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MY THOUGHTS ON THE STOCK EXCHANGE CRISIS

By NBF News

On Thursday, 5th August 2010, the Director General of the Securities and Exchange Commission (SEC), Ms. Arunma Oteh, and some of her senior staff, leading about 150 heavily armed security personnel (members of OSF Mobile Police Unit of The Nigeria Police Force and the State Security Services {SSS}), invaded the premises of The Nigerian Stock Exchange in military commando fashion and through brute force usurped the powers of the Council and Management of The Exchange. As we speak, there is still a detachment of these security agencies stationed inside the offices of The Exchange. According to SEC, this unprecedented and unlawful intervention in the Council and Management of The Nigerian Stock Exchange (private sector institution) was in response to alleged and unfounded issues such as:

-  'Inadequate oversight of The Exchange'
-  'Ongoing litigation'
-  'Allegations of financial mismanagement'
-  'Governance challenges', and
-  'Inordinate delays in the implementation of management succession'

We shall look at these issues in some detail later, as I intend to proceed to the immediate reason for calling this press conference.The intervention of the SEC in the governance of The Stock Exchange has had dire impact on persons and institutions involved in the operations of The Exchange and its market. As to be expected in the current governance miasma at The Exchange, on 26th August 2010, the Sole Administrator, Mr. Emmanuel Ikhazobor, without due process, sacked 32.5% of the workforce of The Exchange in an exercise he described as 'right-sizing' of the workforce, but which in fact was an exercise in witch-hunting and an initiative to forestall possible opposition to a grand design by a 'cabal' to take over the ownership and management of The Exchange for personal gains, as opposed to all the pretence about 'serving public interest'.

The so-called right-sizing was without any consideration and approval by the Finance and General Purpose Committee of Council, which has responsibility for all staff matters. Significantly, even the Council that was purportedly reconstituted by SEC that was said to have approved the proposal to right-size the workforce at its meeting of 25th August 2010 did not have any appreciable insight into what was proposed, as no names, functions or files of the affected staff were provided to Council members who were cowed into granting the so-called approval by the presence of heavily armed mobile policemen by the door of the Council/Board room.

It is pertinent to note that in the October 2009 SEC inspection report, the point was made that there was an 'inadequacy of staff to effectively discharge all functions of The Exchange'.

Therefore, should The Exchange be 'right-sizing' its workforce at this point in time? These are highly trained technical and skilled officers, and I wonder where The Exchange will get a replacement for such personnel. I wonder because there is only one Stock Exchange in Nigeria where people can acquire skill and experience in running a stock exchange, unlike in banking where a highly skilled banker can readily be sourced and moved from one bank to another without further training. So, I highly consider this action of the Sole Administrator as a disservice to the capital market and the economy as a whole. A high number of these aggrieved staff are my clients and I have their instruction to file a class action suit in order to protect their rights and jobs, and to prevent further damage to their reputation and psyche.

From my understanding, The NSE is a 100% private organization. I wonder what it has done to warrant a complete takeover by SEC as we are currently witnessing. This is a company Limited by Guarantee that is not into deposit-taking from the public. I need to be educated on this development. Does the mere declaration of an organization a 'public interest entity' predispose it to the kind of takeover that has been demonstrated at The Exchange? I believe that this has grave implications for Nigerian businesses. Stakeholders of The Nigerian Stock Exchange should also be concerned about the fallen staff morale at the organization, as there is uncertainty among the remaining workforce of The Exchange as to their future in the organisation, given sustained hints of further reduction of workforce and the sustained presence of armed policemen inside and around the offices of The Exchange.

The sole administrator has continued to hire staff through the back door after the so called rightsizing exercise designed and conceived to victimize the original members of staff. With the active backing of security agencies who may not know the limit of their duties, arbitrariness, intimidation and blackmail have become the order of the day at The Exchange as staff are sacked and dismissed without consideration for due process. Staff have been made to sign letters of resignation under duress, with threat of termination of employment and personal embarrassment from armed mobile policemen that have become a feature of The Exchange. Staff are now searched as they arrive and leave the office.

They have been directed to leave their computers, files/file cabinets and drawers open and to leave the office by 5 pm daily, leaving the so-called forensic and hostile auditors and lawyers to rummage through these records. Can these records not be tampered with to the advantage of the so-called investigators? Ordinarily, should these records not be inspected in the presence of the affected officers?  My brief is that the role of Alhaji Aliko Dangote in all of these is that having failed to hijack the 51 % equity of the Nigerian Stock Exchange which the sacked management kicked against, he has positioned himself to do so through the help of SEC and his associates. He has been the second vice president, first vice president and later president of Council of Nigerian Stock Exchange from 2006 – 2010. At no time did he raise issue(s) with the accounts of the Exchange.

He infact was the President/Chairman before he was sacked by the Federal High Court, because he failed to have the support of the sacked management in his desperate moves to thwart and frustrate the implementation of two separate court judgments ordering him to vacate the office of the president of council of NSE. Curiously, Aliko Dangote who still has Bench Warrant dangling like a sword of Damocles over his neck moves freely around the country and has conveniently agreed to respect the status quo ordered by the courts over 7 months ago and now informed the SEC appointed President and Interim Administrator that he is still the first vice president. WHAT A COUNTRY!!! Dangote through his wealth and political influence now chooses when and how to obey ORDERS OF OUR HALLOWED COURTS!!!. In his letter dated August 9, 2010 addressed to the interim president and copied to the sole administrator, which I shall make available to you all, Dangote advised that 'The NSE is now saddled with a bloated workforce whose output quality is quite suspect'.

The public should know that NSE has only 297 staff while SEC has 700. The sole administrator and the interim president obviously took a cue from Dangote's letter and sacked these Nigerians from the NSE. It is obvious that Dangote now controls the Nigerian Stock Exchange. I reiterate that in the recent sacking of staff of The Exchange, the Finance and General Purpose Committee of the Council was bypassed. Contrary to the observation of the SEC inspectors and the Accenture-facilitated Enterprise Transformation Programme of The Exchange, staff were sacked when in fact more hands are needed to drive the business to the next level. The Interim Management of The Exchange played on the intelligence of Nigerians when it said the exercise was 'rightsizing' instead of correctly calling it witch-hunting and an action taken to facilitate total control of the ownership and management of The Exchange by some shadowy self-serving cabal.