U.S. Treasury Pressure Leads to New Probe of African Bank Chief

ABIDJAN (Capital Markets in Africa) — The African Development Bank’s board decided the lender should order a new independent probe of its president, Akinwumi Adesina, after U.S. Treasury Secretary Steven Mnuchin rejected an internal investigation that cleared him of allegations of favoritism, according to two people familiar with the board’s deliberations on the matter.

Africa’s largest multilateral lender agreed to the inquiry after several foreign governments backed the Treasury’s criticism of a bank-led examination into the allegations, the people said, asking not to be identified because details aren’t yet public. Adesina, who has repeatedly denied wrongdoing, may have to step back from the role until the probe is completed, they said.

The Abidjan-based lender declined to comment. Adesina didn’t immediately respond to an emailed request sent after regular business hours seeking comment, while a call to his mobile phone didn’t connect.

The investigation comes three months before the Abidjan-based bank’s annual meeting, at which Adesina is the sole candidate to extend his five-year term. The AAA-rated lender’s 80 shareholders in October pledged to provide funding that will help to more than double its capital base to $208 billion.

Denmark, Sweden, Norway and Finland are among countries that wrote to the AfDB to back the U.S. Treasury Secretary’s demands for professional outsiders to look into the allegations, the people said. A representative for the Nordics declined to comment.

Mnuchin last week wrote to the AfDB to express “deep reservations” about the integrity of the lender’s ethics committee after it exonerated Adesina.

The scope and detail of the allegations are serious enough for a further inquiry to ensure the AfDB’s shareholders have confidence in the bank’s leadership over the next five years, Mnuchin said in the May 22 letter addressed to Niale Kaba, the chairwoman of the bank’s board of governors.

Biggest Shareholder
The U.S. is the AfDB’s biggest shareholder after Adesina’s home country of Nigeria.

Unidentified whistleblowers accused Adesina, 60, of handing contracts to acquaintances and appointing relatives to strategic positions. The demands for an independent probe are aimed at ensuring that if the allegations are baseless, the process of reaching that conclusion is public and transparent, one of the people said.

Shareholders of the AfDB include 54 nations on the continent and 27 countries in the Americas, Europe, Middle East and Asia. It has an AAA rating from Fitch Ratings, Moody’s Investors Service and S&P Global Ratings.

“If there are questions from major shareholders on the appropriateness of an internal process, clearly it’s not harmful if that is put into a different light and looked at from the outside world with fresh eyes,” S&P analyst Alexander Ekbom said before the decision of the probe was taken. “We don’t necessarily require such or we don’t advocate for such.”

Prior to Mnuchin’s letter to the board, African leaders including South African President Cyril Ramaphosa and his Nigerian counterpart, Muhammadu Buhari, expressed support for Adesina and commended him for his efforts to help secure funds for Africa to deal with the fallout from the disease.

Source: Bloomberg Business News