Justice Mohammed Idris of the Federal High Court in Ikoyi, Lagos ruled that the Governor of the Central Bank of Nigeria (CBN), Malam Sanusi Lamido Sanusi, has the statutory power to appoint and remove any bank chief executive or director.

Some aggrieved shareholders of Union Bank Plc had challenged the propriety of the appointment of executive directors into the board of the bank by the CBN governor.

The court ruled that Section 35 sub-section (2) (d) of Banks and other Financial Institutions, Act (BOFIA) gave the CBN governor the power to remove or appoint, not withstanding anything in any written law or contained in the memorandum and article of association of the banks.

The shareholders, who include Danson Izedonmwen, Edith Izedonmwen and Osato Edo-Osagie, had dragged Union Bank and its Managing Director, Funke Osibodu (who was sued on behalf of herself and others appointed into the board of the bank by Sanusi) before the court, seeking for a declaration that their appointment was fraudulent.

The shareholders had urged the court, in their final submission, not to allow Sanusi to get away with the “harm” he has done to the banking sector”, arguing that the CBN boss had already set a dangerous precedent that must not be allowed to stand.

However, in his ruling, Justice Idris held that: “In my view by, virtue of the combined effect of the provisions of Section 33 and 35 of BOFIA, the CBN governor is empowered to order a special examination into the books and affairs of a bank.”

“He can also intervene in the operation of a bank by removing and replacing the directors of a bank found to be in a grave situation. to hold otherwise is to impair the legislative intent underpinning the provisions, which is the ability of the CBN governor to provide a failing bank with necessary managerial and operational support to facilitate the bank’s turn around,” he held.

He also ruled that the law empowers the CBN governor to appoint any person to advise the CBN in relation to the proper conduct of its businesses and provided in the order for the person or persons so appointed to be paid by the bank such remuneration as may be set out in the order.

The judge also stated that: “It is clear from the word “or” used in the law, and it is also settled law that the word “or” is a distinction word used to express alternative or to give a choice of one or many things.”

“On the whole, I hold that this originating summons lacks merit and is hereby dismissed, and N20, 000 cost is awarded in the favour of the respondent,” he ordered.

It would be called that the shareholders had gone to court to get an order restraining Union bank from parading Osibodu and her colleagues as managing director and executive directors respectively.

They also wanted the court to nullify all the steps taken so far by Osibodu on behalf of the bank, most especially the Annual General Meeting (AGM) of the bank held on December 15, 2009.

The plaintiffs further wanted the court to hold that the appointment of executive directors and not non-executive directors into the board of the bank was a fraud, and that the position of the law was that those people (Osibodu and her colleagues) should be held for criminal offence.