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ABUJA -THE on-going Public Hearing on Near Collapse of the Capital Market in Nigeria took another twist, yesterday, as principal officers of the Securities and Exchange Commission sang discordant tunes that revealed the turmoil in the house, where the major actors work at cross purposes.

At the hearing, yesterday, all commissioners of Securities and Exchange Commission, SEC, who were supposed to assist the Director General to find her bearing claimed the Director General, Ms Arunma Oteh kept them out of the roadmap for a world class Capital Market.

All the commissioners present at the public hearing spoke with one voice that the Director General was running a one man commission at SEC. Ms Oteh who was threatened on Tuesday with arrest by the committee for her failure to appear, however, tendered an unreserved apology to the committee when she appeared yesterday.

She got a shock of her life when all her management staff who were to give her support publicly disowned her, alleging that they were not carried along in the taking of critical decisions concerning the commission. Oteh looked visibly shaken, dazed and almost incoherent and was severally cautioned by the committee as she refused to join issues with the executive management. Instead, she insisted that she was focused on the transformation of the capital market.

This development led the ad hoc committee of the House of Representatives to openly decry the disharmony that existed between the management team of the Commission (SEC), saying this could hamper the reform agenda and the envisaged goal of achieving a world class market. Chairman of the Ad-Hoc Committee, Mr. Ibrahim El-Sudi blamed the disharmony among the management team for the lack of coordination and communication in the activities of the commission; a development which he said has led to friction. 'There is a concept of team, which says together, each achieve more. If teamwork is absent in SEC, how do you people intend to achieve your goals and objectives' he queried.

From right, Director General of SEC Aruma Oteh addressing House Ad hoc Committee on Capital Market while Executive Commissioner (Operation) Daisy Ekineh, SEC. Executive Commissioner Lawal Sani Stores, Executive Commissioner SEC Udora Charles, Director Legal and Secretary to the Commission , Mr Edosa Aigbekaen and HOD Enforcement and Compliance Department of SEC, Mr Eric Elujeka look on during Investigation on nearly Collapse of Capital Market at National Assembly Abuja. Photo by Gbemiga Olamikan.

The ad-hoc committee members also insisted that all vital documents containing the list of those who supported the Exchange during Nigeria SEC, at 50 celebration on October 31 last year should be submitted for further investigations. The committee however took the Director General of the SEC to task over her employment of two staff of the Access Bank Plc to the Commission when she was supposed to oversee the operations of the bank.

Committee queries SEC over engagement of Access Bank's staff

The committee also queried SEC over secondment of Access Bank Plc's staff to the commission as well as the use of contract staff, while undermining the skill of regular staff to execute its regulatory function, adding, 'this action of secondment could result in conflict of interest in your regulatory role'.

Oteh's response
In her response, Oteh explained that in respect to the engagement of Access Bank's staff, the Commission complied with laid down rules, adding, however, that the staff were engaged to help it in its branch expansion and facilities management service. She said: 'The commission discovered there were lapses in our regional offices and we needed people that will help us set up facility management services, where any Nigerian can walk in and get educated on the capital market issues. Having looked around we discovered that we can partner the private sector to help us build this. So we approached Access Bank that we discovered had done well in its branch expansion to help us in that regard. 'We don't think it will lead to any conflict of interest of regulating the bank as a quoted entity. That aspect of the job is not in our core duty. Besides, it is a global practice where regulators partner with private sector and multinationals to discharge their duty. For us in SEC, we are even partnering with IFC in the area of capacity building as well as bond issuing.'

Also, in response to Ndi-Okereke Onyiuke's claim that SEC is illegally collecting fees from the capital market, Oteh said it is not out of place for a regulator to seek funding from the market it regulates. According to her, regulatory activities come at a price, and the world over, it is not out of place for the capital market regulator to collect fees from operators in the market.'

Commenting on the use of contract staff by the Commission, Oteh said: 'The use of contract staff has been in existence before I joined SEC and there had been several complaints on the ratification and compensations. So right now we are looking at this issues and they are yet to be concluded. We have not undermined our staff but some people are not comfortable with change. Before now, most of our staff are used to analog system but right now most people are beginning to appreciate the use of computers and other communication gadgets. We have recruited young graduates with five years experience to address our short and medium term goal of meeting human resources challenges.  There are three stages of meeting the human resources challenges. For the long term challenges it requires recruiting people to top positions with long term experience and retraining of existing staff for long term purposes.  We have been training our staff based on the skill they require to do their job.'

SEC @ 50 Project
While commenting on project 50 to commemorate 50 years of Nigeria's capital market regulation, she, said: 'This was organized to celebrate 50 years of capital market regulation which started in 1962, when SEC was called Capital Issue Committee under the umbrella of Central Bank of Nigeria. This committee metamorphosed to Capital Issue Commission in 1973 through a decree and later to SEC in 1979. This project was sponsored by some private sector and regulatory bodies, such as CBN, Ministry of Trade and Investment, and other private entity. There was no donation made to SEC. SEC provided its own fund which is accountable. Since you require the document for the organization of project 50 I will submit later.'

Lack of team work
Executive Commissioners of SEC present at the hearing denied knowledge of the engagement of the Access Bank staff and in the employment of contract staff and they all agreed that Oteh acted alone and without due consultations. They accused Oteh of undermining the staff in the handling of the affairs of the commission, saying she is not receptive to ideas of staff members; a situation which they said has led to acrimony, disharmony and dysfunctional operations in SEC's regulation of the capital market.

The Commissioners said Oteh does not refer to them in taking crucial decisions and that this has created a rift among the management and staff of the commission.

Regulatory comatose, disharmony in SEC
'There is presently what I can refer to as 'regulatory comatose' in SEC. The manner in which things are being handled in SEC, today, is causing disharmony and disaffection among staff members,' averred Mr. Charles Udora, Executive Commissioner, Legal & Enforcement, SEC. Udora disclosed that the commissioners were not being carried along in the decision making process and that suggestions and new ideas are being received by Oteh in anger. He added that the exclusion was also extended to the employment and engagement processes, stating that these have brought to the fore a number of issues in the organization.

He said: 'This has brought in its wake, irregularity in staff promotion exercise. There is a case where a staff who graduated in 1998 was promoted above a very qualified staff that has a combined experience of 20 years, working in SEC and in other places.

'The issue of contract staff employment is negatively affecting the morale of staff. It is causing disaffection, disharmony and friction among SEC's staff. The disharmony has led to a situation of regulatory comatose.

'Unlike in the past, SEC's staff members no longer feel obligated to perform their responsibilities and duties. It is now a case of the staff saying 'it is their SEC, if not for the money I am earning here to take care of my family, I will not be here.' This is negatively affecting how SEC regulates the market, especially as this is depriving it of vital information among many others.'

AMCON helped Union Bank secure clearance for acquisition

Udora, also told the House that his directorate initially denied Union Bank approval for its acquisition during the recapitalization of five of the rescued banks that escaped nationalisation, but was pressurized to do so.

He argued that his directorate decided to deny the bank the approval to go ahead with acquisition process since the bank could not account for the proceeds from the last offer it undertook before the market crash.

'I remember we have AMCON's application in respect to their intervention in the rescued banks. For Union Bank, I remember the commission was written and our clearance was sought. In my directorate, we declined originally. We said we were not going to clear Union Bank for any acquisition or merger or anything because from our records, Union Bank had raised N80 billion from the public which was not accounted for and we said we will not clear Union Bank until it accounts for that money.

'At the end of the day, a lot of meetings were held and we insisted we were not giving clearance until the use of the proceeds is accounted for.  The Managing Director, MD, of the bank came and held a meeting with me and said they could not find within the bank any explanation for that money; so we said we will not clear the bank. Then one of the directors came and said they used the money to pay for the money they used to set up Union Bank United Kingdom. We demanded for evidence from the board of Union Bank for such approval of the payment but none was produced; we then said, 'show us evidence of the payment of such amount of money in respect to the Uk branch, again, none was produced and then we said there was no deal.'

Udora, however, stated that he was forced to append his signature after approval AMCON offered to take responsibility for the losses. 'I told them as far as I sit on this desk, nobody will approve Union Bank acquisition from my directorate except and until the two conditions are met:  One, that Union Bank explains the use of the proceeds of that offer.

Then AMCON wrote us to say that we should regard it as one of the losses which Union Bank incurred in the course of its business and they are assuming responsibility for the losses. On that basis, we said if AMCON is recognizing the losses and it is taking responsibility for it, then the transaction can go on. That was at the point when we gave our own go ahead on the Union Bank transactions,' he stated.

Text messages, emails, replaced meetings
In her testimony before the House, Mrs. Daisy Ekinah a commissioner in the Exchange alleged that outside a presentation she wrote for her on the roadmap to a world class Capital Market that Ms. Oteh read at Nigeria Economic Summit Group, NESG programme she never had any link with the project again. Ms. Daisy Ekineh, Executive Commissioner, Operations attested to the division in the rank and file of SEC, saying that 'there is presently a dysfunction in SEC due to the inability of the executive management to work as a team.

Ekineh said unlike what obtained during the tenure of the last two Directors-General of SEC, the executive management team no longer hold meetings regularly and there is lack of cohesion and respect among the executives and staff. She disclosed that what obtains presently is absence of meetings and face-to-face communication, while emails and text messages are used more as means of communication among the executive and other staff members.

She said, 'There is a dysfunction in SEC, because we no longer work together as a team. There is also absence of respect and team spirit. During the time of the last two DGs, we used to hold meetings in their office regularly. This helped a lot, especially in bringing unity and cohesion to our activities, while helping us achieve more.

'Today, we hardly hold meetings and face-to-face interactions; instead, meetings have been replaced with text messages and emails. I am not saying text messages and emails are bad, but it should not make us do away with meetings and face-to-face interactions.

She, however, called for an improvement in team work among the executives, adding that it will help strengthen the commission, ensuring that it achieves its goals.

SEC didn't clear AMCON's N500bn bond
Ms Daisy Ekineh, stated that that the AMCON did not obtain all the necessary approval from the SEC before embarking on its N500 billion bonds issue undertaken in 2011.

According to her, she was notified through a mail sent to her from AMCON that approval has been given for the issue from the commission, saying that despite her insistence that the issue would not go on without securing necessary approval from her desk, the agency went ahead and offered the bonds to the public.

She said: 'The N500 billion AMCON bonds did not go through due process. I got a mail telling me that the SEC has approved AMCON's bonds issue. I told them that it could not have been possible without going through my supervision. Ordinarily, I was supposed to study the offer and give approval but that was the last I heard of it. I was never consulted again on the issue.'

Oteh is inaccessible - Stores
Also speaking, Mr. Lawal Sani Stores, Executive Commissioner, Finance and Accounts, SEC, said: 'Oteh is inaccessible and very distant from the Executive team and other staff of SEC. There is also no cooperation among the management and staff, lack of trust and team work.

'For the commission to succeed, we should be able to work together, trust ourselves and carry each other along.'

In her reaction, Oteh said, 'Communication lapses could have existed amongst staff in the management team, but all the same, the commission has processes that it follows on several issues before decisions are taken. But I think we need to enhance communication.'

Cadbury saga
Speaking on what informed the commission's decision to allow Mr. Emmanuel Ikazoboh function in the capacity of Interim Administrator of the Nigerian Stock Exchange (NSE) after the former DG, Dr. Ndi Okereke-Onyiuke, was sacked, Ekineh explained that Ikazoboh was not sanctioned as an individual following the Cadbury book cooking.

She explained that though he was a partner in Akintola William Delloite when the offence was committed, only the firm and Cadbury Nigeria plc were sanctioned and fined  by the commission.

'All I can say on the Cadbury issue was what we did was to sanction Cadbury and we also sanctioned Akintola Williams Deloitte and Touche. The interim administrator was working with Akintolla William as at the time and SEC actually sanctioned only the firm. Whether he as a person was sanctioned, I don't know. He was a partner in Akintolla William but I was not sure if he was sanctioned,' he explained.