Saturday, April 5, 2014

Nigerian Central Bank: Missing Oil Claims (2014)

Central Bank of Nigeria logo
Nigerian central bank head, Lamido Sanusi, was once widely respected throughout the country. In 2009, Sanusi stopped the banking industry from nearly collapsing by "keeping interest rates at a record in the face of calls from businesses for lower borrowing costs and bringing inflation down below ten percent" (Kay). He "shut down fraudulent banks, uncovered theft that led to an unprecedented conviction, and earned trust in international financial markets" (Nossiter). He was even named central bank governor of the year in 2010 by Banker Magazine. In reality, Mr. Sanusi was not what he made himself seem to be. Sansui began taking his position and power roll to the next level. In Nigeria, "oil yields 95 percent of the country's total export earnings, and Mr. Sanusi has been saying for months that a substantial portion of the money was missing from the public coffers" (Nossiter). In previous years government commissions, parliamentary inquiries, and civil society groups have all recognized missing amounts of money in oil revenues and have been ignored. Mr. Sanusi is butting heads with the wrong people. He has accused the Nigerian National Petroleum Corporation (NNPC) of this scandal. They are the agency that buys, sells, regulates and produces the country's oil. He says that they are the ones not turning over the oil revenue earnings to the country's central bank. These actions are causing a bad reputation on President Goodluck Jonathan's government. New York Times States, "a series of accusations of misspending by high officials and a presidential pardon last year for a state governor convicted of stealing millions, has prompted Nigerian news outlets to depict Mr. Jonathan's government as too casual about corruption" (Nossiter). President Jonathan had no choice but to remove Sanusi from his post as central bank governor for "financial recklessness and misconduct".

This particular ethics case involves more people and business then one would even imagine. Most importantly, one of the stakeholders, in this case, is the Nigerian Central Bank itself. They were given a bad reputation due to Sanusi's actions accusing the NNPC for false actions. The president of Nigeria, Goodluck Jonathan is also the main stakeholder in this case. When Sanusi hoversteppedped his power, he made Jonathan look as if he was not monitoring the actions of his government employees. Relating to that, the government is also a stakeholder. They were given a bad name to the people because of Sanusi's it has caused the people of Nigeria to believe that the government is too casual about corruption. This ethics case is also affecting the country of Nigeria as a whole. Another stakeholder would be the NNPC, due the the fact that they are being the ones accused for not returning the "missing" profit to the bank. Other countries could also be considered a stakeholder in this case. The New York Times States, "this is a country that could soon be declared Africa's biggest economy and already attracts the most direct foreign investment on the continent" (Nossiter). This case gives the country's central bank a bad reputation, therefore allowing other countries to possibly believe that maybe the country is not stable.

Lamido Sanusi, head of Central Bank of Nigeria
One of the four theories of ethics is individualism. According to Salazar's PowerPoint presentation on Business Economic Making Sense, Individualism states "everyone has the right to do his own interests and should do so, but no one has the right to make other peoples choices about their pursuits for them, therefore we need to respect peoples rights to pursue their choices so we can all live the ways we want" (Salazar 11). Milton Friedman, famous economist of the 1900's has a slightly different definition of individualism. He states "the only goal of business is to profit for the owner or stockholders" (Salazar 12). From an individualists point of view, the central bank and the country as a whole would want to bring in as much money as possible to be making a continuous profit. According to one article from The New York Times, Sanusi was going to have the bankers open up their books because he wanted to see where the money was going because "$20 billion from oil sales, mysteriously, was not making its way to the treasury" (Nossiter). Sanusi was acting as an individualist by trying anyway possible to make all the money he could (even though his accusations were false).  According to Friedman, individualists do not take into consideration the happiness of the stakeholders, which is exactly how Sanusi is acting. He had negatively affected so many different parties with his actions, which portrays an individualistic attitude. Sanusi has a right to do what is in his best interest and making more money for the country is just what he had intended on doing, if he had gotten away with it. Sanusi's action in trying to get the money to make more of a profit (undeserved) for the country was an individualist act, even though he was wrong, which in this case made it unlawful, and unethical causing his suspension as central bank governor.

According to Salazar's PowerPoint on Utilitarianism and Business Ethics, utilitarianism is defined as "bringing happiness and pleasure to all things capable of feeling it. The reasoning behind this is, if happiness is valuable, there is no difference, morally-speaking between my happiness and yours" (Salazar 6). In the business aspect of utilitarianism, making employees, customers, shareholders and anyone else affected by the business happy is the way to be successful. Keeping all stakeholders happy is the main point of utilitarianism, and in this particular case, Sanusi did the exact opposite. The only interest he had in his actions was gaining more money for the country, even if that meant falsely accusing a very important national company. In the short long of things for all stakeholders, it would have been a good idea to make more money for the country in a different. He very obviously did not make the NNPC happy when he accused them of not handing over profits from the oil revenue. This is a huge cost because they are such an important company to the oil industry and the oil industry play one of the most important roles to Nigeria. Looking from a utilitatianist's point of view it would have been in Sanusi's best interest to benefit this company rather than downgrade it. Another stakeholder that was a huge cost to Sanusi's actions was President Goodluck Jonathan, who was not kept happy through out this scenario. He was given a bad reputation because in this case, Sanusi would be considered an employee, and he was not thinking of the happiness of his co-workers (Jonathan). The customers, or the people of Nigeria, were also unpleased because they were given the idea that a well recognized company was holding out money that belonged to the central bank, when in reality they were not. In the long run of things and following the utilitarianistic way, Sansui should have definitely found a different way to make more money fast, but also keeping his stakeholders happy.

Nigeria Central Bank headquarters in Abuja, Nigeria
Immanuel Kant, a German philosopher of the 1700's, created a theory that focuses on the rights and wrongs of decision making and the consequences of those actions. According to Salazar's PowerPoint, Kantian Business Ethics, The formula of humanity states, "'act in such a way that you treat humanity, whether in your own person, or in the person of another, at the same time as an end and never simply as a mean'(Kant, MM 429)" (Salazar 9). In other words, making decisions according to the Kantian view are in the best interest of the people's well-being. The company is making sure they know all the consequences that come along with the decisions and the choices that they are making by respecting people's autonomy. Kant's primary principles include, acting rationally, allowing and helping people to make rational decisions, respecting people, their autonomy and individual needs/differences, and finally being motivated the by good will of the people. Sanusi did not act the in interest of the people's well-being during this case. One argument that could be made was that he was looking for the best interest for the country's profit revenue, but he did this without making sure that the people knew all the consequences that came along with falsely accusing a company like NNPC and lying about missing money. Sansui was not conforming to Kant's principles. He was not acting rationally; he was putting the idea of more money into the country rather than informing the people around him that his actions are going to cause serious consequences. He is technically allowing people to make rational decisions. One example of this is he is giving the President and the National Assembly reasons to his suspension and even firing him from his position as central bank leader, even though his actions were unlawful. Sansui committed so many actions that did not respect people, their autonomy and individual needs/differences. He did not respect the fact that lying about missing money would have such a strong negative effect on all the stakeholders. Sanusi was not motivated by the good-will of the people. If he were motivated by seeking what is right by doing what is right by following the Kantian view, he would have found a way to make a bigger profit from the oil company. The country could make better trades for oil at a higher price bringing in a larger revenue for the country as a whole.

Virtue Theory
The virtue theory is based on Aristotle's ethics, which states people mist act rationally to function well in the business society. The first of the four primary virtues is courage. Courage is defined as "risk taking and willingness to take a stand for the right ideas and actions" (Salazar 6). The second virtue is honesty. Honesty is "in agreements, hiring and treatment of employees, customers and other companies" (Salazar 6). The third virtue is temperance which Salazar defines using Soloman's definition, "reasonable expectations and desires" (Salazar 6). The final of the four virtues is justice, which is "hard work, quality products, good ideas and fair practices" (Salazar 6).
Sansui definitely portrays temperance and courage with the decisions he makes by accusing the NNPC. He shows courage, by taking an extreme risk and falsely accusing the NNPC just to try and gain more money. He also shows temperance by having reasonable (illegal) actions. He is trying to benefit the company but he is doing it in an unethical manner which is why he is not showing honesty. He also does not have any justice because there is clear evidence that he was wrong in this case and he is not showing good ideas or fair practice. Sansui was ousted for financial recklessness and misconduct. Even though his actions were for good intentions for the country, they would still be considered unethical.

Kay, Chris. "Nigerian President Suspends Sanusi After Missing Oil Claims." Bloomberg, 20 Feb. 2014. Web. 03 Apr. 2014. <>

"Nigeria Central Bank Head Lamido Sanusi Ousted." BBC New Africa. N.p., 20 Feb. 2014. Web. 03 Apr. 2014. <>

Nossiter, Adam. "Governor of Nigeria;s Central Bank Is Fired After Warning of Missing Oil Revenue." The New York Times. The New York Times, 20 Feb. 2014. Web. 03 Apr. 2014 <>

Salazar, Heather. Business Ethics Lectures. WNEU. Spring 2014.

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