The controversy that has dogged pan-African lender Ecobank in the last nine months has shaken it to its core. Last month Thierry Tanoh, its chief executive, was forced to stand down in what was the latest and, Ecobank shareholders will hope, possibly the last in a series of events that has dented the institution’s credibility.
The most contentious issues related to claims made last year by Laurence do Rego, Ecobank’s then-suspended head of finance. She said she was pressurised to manipulate the bank’s 2012 results and write-off loans owed to its Nigerian subsidiary by a family company of Kolapo Lawson, Ecobank’s chairman.
Mr Tanoh and Mr Lawson both deny any wrongdoing. But the outcome of the saga is that they have lost their jobs, while Ms do Rego, who was suspended for having false qualifications, an allegation she disputed, has been reinstated at the behest of Nigeria’s capital markets regulator.
The scrutiny that Ecobank came under is a reflection to some extent of its success over the last decade, during which it turned itself from a $1.5bn bank to one with $22bn of assets. Even a few years ago, a corporate governance scandal would have garnered little attention beyond its core market of west Africa. But today, with operations in almost 35 African countries and a global shareholder base, that is evidently no longer the case.
Yet that successful expansion perhaps masked serious shortcomings. The bank’s biggest shareholder, South African state pension fund PIC, said it “grew too fast” and should have “taken stock at some point and thought about internal issues instead of focusing on the expansion program only”.
Other African banks with big ambitions should take note. Ecobank’s woes offer them a cautionary tale. A relentless focus on profit and revenue growth should not come at the expense of putting in place proper and transparent governance structures. As Ecobank has found out to its cost, that can be hugely damaging.
