Barriers to Effective Corporate Governance Reforms: Corruption and the Peculiar Case of Nigeria

Abstract

Corporate governance reforms have been viewed as a means of improving the economic and social welfare of emerging economies and there have been efforts by the Nigerian government and its agencies to promulgate codes of best practices for companies in the country. There are critical questions regarding how effective these codes are in practice, and whether they are achieving the aims for which they were promulgated. Another pertinent issue is whether the codes of best practice actually complement and are complemented by the corporate legislation, because, ideally, meaningful corporate governance mechanisms should comprise of laws, regulations and principles working in synergy in order to achieve an overall atmosphere of effective corporate governance. This chapter discusses these issues and argues that corruption is a barrier to achieving the aims of corporate governance reforms and presents potential solutions to the problem of corruption in regard to creating effective corporate governance in Nigeria.

Corporate governance reform in Nigeria: upstream and downstream interventions

“…Second, Adekoya (2011) notes that politicians' overwhelming authority stifles justice dispensation, endorsing the use of independent tribunals to prosecute offenders. Adekoya (2011) Whereas Adekoya (2011) offers multiple reform strategies, Okoye (2014) emphasises the revamp of the regulatory machinery. Okoye (2014) acknowledges that widespread corruption in the country frustrates corporate governance regulations, arguing that resolving the corruption puzzle is crucial to building robust corporate governance.…”

“…Adekoya (2011) Whereas Adekoya (2011) offers multiple reform strategies, Okoye (2014) emphasises the revamp of the regulatory machinery. Okoye (2014) acknowledges that widespread corruption in the country frustrates corporate governance regulations, arguing that resolving the corruption puzzle is crucial to building robust corporate governance. Daodu, Adegbite and Nakpodia (2017) and Areneke et al (2022) propose a different reform route that stresses the significance of institutions and institutional structure.…”

“…Following the introduction of the first corporate governance code (SEC Code) in 2003, various reforms prompted the revision of the code in 2011 and 2018. Stakeholders, notably practitioners and academics, called for these reforms (Adekoya, 2011;Okoye, 2014;Daodu, Nakpodia & Adegbite, 2017) reforms -uncovers the preconditions that support robust corporate governance. The governance reform literature often overlooks these prerequisites.…”

“…Following the introduction of the first corporate governance code (Securities and Exchange Commission [SEC] Code) in 2003, various reforms prompted the revision of the code in 2011 and 2018. Stakeholders, notably practitioners and academics, called for these reforms (Adekoya, 2011; Okoye, 2014; Daodu et al , 2017). Despite these interventions, the state of corporate governance in Nigeria suggests that the reforms have underachieved.…”

Chief Executive Officers and their Boards: a Play of Power

“…In Nigeria, the roles played by the CEOs of most distressed and bailed out banks between 2009 and 2010 are quite illustrative. The CEO of the then Oceanic bank, Cecilia Ibru is said to have controlled over thirty-five per cent of the bank through Special Purpose Vehicles (SPVs) set up to borrow customers deposits for stock price manipulations and other personal gains (Uwuigbe, 2011) while the MD/CEO of the then Intercontinental Bank Plc, Dr Erastus Akingbola removed from office by the Central Bank of Nigeria (CBN) was arrested and accused by the "Economic and Financial Crimes Commission (EFCC) of insider abuse, theft, manipulation of the company's shares and other economic crimes running into billions of naira" (The Nation as cited in Okoye, 2015).…”