Wednesday, September 26, 2018 07.24AM / FDC
Research / Culled from Business Day
This question was raised in an article by Ayuli Jemide published by Businessday yesterday asking questions about the regulatory environment. Who regulates the regulators? - BusinessDay Media... As the Latin expression puts it, Quis custodiet ipsos custodes? is a phrase from the Roman satirist / poet Juvenal, which is literally translated as “Who will guard the guards themselves?” It is also sometimes rendered as “Who watches the watchmen?”
The assertion comes from two millenia ago from Satires of Juvenal, where the satirist posed the question based on a belief that ‘the effectiveness of watchers is based on both power and independence; and the need to ensure watchers are properly trained and are wise.
Others in the last decade, such as Baetjer (2015), Cato Journal 35:3 pg 634; have expanded on the practical execution of this and posit that:
“From a systematic standpoint, regulators being government-granted monopolies with a captive ‘client’ base, are unregulated. There is no robust regulation of their performance. There is no quality-assurance regulation of the job these regulators do. They are not accountable to the public in a meaningful way. In theory, agencies are regulated by the political process, but the political process is so ineffective at regulating regulators that the regulators are de facto unregulated.”
How perspectives on what ‘acting in the public interest’ has changed
Source: Benton et al (In Press) / David C Benton PhD RN FRCN FAAN / ncsbn.org
Why Regulate the Regulators
Now, Find Below The Post Culled from BusinessDay:
If you google “regulating the regulators,” it comes up with 38.4 million results. This is symptomatic of the fact that this is a popular phrase all over the world. Surely companies around the world are suffering from dog bites and scratches from regulators who are like wild Alsatians left to wander outside their kernel. So, a key question is who has a leash on them?
The fact that the dogs are out in Nigeria is glaring. We have seen the Nigerian Electricity Regulatory Commission reduce the price of electricity just before elections. We have seen one gentleman turn the Financial Reporting Council of Nigeria into a gestapo type institution – chasing churches, mosques and sundry for game. We have heard of the erstwhile Director General of the Securities and Exchange Commission allegedly approve monies for himself and by himself. We have more recently seen the Central Bank of Nigeria (CBN) deploy a serving Deputy Governor of the CBN to act as the board Chairman of Etisalat (a private telecoms company not under CBN’s purview) because of bad debts owed to commercial banks, and further participating in rebranding the company to 9mobile and selling down to investors.
We have recently seen MTN buckle under the Nigerian Communications Commission $5.2 billion fine. Again recently, CBN has made a pronouncement that MTN should “refund” $8.1 billion. One wonders about the legal and practical plausibility of such an order. Does CBN have the power to fine a privately held non-bank institution like MTN? Can private money not drawn from the CBN be refunded? How can MTN refund monies that may have been distributed to shareholders and lenders? Is CBN not conflicted given that the CBN midwifed the rebranding and sale of MTN’s competitor Telco (Etisalat, now 9mo-bile)? Does the Central Bank regulate Telecoms companies?
Regulators are really having a field day with executive recklessness and commandeering activities in Nigeria today. Who checks them when they draft regulations that give them powers outside the ambit of the enabling legislations? Who checks them when they make pronouncements that are clearly outside their powers and purview? Who checks them when the helmsmen or some of the officers have a conflict of interest?
Shall we continue to recoil under a crop of brigadiers whose questionable exercise of discretion and value judgements put the corporate citizens in a quandary and the nation into disrepute?
An indiscriminate exercise of discretion is akin to a patient under the scalpel of a quack surgeon. I recall that several years ago, a certain important law had just been passed in a key sector in Nigeria. Months after, I had a meeting with the Director General of this very important new regulatory agency and I asked him when he planned to draft regulations typically made pursuant to the enabling law to guide stakeholders and streamline processes.
(Please hold your breath!!) This gentleman with a smile on his face said to me “I am not in a hurry to draft regulations because that will whittle down my discretion. For as long as we don’t have regulations whatever I say is the regulation.” How do we deal with these kinds of despots that have found themselves in positions of public trust yet cannot be trusted for a fraction of a mile?
These issues raise fundamental questions:
Do we realize that most regulators are judges in their own cause because they decide if there is an infringement and then they decide the penalty for such infringement? Perhaps we should have a system where a regulator investigates a matter and passes its findings to an Ombudsman to review and decide if there is an infringement and if so suggest the appropriate penalties. Many regulations are so obsolete and archaic that perhaps major regulations should have sunset clauses that make the regulations expire after, say, ten years so it can go back for fresh stakeholder engagement and legislative review.
Indeed, I have asked just so many questions! Permit me to ask just one more: When so many questions may be asked, is it a symptom that somethings are wrong?
About the Author
Ayuli Jemide is Founder and Lead Partner of Detail Commercial Solicitors. An entrepreneur, public speaker, author and adjunct faculty, Lagos Business School. Email: AJ@ayulijemide.org Twitter: @JemideAyuli
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