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THE  public hearing called by the House of Representatives Committee on the Capital Market to examine circumstances surrounding the 2009 spectacular collapse of the market took off on a very shaky start with credibility crisis threatening to drown it.

The hearing began with the Committee flaunting its powers by threatening to order the arrest of the Managing Director of the Nigeria Stock Exchange, Oscar Onyema. The threat took the center-stage in the media and drowned the presentation made by the Director General of Securities and Exchange Commission, SEC, which ought to be the fulcrum of the public hearing for the exercise to achieve its supposed goal.

In her 48-page presentation, Oteh expressed her conviction that Nigeria has the capacity to build a world class capital market as a catalyst for the realisation of the country's full potential.

According to her: 'The Nigeria Capital Market has the potentials that will engender high investor confidence, market integrity, efficient processes, adequate product offerings, sound regulatory framework, strong and transparent disclosure and accountability regime and good corporate governance'. These qualities, according to the SEC DG, are attributes of world class capital markets.

The exercise is meant to be a public hearing to help draw lessons from the market's past, take a look at the work that has been done since 2010 and make recommendations for a more sustainable capital market. Rather, the committee leadership began a systematic attack on the leadership of the SEC which had been roundly hailed for bold initiatives aimed at building a healthy capital market for the country.

The questions market operators and Nigerians are seeking answers to are: What happened to the market integrity issues that precipitated the fall? What of the issue of insider trading, wash sales, pump and dump? What of the other fraud and market abuses which were prevalent at the time of the market collapse?

Under Oteh, the Commission constituted a committee of experts to undertake a diagnostic review of the Nigerian Capital Market. In addition, Accenture, a reputable global management consulting firm, was engaged to assist the Commission with a review of the organisation's systems and processes with a view to enhancing operational efficiency. The US SEC was also invited to conduct a peer review of the Commission.

SEC in the area of regulatory oversight and enforcement under Oteh had taken various enforcement actions against operators and issuers with respect to inadequate filing of periodic returns and other market infractions. Seventy new rules and rule amendments have been released since 2010 to further strengthen the capital market.

SEC also took various enforcement actions against operators and some publicly quoted companies stating that between 2010 and 2011, 52 companies were suspended for various capital market violations, while 30 companies were referred to law enforcement agencies for further action.  The Commission, according to the DG, has strengthened its working relation with law enforcement agencies, especially the Federal Ministry of Justice, Economic and Financial Crimes Commission, EFCC and the Nigeria Police Force, NPF.

Instead of working to unravel what led to the collapse, the committee launched into an inquiry over frivolous allegations about how Access Bank had two staff seconded to SEC to support efforts at building critical human capacity. Ms. Oteh  used her personal goodwill to attract two people on secondment to the SEC from Access Bank.

They work in Brand Communications Support and Project Management / Premises Maintenance - two areas in which SEC was and still is deficient and which are absolutely unrelated to the regulatory mandates / roles of the SEC Nigeria. There is, therefore, absolutely no conflict of interest involved in the matter. They work pro bono, i.e. without earning any salaries at the SEC. They are not staff of the SEC and have no intention of taking employment at the SEC.

The DG of the SEC should be commended for using her goodwill to attract them at no cost to the Commission.

Phantom N850,000 food per day
Another issue which rightly or wrongly hogged headlines was the panel's allegation that on one occasion, the SEC DG ate a meal worth eight Hundred and fifty thousand naira (N850,000.00).

This allegation is thoroughly false and unfounded. Upon investigation, it was discovered that the actual amount spent was N83,400 and it was on March 24, 2010 at Transcorp Hilton Abuja. The bill for that meal was N83,400 and not N850,000.00.

Ms Oteh has alleged that the Chairman of the House Committee on Capital Markets, Rep Herman Hembe demanded N39 million and N5 million bribes respectively from her.

She also accused the lawmaker of collecting estacode and other travelling allowances for a foreign trip to Dominican Republic from SEC but neither went nor returned the money. Oteh openly challenged Hembe to 'tell the Nigerian people whether you travelled or not, and if you did not go, please tell the Nigerian people if you have returned the money.' She added that 'I do not think I was given fair hearing. Was it because SEC did not give the N5million in cash as requested on Tuesday March 13, 2012?'

The integrity of the House of Representatives Committee on Capital Markets has shredded before the whole world and this has thrown up a credibility issue both on the committee members and its work. Responding to this weighty allegation, Hembe failed to say if he collected money for the ticket and estacode to the Dominican Republic and if he actually made the trip to the conference. He merely urged the EFCC and ICPC there present, to immediately investigate the fundamental issues raised against him, the entire committee and the whole House.

Meanwhile, the Nigerian Bar Association (NBA) and the Civil Liberties Organisation (CLO) have urged the Chairman, Capital Market Committee of the House of Representatives, Hon. Herman Hembe, to step aside due to the allegations of corruption levelled against him and some members of the committee by the Director-General, Securities and Exchange Commission (SEC), Ms. Arunma Oteh.

The Nigerian stock market which has been battling for survival from the comatose state in the 2008/2009 melt-down had plummeted again; no thanks to the House committee probe on the capital market. Trading at the Nigerian Stock Exchange had inched up by 0.64% on March 12, 2012.

Mr. JACOB ODIA, a Market analyst, wrote from Lagos.