The most important asset a bank has is its credibility. The bank's credibility is carried by the governor and is embodied in the person of the governor. It is this credibility that makes national and international commerce go on. It is why when merchants offer goods and services for sell they demand payment by bank check. Because if the bank says that it has the money the seller is at ease. Note that merchants would not accept cash even when the cash is the legal tender.
When the governor of the Central Bank of Nigeria says that $50 billion is missing from his bank and it turns out not to be true, he could no longer continue in this post for he has lost (its greatest asset) the faith and trust of citizens and international community. Many things make this error chilling to most of us who have studied business especially accounting.
The amount of money involved. $50 billion is a lot of money in any economy including US economy. If the governor woke up and discovered that $50 billion was missing, his first reaction would be that it is impossible. It would be impossible because there would have been many warning signs. $50 billion could not be a single transaction, but literally thousands of transactions and thousands of transactions cannot pass through the eye of a needle without notice.If his subordinates insisted that the sum is missing, he would call and ask for the dates the deposits were expected and when the last deposit was made. He would ask them to go backwards from the time barrels of oil were sold tracing each transaction every step of the way. He would have called his chief accountant to get to the bottom of this. He would have called his auditors and demanded that they put their best brains on the matter and get back to him A-S-A-P.If they still could not find out what happened, he would personally place a call to the Petroleum Minister and alerted her on what his people were seeing. After he hung up he would place a similar call to the coordinating minster of the economy and minister of finance. The forgoing is what is called DUE_ DILIGENCE_WORK in the business. Together they would be able to find what the error was. If he were only just half smart he would have done all this before approaching the president. You do not go to the 'top' unless you have iron clad proof.
The fact that Mr. Lamido Sanusi did not do these things means one of two things: (a) he was not truly searching for the truth but to add to Obasanjo's allegations of corruption and thus throw the administration to the wolf by causing national and international loss of faith in his country and throw the economy into a free fall. Or (b) he is truly ignorant of how these payments are actually made; has nobody on his staff who understands this business; is unaware of the implications of a loss of $50 billion to Nigerian economy; does not understand how important his credibility and the bank's credibility were to the world or worse, does not really care. Either way Mr. Sanusi is damaged goods and will not be able to regain the level of trust he should be carrying around.
Should Mr. Jonathan fire Mr. Lamido Sanusi? It would seem that on the surface he could not fire him because his appointment is such that he has almost a life time appointment, just a shade lower than that of the judges of the Supreme Court. Secondly he should not fire him even if he could for political reasons. He already has his hands full in allegations and this would make it rather difficult to add political fall out into his already full plate.
Mr. Sanusi would appear as one who is preaching a "clean government gospel."
The fact that GEJ could not fire him should be the main reason why Mr. Sanusi should offer his resignation immediately and GEJ ought to accept it. It is noble to know when on has made a major mistake and to accept responsibility for it. The governor is lamenting that his letter was leaked to the press. It is usually the last defense of a defenseless bureaucrat: blame the press. It is shameful that he and his staff could not find their error by themselves; it is bad that he could not work cooperatively with the oil minister and the finance minister to find his mistake; and it is bad that he would rush to the president with false alarm. When I was a mere staff accountant with the Accounting firm of Price Waterhouse, I could not have rushed to my senior to allege a theft and my senior would not have rushed to the partner to make such allegation, how much more rushing to the Managing Partner.
Far too many things broke down in this rush to judgment from system internal controls, to accounting controls and finally to self control.
Basic knowledge of double entry bookkeeping is lacking in this organization. Mr. Sanusi should understand all this. He should know that the next time he says that 50K is missing, some body out there, would wonder if this is another of his delusions.
Benjamin Obiajulu Aduba
December 22, 2013