Why Publishing Names of Delinquent Bank Debtors is in the Public Interest

Sunday, December 06, 2020 / 11.37AM / OpEd By
Legal Counsel* / Header Image Credit: DebtorsAfrica

This is a
rejoinder to the post ‘The CBN Directive on Publication of Delinquent Bank
Debtors: Some Data Privacy Ramifications’ refers.

By way of introduction to the issue of the legal basis of disclosing the
information of debtors by Banks (which amounts to processing of such
information), it is pertinent to state that it remains to be settled whether
or not the fact of indebtedness is information personal to a debtor.

This is because the information is one jointly owned by the debtor and
the creditor upon which they both have a right to use. More in the same way the
name of a wife is information which the husband can use as a reference to her
being his wife without needing to get consent. It is shared information not
personal information. This is because the information itself is in relation to
another entity.

For further clarity, the information that a debtor is indebted to a
creditor is the economic information of the creditor as much as it is that of
the debtor; and it is not information personal to anyone of them.

However, the issues raised in the article will be dealt with on the
premise, without concession, that the fact and amount of indebtedness is
economic information personal to the debtor.

It
is herein argued that there are three (3) lawful basis for disclosing (processing)
the information of a debtor vis:

First, processing is necessary for the performance of a
contract to which the Data
Subject is party or in order to take steps at the request of the Data
Subject prior to entering into a contract;

The contract for obtaining
the loan is a contract to which the data subject is a party. By entering into
the contract, every personal information supplied can be processed and used for
the purpose of performing the contract. It is important to note that the
performance of the contract is not complete at the point of issuing the loan,
which is only one leg of the contract, but is only complete at the point at
which the loan is repaid.

Consequently, the bank is
at liberty to use the data and information of the debtor for every action it
needs to help it perform the other leg of recovering the loan. These actions
can include transmission to a newspaper, a debt recovery agency, and a legal
practitioner.

By extension, a third
party is also allowed to process the information for the purpose of performing
the contract which the data subject is a party to. It is important to note here
that it is the data subject who is required to be a party to the contract and
not the processor. Any other third party can process the information to the end
that the contract might be performed. The act of publishing the names of the
debtor, filing an application in court, or otherwise doing any action to
recover the said debt is an action necessary for the performance of the loan contract
provided that the methods of recovering the debt has not been limited by said
contract.

The second basis for processing
the said information is because processing
is necessary for compliance with a legal obligation to which the
Controller is subject.

This is a rather glaring
one as the banks are subject to regulation of the Central Bank of Nigeria as
provided by the BOFIA Act. Consequently, banks are duty bound to comply with
any regulation of the Central Bank to the extent that it does not conflict with
any other existing law. It is important here to state that the regulation of
the Central Bank does not conflict in any way with the NDPR as what the CBN
requirement that banks publish the names of delinquent debtors does is to
create a legal obligation which is anticipated by the NDPR thus providing an
exception for banks if they had been otherwise unable to process such data.

The fact that the author
of the directive, the CBN, is itself subject to the NDPR and to regulatory
supervision by NITDA on data privacy issues does not go to the root of whether
the CBN can create a legal obligation to process information on its subjects.
As an illustration of this point, the National Assembly and Supreme Court are
also subject to the NDPR and regulatory supervision on data privacy issues by
the NITDA, it would be ridiculous to state that they cannot create a legal
obligation to process data.

The NITDA is not empowered
to determine exactly what information any particular body can process, but only
to make provisions on the circumstances under which processing can be done.

Lawful processing by
virtue of a legal obligation is present in the NDPR in order that government
agencies would not be hampered in the discharge of their legal duties and
functions. The NDPR is not a super enactment that can be elevated to the
position of the Constitution. Was there a legal obligation created? Yes. Is the
creator of the obligation authorised to create such an obligation? the answer
is also in the affirmative. Thus, it is clear that information of debtors can
be processed.

The third basis for processing
under the circumstances is that it is necessary
for the performance of a task carried out in the public interest or in exercise of official public mandate
vested in the controller. This is because the issue of delinquency in the
banking sector has become a systemic issue with serious implication for
the banking sector and economy at large.

Recall that
the issue of non-performing loans was so bad that the Asset Management Company
of Nigeria (AMCON) had to be created to deal with the problem. The Debtors
Report particularly does an analysis of the issue of NPLs. An Executive
Summary of the report is available here. Thus, the need to
tackle the issue of non-performing loans is one of public interest.

Publishing
the names of delinquent debtors is also of public interest as it aids members
of the public in discerning who to go into business with. The need to rid the
banking sector of delinquent debts is therefore a matter of public interest and
is a lawful basis upon which information of debtors can be published.

Conclusion

In summary it is important to note that the era of hiding behind the
cloak of anonymity for debtors is past and a new industry approach has been
adopted to aid in unmasking the character of delinquent debtors and thus reduce
the exposure of the banking sector and indeed the economy to them.

The laws are in order and the NDPR is not a clog in the administration
of this new credit regime.

Note

The
above article was written by the Proshare In-House Counsel on May 21, 2020 and
since then, we have published this judgment delivered by the courts – For Publishing
Debtors List – Court Dismisses N5bn Libel Suit against THISDAY, Diamond Bank – July 17, 2020