Nigerian governor under parliamentary fire

Lamido Sanusi, the governor of the Central Bank of Nigeria, has come under strong attack from parliament for his decision in August to bail out five of the country's banks.

Ogbuefi Ozomgbachi, the chairman of the House of Representatives committee on banking activities, accused Sanusi of acting unconstitutionally by authorising the injection of N420 billion ($2.7 billion) into the banks and sacking their chief executives for running the banks into insolvency without prior parliamentary approval. Ozomgbachi said such expenditure of taxpayer's money required this.

In his defence, Sanusi said failure to act speedily would have led to the banks' collapse, which would in turn have had serious implications for the national economy. He said the banks had run up non-performing loans worth N1.14 trillion ($7.6 billion), the scale of which was such that there was a very real risk of them triggering a systemic banking crisis. This and the fact that the central bank intends the new funding to be converted into Tier 2 debt or preference shares - and new investors for the banks found - meant the organisation acted within its remit.

"The central bank has therefore not contravened any law, including the 1999 Constitution, in the manner it intervened to save the five banks through the injection of fresh capital into their operations," Sanusi said.

The Central Bank of Nigeria has also published a list of Nigerian enterprises and businesses that it says owe the banks some N747 billion ($5 billion), although some of those accused of owing money have contested the allegations.