Last week, I rehashed a story that had largely been reported by Reuters, the Financial Times and Bloomberg relating to a West African corporate governance drama. The story involved the group entity of Ecobank, headquartered in Lomé, Togo.

The protagonists in the decade old story were the Group CEO (GCEO) of Ecobank Transnational Incorporated (ETI), the Group Chief Financial Officer (GCFO) and the Group Chairman (GCM) at the time. Having been suspended by the group board around July 2013, the GCFO whistle blew by sending an exposé to the Nigerian Securities and Exchange Commission (SEC) of how GCM and the GCEO were purportedly scratching each other’s backs in Togo. The GCM had quietly approved a bonus payment to the GCEO of $1.14 million while the GCEO was making quiet arrangements for the GCM’s $10 million non-performing loan at the Nigerian Ecobank subsidiary to be written off. If the group board was going to do nothing after she had blown the whistle in July 2013, then surely the Nigerian capital markets regulator could and should take an interest, right?

You bet they did. Established in 1979 and headquartered in Abuja, the SEC had a wide ranging mandate over the capital markets in Nigeria. Part of its stated mandate is monitoring the financial health of market operators to ensure that only fit and proper participants are in the market. It also investigates and resolves disputes among market stakeholders. GCFO was a smart lady. She may have figured that she would get little to no joy trying to reach out to any kind of Togolese regulators. By pointing her whistle eastwards, the sound was bound to galvanize the Nigerian regulator into action, as ETI is traded on the Nigerian Stock Exchange.

The regulator clutched its pearls in horror and with righteous indignation after reading GCFO’s damning accusations. The SEC immediately summoned the entire group board of ETI to the headmaster’s office. Toys must have been thrown out of the cot while expletives bandied about because a couple of months later in October 2013, the GCM tendered his resignation. Quite likely out of a desire to grant him breadcrumbs of  dignity, he was allowed to state that his resignation took effect from the end of December 2013. Meanwhile GCEO gripped onto the arms of his executive swivel chair until his knuckles turned white. The Nigerian SEC had commissioned one of the Big Four audit firms to undertake a formal investigation on the bank. The investigators were bound to find something about his little fiefdom.

They did. The investigators found that GCEO had appointed the internal auditor in a dual role as his special adviser which represented a conflict of interest amongst several other issues. For the keen observer, it begs the question what benefits would the back scratching GCEO get from keeping the internal auditor sitting in such a close range?

As GCM was exiting on December 31^st 2013, GCFO was returning from her six month suspension shortly thereafter  in the first week of January 2014. She found GCEO standing in the executive corridor, lips trembling in rage as he recalled the tearful and reluctant farewell he had just had with the chairman a few days before. Within a week of her return to the office and even before the dehydrated Christmas tree had been taken down from the front lobby, the bank announced her termination. 24 short hours later, the SEC issued a flaming hot scathing report. In it, the regulator pointed out the group board’s myriad specific weaknesses which simply came down to: You directors couldn’t organize a toddler’s party at Disneyland even if you had a map tied to your chests. The regulator had one more thing to say: Shareholders get your heads out of the sand and organize an extraordinary general meeting to reorganize your board and management.

With a sliding share price on the Nigerian Stock Exchange and its jaws still smarting from the regulator’s existential uppercut punch, the board finally snapped out of whatever spell had bewitched them, asking GCEO to resign a few weeks later in early March 2014. While wiping away the scrambled egg from their faces, the same board also announced that they were reinstating the GCFO to her role. She had indeed fought the good fight, finished the race and kept the whistleblowing faith. Next week, I will conclude on what critical lessons the banking group took out of this debacle.

 

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Twitter: @carolmusyoka