 billion to about $50billion; the naira continues a frightening slide which last week plumbed the depths at N181 naira to the dollar, from its value of 118 naira only three months ago. With the naira now so evidently humbled by devaluation, the spectre of inflation and spiralling unemployment are palpable even as the fear of bank failures rises by the day.
Blind eye to dodgy loans
Mr.Soludo’s regulatory record is invariably under scrutiny. Concerned bankers and financial analysts in Abuja and Lagos, speaking to us this past week, expressed anxiety that the hallmark of his legacy at the CBN has been the turning of a blind eye to phony financial declarations and doggy loans, many extended to buy shares.
Early this year, the Central Bank spent nearly N1 trillion to bail out ailing banks, without authorisation from either the National Assembly or the Presidency. What is more, the questionable bail-out was executed via toxic instruments packaged through an expanded discount window to shore the banks up from impending collapse.
Yet the most illustrative evidence of Mr. Soludo’s questionable position as both player and regulator at the same time, is the Intercontinental Bank and Ascot Offshore Nigeria affair. In 2007, Intercontinental bank gave a $200 million loan to Ascot Offshore Nigeria Limited to buy out Wilbros Nigeria.
Without the necessary due diligence, the CBN looked away when the collateral provided to secure the private loan turned out to be shares in the telecoms operator VMobile, now Zain, that were owned by the Delta State government. Today the deal is in receivership and the bank is groaning.
Playing games with fx transactions
A top bank executive said last week that Mr. Soludo’s management of the country’s foreign exchange assets has often involved playing fast and loose with the rules. For example, last December 21, the CBN auctioned $180 million to Zenith Bank alone to retire a position in Visafone with a bid of 128.10 to the dollar, just 10 kobo above the other bidders. “Obviously someone on the inside had tipped them off,” the banking executive said.
Mr.Soludo is seen as especially close to some of the most powerful bankers in the land. These include Jim Ovia, the chief executive of Zenith, and Tony Elumelu, who runs UBA. Also close to the Central Bank governor are Cecilia Ibru of Oceanic Bank, and Erastus Akingbola, of Intercontinental Bank, all of whom constitute the aristocracy that invariably supports Mr. Soludo at Bankers Committee meetings.
A senior banker who attended a reception for Mr. Soludo after his appointment told us last week: “That was the origin of Mr. Soludo’s incestuous relationship with our bank chiefs”. Thus, from supposedly sharing the same tailor as Tony Elumelu, Mr. Soludo gradually walked his way to the making of the imperial banker. His pulpit was the bankers’ committee meetings.
In no time too, a psychology emerged: the interminable lecturer wedded to the magnetism of television cameras and newspaper pages.Mr. Soludo inaugurated a ritual of hopping in and out to open every bank branch in London, and accepting awards like a chieftaincy title. He quickly acquired a taste for the lux life.
Mr.Soludo’s residence on 14 Daresalam Street, Wuse 11, Abuja is one of the most expansive compounds in the capital. The cluster of buildings in the complex are hidden behind a tall fence, which appear to be well in excess of municipal requirements of a maximum height of 1.5 meters.
The more intriguing aspect of the building is how Mr. Soludo got the Obasanjo FEDERAL EXECUTIVE COUNCIL to approve his purchase of what is properly the CBN governor’s official residence. It is a situation similar to Sunday Ehindero’s purchase of the Inspector General of Police’s residence which has since been reversed. Mr. Soludo made an elaborate security excuse that allowed him to get the approval to purchase the house for N200 million. CBN sources said another N100 million was used to renovate it to his taste.
“It was one of the most improper decisions to allow him purchase that house,” a top bureaucrat said in Abuja. “It would have sounded like allowing Yar Adua purchase Aso Villa simply because he is resident there.”
Mr.Soludo’s flaws were quick in coming. The ambitious African Finance Corporation, which he founded in 2007, and over which he installed himself as chairman, was the subject of a criminal investigation that found him guilty of gross negligence and poor executive judgment.
Financial experts who reviewed the African Finance Corporation process said it was the lowest point of his relationship with the banking industry which illustrated the fact that “you can’t be a player and a regulator at the same time.”
Plucked from obscurity
At the time Mr. Soludo emerged as governor of the CBN, he became part of an all-star cast of economic managers, perhaps the best the country had ever seen. The Obasanjo team was powerful and successful, especially in the three years from 2003 to 2006, before the former president distracted and derailed his own government by seeking a third term in office that was not allowed by the constitution.
The team was led by Ngozi Okonjo-Iweala, the gifted MIT-trained development economist who was finance minister; Nasir El-Rufai was at the helm of the privatisation program and later as minister of the federal capital administration; Mansur Multar, the current finance minister, headed the Office of Debt Management; while Bode Agusto was head of the budget office.
The economy was turbo-charged with the privatisation of the telecommunications sector. It was buoyed by ever-increasing oil prices, growing foreign reserves, strengthening of the naira, and the remarkable decision to wipe out our $35 billion in foreign debt. With a vigorous anti-corruption campaign and the cleaning up of the banks, the path was clear for the most remarkable banking reform in the history of the nation.
Today, however, all that once seemed to make Soludonomics viable has come unravelled.
In only three months, our currency has lost more than 50 percent of its value and many banks are teetering. Unemployment is growing. The budget already is in deficit before it gets out of the starting gate. And the spectre of runaway inflation hovers over all.
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