By NBF News
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The sack, last Wednesday, of the Director General of the Nigerian Stock Exchange (NSE), Prof. (Mrs) Ndi Okereke-Onyiuke, three months to her voluntary disengagement, may have come as an unexpected denouement of an in-house struggle whose battle cry was ignored for long.

No wonder, when the news broke, there was manic merriment among the change champions, who had almost shouted themselves hoarse for a change of baton at the bourse-one of them, in what could be regarded as a whistle blowing in some quarters, had recently posted an alert in the web:

'The index being up in excess of 20 per cent does not make our market attractive when all sorts of transgressions are being carried on with impunity that stem from poor corporate governance practices and pursuing the interests of a selfish few instead of the good of the majority.'

Okereke Onyiuke's travail was said to have started when, Accenture, the recruitment agency handling the selection process of a new Director- General for the Exchange, suspended the exercise

In a letter addressed to the Council of the Exchange in June, and quoted by a news report, its country Managing Director, Niyi Yusuf, was said to have expressed his displeasure over the failure of the NSE to keep its own side of their agreement. The letter read in part: 'As agreed in the contract with the NSE, our payments were to be made in instalments and based on invoices which are payable upon presentation. However, despite all the necessary invoices, Accenture is yet to receive any payment on all outstanding invoices. We have written formal letters of reminder of this indebtedness to the management of the NSE to no avail'.

The letter added: 'while we are mindful of the constrained financial position of the NSE, but given this level of indebtedness and absence of a firm assurance of payment by the NSE management, we will unfortunately not be able to commence any additional work (executive selection, trading platform selection completion and implementation of the operating model), until all outstanding invoices are duly paid in full'. These outstanding invoices are conservatively put at N119.5 million.

As if that was not enough, Alhaji Aliko Dangote, came out with another stinker that about N900 million used in running the operations of the Exchange was a borrowed plume from the Central Securities Clearing System (CSCS), the main clearing house of the bourse. He explained that the Exchange is currently dipping its hands in the CSCS accounts for N900 million to support its cash deficit position.

This was one piece of evidence that formed the plank upon which Dangote built his petition to SEC about the Stock Exchange's insolvency. According to him, the 13th month salary of the staff for 2009 was not paid in December due to cash crunch and that the annual president's dinner did not hold due to fund paucity.

He challenged the management of NSE to submit itself to forensic audit by reputable auditing firms. Not done yet, he alleged that most of the failed banks' audited accounts were later found to be doctored. In the petition, he urged Security Exchange Commission (NSE), to investigate the accounts and books of the Exchange, saying: 'I assure you that if it is done, the revelation in the banking industry will be a child's play when compared to the rot in the Exchange' .

Other details of his allegations were that the management has not presented 2009 audited financial statement, seven months into another financial year, neither has it been able to produce for consideration by the Finance and General Purpose Committee of the council, interim financial statements for the first and second quarters of 2010.

He added: 'At the end of 2007, NSE had a surplus cash position of over N9 billion and as of today, the Exchange is in deficit and is unable to meet its obligations when due. The current inter-company balances with inter-company/associated companies amount to over N3 billion, which have been built over a period of years. Similarly, investment in such companies is now in excess of N1.3 billion without any commensurate return being accounted for.'

Dangote also asked SEC to urgently audit the Exchange's pension scheme, to gain a thorough understanding of the extent of its liability. For instance, he said there was an actuarial valuation done which presented a deficit funding of N2.6 billion. Over N423 million of the amount was said to be kept in an insurance company, for which the existence of the funds is yet to be ascertained. In the petition to SEC, Dangote said: 'I am concerned that unless something is done urgently, the NSE may soon face financial bankruptcy as it will not be able to meet its financial obligations'.

In a swift reaction, the Exchange dismissed all the Dangote's allegations of financial mismanagement of funds. In a statement made available to the press, Mr. Sola Oni, Head of Corporate Affairs, said that the Exchange was not insolvent. According to him, the organization was meeting all its obligations when due and that staff are not owed salaries and allowances. 'The retirees receive their cheques promptly and the Exchange does not owe any bank or individual. If there is any form of owing it could be that such a company is handling project that has not been completed.

Even at that, The Exchange must have made some pre-payment,'

He said that no organization in Nigeria is fully insulated from the effects of global market downturn, adding that the NSE is certainly affected by the meltdown. However, he said the Exchange has always been prudent in the management of its resources. As part of prudent management , he stated that the Council directed a downward review of staff salary and benefits in view of low revenue following the global financial crisis, saying that that does not mean insolvency.

On the alleged mismanagement of N42 billion income, the Exchange spokesman said the figure was misleading and that as a corporate citizen, it granted heavy discounts to banks during the consolidation programme. 'Also, there had been several instances when the Exchange simply charged nominal values against its actual commission. Unfortunately, some people simply calculate the Exchange's fee based on the standard commission whenever companies come to raise capital. That is why anybody cannot just assume that the Exchange charges its commission on the strength of the value of money to be raised by a prospective company. The said income is less than N42 billion anyway,'

Explaining NSE's pension operation, Oni noted that there was nothing wrong with its pension , saying 'we have been remitting our pension on monthly basis. Our pension is managed by NLPC Pension Fund Administrators Limited, a well-known company. Our pension cost increased because we had to backdate it by 20 years when we commenced. We had to backdate it by 20 years when we commenced, otherwise those who had worked for the Exchange for several years would be left in the cold.'

He added: 'The decision posed some challenges at the initial stage because we needed a huge capital to back up the scheme. We are now on course. This is a matter of being fair to them. But everything we did on the pension was approved by the Council. We have no problem with our pension managers'.

On the non-presentation of accounts, Oni said that the council approved the draft accounts as preparatory to statutory audit as far back as March , adding that the auditors, Messrs Akintola Williams Deloitte , have concluded the audit and that their report would be out in a matter of days.

He said: 'The auditors called for the consolidation of the accounts with that of its subsidiaries which include naira properties in charge of Lagos Building and Coral Properties in charge of Port Harcourt building, NSE Consult and our Associated Company, the Central Securities Clearing System (CSCS) Limited.

'Also, the Exchange does not publish its account until most of the quoted companies have done so in order to enable us capture some data for inclusion in our own financial statement. Usually, we publish our accounts around August before the Annual General Meeting. We always send our audited accounts to African Securities Exchanges Association (ASEA) World Federation of Exchanges (WFE), and other international organizations'.

On the query from the auditors, Oni said the NSE received none, adding that it is good to appreciate that the accounts of the Exchange is the final responsibility of the President and other council members, and not the management. 'The council scrutinizes the management account, approve it and lay the account before the Exchange's members at the Annual General Meeting. In essence, all the previous accounts were scrutinized and approved by the council before the Annual General Meetings This is the due process'.

Based on all this, SEC viewed the allegations very grave and then decided to wield the big stick.

The commission, in a statement by its Head of Media, Mr Lanre Oloyi, said it has closely followed the developments in the Exchange, particularly with respect to inadequate oversight of the Exchange, ongoing litigation, allegations of financial mismanagement, governance challenges, and the inordinate delays in the implementation of the succession plan for the Exchange.

'In following the developments, the commission has at all times carefully deliberated on the implications and ramifications of a direct intervention in the affairs of the Exchange. In this deliberation, the commission weighed the consequences on the market of a direct intervention set against the broader goal of safeguarding the interest of the public and protecting the investor.'

As a result of this, the commission decided that to take a number of decisions, which are as follows:

'That the Council Member elected as President of the Exchange in defiance of the Court order cease acting as the President pending the outcome of the ongoing litigation; Council Members elected in defiance of the Court order cease acting as members of the Council pending the outcome of the ongoing litigation; current Director-General of the Exchange, Professor Ndi Okereke-Onyuike, be removed from the office of Director General/Chief Executive Officer of the NSE; That the affairs of the Exchange are managed by an Interim Administrator appointed by the Commission pending the selection of a new Director General.

'These actions by the commission reinforce the integrity of our markets and demonstrate commitment to accountability, particularly given the importance of ensuring adequate oversight at all times and demonstrating that when there are shortcomings, as the apex regulator, the Securities and Exchange Commission will step in decisively to address these issues in the public interest and to protect the investors.'

With this fiat, the 10-year tenure of Madam Okereke-Onyiuke as the Director General of the Nigerian Stock Exchange(NSE) was consigned into history around 10 pm on Wednesday August 4, 2010. She was appointed in January, 2000.

Okereke-Onyiuke's journey in the corporate world began at the New York Stock Exchange where she rose to the managerial cadre before she returned home and joined the NSE on February 21, 1983.As a youth, she was exceptionally brilliant. She passed out with Grade 1 in her West African School Certificate Examination in 1965.  This was capped with a distinguished performance at Higher School Certificate Examination at Queen's School, Enugu, her alma mater in 1967.

The intellectual strength manifested in her graduation with First Class Honours in Business Administration, Computer Sciences and Economics at the Baruch College of the City University of New York in 1975.She obtained her Master of Business Administration, (MBA) specialising in Finance and Computer Science at City University of New York, Graduate School in 1977.  By 1980, Dr. Okereke-Onyiuke had comfortably completed her Doctor of Philosophy/Doctor of Administration in Finance and Securities Market at City University Post Graduate Centre, New York. She was awarded Order of the Niger (OON) by the Federal Government of Nigeria in 2001.

On assumption of duty in 2000, the Market Index hovered between 8,000 points, and 9,000 points wrapping up the year at 9,542.39. It hit the 10,000 mark in 2001, and by Wednesday when she was sacked, it closed as 25,691.30 points . But before then, in the first quarter of 2008, it hit an all time high of N12.64 trillion with the index above 60,000 points.

On assuming duty in 1983, she dazzled the council and management of The Stock Exchange by strengthening the organisation's research base.  She was highly instrumental to the computerization of the Exchange in 1985, a development which included the creation of 'The Nigerian Stock Exchange' All Shares Index – a barometer that gauges the mood of economy.  In the same year, she spearheaded the training of potential stockbrokers by starting off The Stock Exchange's Authorised Clerkship Examination.

Today, the examination is midwifed by the Chartered Institute of Stockbrokers (CIS).  The credit goes to her that Nigeria stockbrokers have a pride of place in the international stock markets. She brought her technical know-how to bear on the Exchange at the inception of the privatisation and commercialisation programme of the Federal Government.  As the head of the Exchange's Quotations Department, she was the Chairman of the Technical Committee on Privatisation and Commercialisation (TCPC) now Bureau for Public Enterprises (BPE).

Her laudable contributions to the committee's achievements earned her special commendation from The Exchange and the Federal Government. In April, 1997, her efforts as the Project Director of the CSCS Limited was crowned with success with the commencement of automated delivery that is Central Depository, Clearing and Settlement System.  Her concerted efforts with Rasak Oladejo, the Project Director of Automated Trading System (ATS) culminated in the success story of the new trading regime in April, 1999 (T+5) and on March 1st, 2000 (T+3) in line with developments in advanced markets.

As an accomplished securities strategist, she emerged as the Chairman of the African Stock Exchange Association (ASEA) listing committee whose mandate is to produce a standardized minimum listing requirements for ASEA members to facilitate cross-border listing in Africa .  She has always served on the ASEA committee on harmonisation of qualifying examination for stockbrokers in Africa .In 2009 in Abuja, she was appointed its Chairman.

Despite her acclaimed success at the Exchange, her travails actually started in 2008, when she tried to raise funds for the presidential campaign of Mr Barak Obama in the United States through an outfit known as 'Africa For Obama,' but a swift disclaimer by the Obama campaign team led to the subsequent collapse of the scheme. Earlier, she was embroiled in the controversy surrounding her chairmanship of Transnational Corporation of Nigeria Plc(Transcorp), a company established by former President Olusegun Obasanjo to serve as a private sector response to economic reform initiatives of his administration.

The third cause was the capital market crash that saw investors lose about 60 per cent value on their investments. Many operators and investors had complained then that the pre-May 2008 Okereke-Onyiuke/Musa Al-Faki leadership was a bad combination that must be changed if investor confidence must return to the market.

Surprisingly, the stocks reacted positively when the news of her sack hit the market, and the bulls returned after three days of bears' domination . More and more reactions continue to trail her exit from the Exchange. While some people thumbed up the action taken by the apex regulator of the capital market, particularly for living up to its statutory duties of safeguarding the interest of the public and protecting the investor, others were simply stupefied. Mr. Okechukwu Unegbu, former President of Chartered Institute of Bankers of Nigeria (CIBN), said that SEC is using the power of a court. According to him, the development was long foreseen, but that government and all its agencies should be proactive in all their actions.

Unegbu said: 'What we are seeing is the result of regulators not being mindful of certain pronouncements they make. Some statements are inflammable and so ought to be selected and its impact on the public considered. If SEC had asked the DG to proceed on an indefinite leave from where she would be relieved of her duties it would have been honourable. Regulators should be mindful of the impact of their pronouncements on both local and international investors. The way and manner these issue is handled would be the way it will improve on market growth and performance'

He said that the action may erode the confidence returning in the market which will be disastrous.

According to Emeka Madubuike, CEO, Compass Securities Limited who feels confused at the development; the market community is shocked at the extemporal action taken by SEC. He said that what the stockbrokers and the investing public is anything capable of increasing market performance.

Chief Ben Omanukwue, Managing Director and Chief Executive Officer, Krabo Nig Plc, said SEC's action look political. According to him, Dangote, who insisted that Okereke Onyiuke should either resign or tender an unreserved apology to him said so because he wants to tarnish her image. 'It is only two months to her retirement. For Dangote to champion her exit from the Exchange in this manner is seen from the angle that he doesn't want to go down alone. I see it as political, otherwise how many cases have Dangote had since his adventure into the NSE.

Another stockbroker, who chose to be anonymous, said that the action of the Commission may have little or no effect on the market. According to him, it is transient which is capable of fizzling out as a matter of time. He stated that SEC is only doing its regulatory functions. On whether the stockbrokers were consulted, he said they were informed before the appointment of the interim administrator. He said that they were informed but not consulted as SEC was on a mediatory mission.

Another stockbroker, Prince Okafor of Silver and Gold Securities Limited, said it is unnecessary. He summarized the battle as the issue of two fighting elephants fighting. According to him, SEC and Dangote are indulging in eagle play, saying that the action is capable of hitting up the market. He noted that Dangote benefited from the market more than any other person. 'This battle that is being raged is on the levels of the public because tomorrow now the issue will become family affair. It is really uncalled for because I can't see where the action is heading to.

'What is the rationale for appointing the man who has been auditing the accounts of the Exchange to become the interim administrator? The whole thing looks absurd. We should know that banking and capital market are not the same. The interventionist theory of the banking industry cannot work effectively in the capital market. Regulators should always trade with caution not to destroy the building it is erecting. The battle has just started,' he said.