NSE Response to the Complaint by Aliko Dangote


July 29, 2010


The Director General

Securities & Exchange Commission

Plot 272, Samuel Adesujo Ademulegun Street

Central Business District



Dear Madam,




We are in receipt today of your letter of 28th July 2010 on the above subject – matter and wish to respond as follows:


We are taken back by the letter written to the Commission by Alhaji Aliko Dangote, as the allegations contained in his letter of complaint are baseless and merely sensational.


Before going into the specifics of the allegations, we invite the Commission to note that the Council of The Exchange is not aware of the allegations made by Alhaji Dangote, in which case his recourse to the Commission may be considered hasty and premature, assuming there is substance to his claims.


We wish to stress that as a member of the Council of The Nigerian Stock Exchange at the time all these accounts were considered and approved, Alhaji Dangote never brought any of the allegations to the attention of the Council for discussion or investigation.


This is especially pertinent as his membership of the Council covers the period during which he alleged there was financial imprudence that, according to him, “has brought The Exchange to the verge of financial bankruptcy”


By the allegations, Dangote has confirmed the suspicion that he is bent on destroying The Exchange, following the ruling of the Federal High Court nullifying his acclamation as the President and Chairman of the Council of Nigerian Stock Exchange.


He has used various means to attack and undermine The Exchange, including the sponsorship of negative newspaper publications, as could be confirmed by the similarity of the substance of his petition to the Commission and the lead story of BusinessDay of Monday 26th July 2010. See Appendix A.


We provide hereunder specific responses to the issues raised in the petition:


1.      Audited Accounts for 2009

It was alleged that “seven months into the current financial year, the management of the Nigerian Stock Exchange has not presented the Audited financial statements for the year ended December 2009”



The Council of the Exchange met on Monday March 8, 2010 to consider and approve the draft accounts for year – ended 31st December 2009 to pave way for the commencement of the Statutory Audit.


The pre- audit meeting was held on 22nd April 2010 and formal audit exercise commenced on 10th May 2010. The auditors, Messrs Akintola Williams Deloitte, have completed their work and the audit report will be ready within the next few days.


It should be noted that for the first time the financial statements of The Nigerian Stock Exchange are being consolidated with the accounts of its subsidiary/associate companies, namely Coral Properties Ltd, Naira Properties Ltd, NSE Consult Ltd and Central Securities Clearing System Ltd.


2.      First and Second Quarter Accounts

It was also alleged that Management has been unable “to produce for consideration of the Finance and General Purpose Committee of the Council interim financial statements for the first and second quarters of 2010”



The first quarter and half – year accounts have been prepared and filled with Securities and Exchange Commission vide our covering letters dated May 13th and July 27th 2010 respectively. Acknowledgement copies of letters are attached as Appendix B and C.


The petitioner as a Member of Finance and General Purpose Committee is in a better position to give reason as to why the finance and General Purpose Committee of Council could not meet to consider the accounts, this is obvious because of the court judgment against him.


3.      Financial Health of The Exchange

Alhaji Aliko states that he “is aware that the Nigerian Stock Exchange is experiencing financial difficulties mostly arising from undisciplined spending and financial imprudence exhibited by the Management of The Exchange”



The Nigerian Stock Exchange, like any other institution of the Capital Market, has gone through very difficult times over the last two years following the global financial crisis. However, the Nigerian Stock Exchange has responded very well by maintaining critical operations) uninterrupted trading sessions, system upgrade, branch net-work expansion, etc) without external borrowing.


4.      Expenditure Pattern of The Exchange

It is alleged that “In the last 4 years from 2006 to end of 2009, The Nigerian Stock Exchange grossed a total income of N42.2 billion with a surplus of only N5.6 billion, representing 13% growth over the 4 – year period”



Over the same 4 year period The Nigerian Stock Exchange carried out major infrastructure upgrades such as: buy- out of 60% interest of Daily times Plc in Naira Properties Ltd (owners of The Nigerian Stock Building) installation of two 1, 500- KVA Generators of The Nigerian Stock Building, redesign and upgrade of the World- Class Head Office Trading Floor Commissioned by president Umar Musa Yar’adua, GCFR in October 2007, design and construction of a data centre and power bank to guaranty regular trading, investment road- shows that increased the rating of Nigeria in the international investment community, opening of new branch offices in Benin, Ilorin, Uyo, Onitsha, Abeokuta, Oweeri and Bauchi, among others.


It is misleading to ignore these major achievements in profiling the major cost pattern as “salaries, pension, travel and marketing”. Salaries and associated pension costs increased significantly over the period because the pension scheme was back- dated by 20 years and approved by the Council of The  Exchange to accommodate the retired Director- General and Deputy Director – General and other retired staff of The Exchange.


5.      Inter-Company/Associated Company Investments

It is allege that “As of today, the current inter-company balances with inter-company/Associated companies amount to over N3 billion”.



There are no un-reconciled items in the inter-company accounts between The Nigerian Stock Exchange and its subsidiary/Associated companies. This is a normal occurrence in a Holding Company/Subsidiary/Associated Companies relationship. These intercompany balances would nil out the consolidated accounts.


6.      Pension Scheme

Alhaji Aliko is canvassing that “the pension Scheme should be urgently audited to gain a thorough understanding of the extent of the liability of The Exchange



Scheme Liability

In 2007 the pension Scheme had an Actual surplus of N29.64 million. The 2008 Actuarial Valuation Report that indicated N2.59 Billion deficit was based on Staff total emoluments instead of pensionable salary as per the scheme’s Trust Deed and Rules.


The latest valuation as at 31st December, 2009 indicated an Actuarial surplus of N55.94 million.


Transfer of Fund (N423 million)

In August 2009 Intercontinental Bank was advised to transfer N400.0 million with the accrued interest to the Pension Fund. See NSE letter of August 17, 2009.


This amount was accounted for (as part of the Pension Assets) in the pension Fund Administrator’s August 2009 Fund Statement Report forwarded with their letter of 2nd September, 2009.


An additional amount was released by the Bank as interest due to the tune of N24.54 million in September 2009. This amount was accounted for in September 2009 Fund Statement Report of 5th October 2009.


In essence, the principal amount plus the accrued interest is N424.54 million which forms part of the Pension Fund total assets of N2.17 Billion as at December, 2009. The fund was at all times under the management of NLPC Pension fund Administrators Ltd, and not with an unknown insurance company as alleged.


7.      Financial Health and Low Morale

The uncertain financial health of the NSE has created low morale among staff (the 13th month salary for 2009 was not paid in December0 and uncertainty in the minds of creditors such as Accenture”



We consider it important to say that it was mischievous of Alhaji Dangote to cite non-payment of 13th Month bonus to staff in 2009 as an instance of the alleged financial ill-Health the Exchange, when the Council of the Exchange had directed a downward adjustment of salaries and other benefits in view of the reduced revenue of The Exchange following the global financial markets meltdown. When has a prudent financial initiative become a sign of distress? It suffices to state, however, that contrary to Alhaji Dangote’s allegation, staff of The Exchange are far from being demoralized, as salaries and benefits are paid as they fall due, which cannot be said for many comparable institutions in the Nigerian Financial district.


On the outstanding bills due to Accenture, it should be stated that Accenture was foisted on the Exchange without subjecting them to due process or a competitive bidding process. No other consultancy firm was invited to submit a proposal to the Exchange for a project valued at N212 million. Of the total project sum the Exchange has paid a total of N166 million, the last payment of N60 million was done as recently as 15 June 2010.


Accenture created payment difficulties for themselves by completely avoiding management in their drive to generate more business for themselves under questionable and uncompetitive manner by dealing directly with Alhaji Aliko Dangote as if he is the Chief Executive Officer of The Exchange.


Recent Newspaper Articles Referencing Contempt Charges

We had on 27th July 2010 written to the Commission on this matter (see Appendix E) and can only add that later that day, our Director General/Chief Executive Officer, Professor Ndi Okereke-Onyiuke, OON, and Secretary to Council, Mrs Josephine Igbinosun were discharged and acquitted on the charges of contempt of court, as both ought not to have been charged in the first instance, having committed no offence and they were not mentioned in the substantive suit. However, the contempt charge and bench warrant against Alhaji Dangote is still pending at the same court.


Regarding our newspaper advertisement on Tuesday 27th July 2010 and the matter of supervisory oversight of the Council of the Exchange, we wish to draw the attention to the fact that it was clearly stated in the advertisement that Committees of the Council have been meeting and discharging their various functions and in the process ensuring the smooth running of the Exchange and its market.


In particular, the Disciplinary Committee of Council has met and taken disciplinary actions against Dealing members firms, which were communicated to the Commission, vide our letter dated April 30, 2010 (see Appendix D). The Quotations Committee and the Rules Committee of Council were extremely active during this period and so indeed all is well with the Exchange and the market since the beginning of the year. If the Finance and General Purpose Committee of the Council has not met to consider the accounts of the Exchange for the first and second quarters of the year, it was because of the Court judgment involving Alhaji Dangote as a Member of the Committee.



In conclusion we attach minutes of the meetings of the Council of The Nigerian Stock Exchange on March 25, 2009 and March 8, 2010 where the respective draft accounts for years ending 2008 and 2009 were approved by Council for audit. Alhaji Aliko Dangote was present in both meetings and he did not go on record as challenging the accounts. This confirms our statement above that he is prepared to destroy The Nigerian Stock market in his flight to save himself from case of manipulation of the share price of African Petroleum Plc brought through a suit by aggrieved AP Shareholders.


We would like to reiterate that these accounts have been audited by Akintola Williams Deloitte, without qualification, and the accounts were approved by the Council of Exchange at its meetings and also approved by Members of the Exchange at Annual General Meetings. Furthermore, these same accounts were recently subjected to a special audit firm by a team of SECD inspectors and external consultants.


While management appreciates the opportunity to respond to the spurious allegations by Alhaji Aliko Dangote and it is ready to provide further explanations that may be required, please accept the assurances of our usual commitment to good corporate governance and financial discipline always.




Related Stories:

Stock Exchange lied, Accenture not involved in CEO search – Businessday, Aug 04, 2010


NSE crisis deepens as Accenture suspends CEO selection over debt – BusinessDay, Aug 03, 2010


FRAUD: Madam Stock Exchange In Trouble | Nigerian News – P.M.NEWS Aug 03, 2010



Dangote alleges N11bn fraud at NSE –  Daily Trust | Nigerian Bulletin Aug 02, 2010



Contempt: Court Strikes out Okereke-Onyiuke’s Name – ThisDay, Jul 28, 2010 


Fresh succession crisis hits Nigerian Stock Exchange – Businessday, Jul 26, 2010





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