By Goddy Egene, 09.06.2010

 

The weak corporate governance at the Nigerian Stock Exchange (NSE) and non-compliance with applicable laws, which were some of the reasons the Securities and Exchange Commission (SEC) intervened last month, are beginning to manifest.

 

A report obtained by THISDAY showed that the Council of the NSE and  employees  shared a total of N3.362 billion as bonuses and productivity allowances in three years, in contravention of the provisions of  Companies and Allied Matters Act  (CAMA) and Memorandum and Articles of Association (MEMART) of  the Exchange.

 

The document indicated that the money was shared in respect of 2006, 2007 and 2009 financial years.

SEC removed the former Director-General of the NSE, Prof. Ndi Okereke-Onyiuke, and some members of its Governing Council last month over a crisis that resulted from allegation of financial impropriety and issues of corporate governance.

SEC thereafter appointed Mr. Emmanuel Ikazoboh as the Interim Administrator while Mallam Ballama Manu was made the Interim President of the NSE Council.

The commission also ordered a probe into the finances of the exchange, just as the process to recruit a substantive director-general is also ongoing.
But information obtained by THISDAY showed that the Council of the NSE and its management have been violating laws guiding its operations.

 

The council disregarded provision of CAMA and MEMART, a development that made its External Auditors, Akintola Williams Deloitte, qualify the 2009 accounts of the exchange.

The document obtained by THISDAY showed that N1.2 billion was distributed to employees and council members as bonuses and share of surplus respectively in 2009. Before then, N428 million and N1.74 billion had been shared among the employees and council members in 2006 and 2007 respectively.

 

Faulting the sharing of these funds, Akintola Williams Deloitte said: “This is contrary to Section 26(3) of CAMA, Cap C20 LFN 2004 and section 6 of the MEMART of the Exchange, which stipulated that the income and property of the Exchange shall be applied solely towards the promotion of the objects of the Exchange and no portion thereof shall be paid or transfered directly or indirectly by way of dividend, bonus or otherwise.”

 

Consequently, the auditors advised the previous management of NSE to ensure compliance with applicable laws and reporting framework of the exchange.

It was gathered that the failure of the ex-NSE management to give full assurance of future compliance delayed the signing off of the accounts by the auditors before the crisis broke out.

 

Meanwhile, an analysis of how the surplus money was shared showed that council members smiled home with N1.205 billion in the three years,  while employees got N2.57 billion as productivity bonuses in the three years.
The council got N161 million in 2006, N465 million in 2007 and N480 million in 2009, while employees received N266 million in 2006, N1.171 billion in 2007 and N720 million in 2009.

 

Further analysis of the largesse showed that 17 members of council shared N161 million in 2006, 14 members shared N565 million in 2007, while 19 members collected N565 million in 2009.

Corporate governance concerns were raised by many stakeholders during the administration of Okereke-Onyiuke at the NSE.

 

The DG of SEC, Ms. Arunma Oteh, while speaking on how to transform the nation’s capital market into a world-class institution last May, said the  exchange needed stronger corporate governance structure.
She said the governance of the exchange should be such that prevents the occurrence of conflict of interest, enshrines accountability, transparency and professionalism and commands public trust.

Source: ThisDay