Independence That Is Not Independent

Independence is a relationship test, not a label. Apply both quantitative materiality (fees, contracts, shareholding as a share of the director's income or the counterparty's revenue) and qualitative tests (past executive role, family ties, long tenure, professional entanglement).

• Emeka (chair): not independent. Twelve years plus a family link to a 22% shareholder creates both tenure and relationship concerns; a founder-related chair cannot credibly lead evaluation of the founder's interests.
• Ngozi: not independent. ₦12 million of consulting fees is a continuing commercial relationship and, on any reasonable test, material to her. "Brand strategy" work is also close enough to management to blur oversight.
• Tunde: not independent. A former MD of a subsidiary is a former executive; the standard cooling-off period has not elapsed, and his knowledge of the subsidiary creates loyalty risk.
• Chidi: prima facie not independent. The lease is 6% of the lessor's revenue, so his company depends on the bank; even if immaterial to the bank, dependence flows the wrong way for an independent director.
• Audit committee chair: a former partner of the incumbent audit firm is a professional relationship that compromises audit committee independence even after partner rotation.

Consequence. On the facts, the bank has no genuinely independent NED. That is a disclosure problem, a supervisory problem and a governance problem: the board cannot claim an independent element in its annual report, and the central bank's remediation plan must address substance, not relabelling. Re-designation without changing relationships would be misleading and worsen the regulatory position.

A workable plan has four tracks, sequenced to avoid a boardroom crisis:

1. Relabel honestly now. Remove the "independent" designation from Ngozi and Tunde in the current year's report and explain the relationships. Correcting the record before the regulator does is far cheaper than defending it afterwards.
2. Recruit two or three genuinely independent NEDs. Use a search committee chaired by a director unconnected to the founder, with a published role specification. Target people with digital/core-banking, risk and financial-reporting expertise to close the skills gap, and require at least one woman candidate on every shortlist.
3. Fix the chair and tenure. Separate the chair from founder influence: either Emeka steps down as chair or the board sets a firm end date and appoints an independent chair. Adopt a tenure policy (commonly nine years, with a hard stop) and apply it prospectively so the board is not seen to ambush long servers.
4. Repair the audit committee. Replace the former audit partner as chair with an independent NED, and review whether the firm's total relationship with the bank (non-audit services, alumni links) still supports independence.

Sequencing. Do the honest relabelling and audit committee change before the AGM; announce the search with a timetable; stagger retirements so quorum and institutional memory survive; document every step in board minutes for the regulator. Brief the central bank on the plan before the AGM rather than after.

Independence reforms fail when they are handled as a power struggle. Practical safeguards:

• Frame it around the regulator and the strategy, not personalities. The central bank letter and the delayed core-banking migration give objective reasons for change; use them.
• Engage the founder early and privately. A 22% shareholder can block or poison an AGM. Offer a legitimate role - for example, founder director without chair or committee seats, or an advisory council - rather than a public defeat.
• Protect the CEO's mandate where it is working. Board change is not management change. Confirm the CEO's authority in writing and avoid independent directors drifting into executive decisions.
• Use a board effectiveness review to generate the case for change and to set a baseline against which the new board can be measured in 12 months.
• Disclose progressively. Investors and the regulator should see a plan with dates, not a surprise at the AGM. A short governance note in the annual report explaining what changed and why reduces speculation.
• Watch for backlash symptoms - information withholding by management, informal pre-meetings, resignations of the newly independent directors. If these appear, address them in the chair's private sessions, not in open board confrontation.