Recent Sacking at Nigerian Stock Exchange, witch-hunting-Attorney

Wednesday, September 22, 2010


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 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 “rightsizing” 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 the 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 the 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 of the organization 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 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 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 have 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 affluence now chooses when and how to obey the 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 N.S.E 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 NSE.


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.


In considering the extant governance regime at The Exchange, Nigerians must begin to ask questions at the time they matter most:

a)   What qualifies Mr. Ikhazobor for his current job at The Nigerian Stock Exchange?

b)   What is the job description of a “Sole Administrator”? How does this contrast with his professional experience? Does the job description include functioning as a Receiver Manager? Has the office of the DG/CEO of The Exchange suddenly become a job that just anybody could do, even if on an interim basis?


Is this not the same Ikhazobor that was Managing Partner of Akintola Williams Deloitte when the firm was indicted by SEC over the Cadbury accounting scandal? Does simple respect for decency not disqualify Ikhazobor from his current duties at The Exchange? More so because his Firm AUDITED the same Accounts of The Stock Exchange from 2006 – 2009 while he was the managing partner and Akintola Williams Delloite has been External Auditors to the Stock Exchange from 1960 till today and has Never Qualified any accounts of NSE.



Current inept management of The Nigerian Stock Exchange following the usurpation of the powers of the Council and Management of The Exchange by a band of puppets and puppeteers has created a leadership vacuum that is beginning to undermine the workings of The Exchange and the capital market, with adverse implications for the larger economy. These days companies are suspended for breaching the rules of The Exchange and at the same time others are granted “waivers” that enable them to subvert the same rules of The Exchange. Should a responsible, honest market leadership be seen as approbating and reprobating on the same issue? Why grant a waiver to Dangote Cement plc on the minimum free-float requirement of the Exchange at the same time that companies that have failed in their financial reporting obligations to the market are being suspended? Both conditions impact adversely on the pricing efficiency of the stock market and neither should be made to look like a lesser evil. Certainly, double standard cannot help the growth and development of the stock market. With the speed that attended the approval of the proposed BCC/Dangote Cement Plc merger by SEC and the “Interim Administration” of The NSE, it is now becoming clear why SEC had to subvert its own rule to forcefully intervene in the management of The Exchange. Apparently, this was one deal that SEC and the so-called Interim Administration at The Exchange believed must go through inspite of obvious defects in the transaction. How much did Dangote Cement Plc pay to The NSE in Application Processing Fee for the proposed listing of combined business? How much did Benue Cement Company Plc and Dangote Cement Plc pay to The Exchange in Application Processing Fee for the proposed merger? Why has The Exchange allowed an unlisted company to takeover its listed company, contrary to its policy aimed at encouraging public quotation? Why is it that only one stockbroker (Afrinvest) seemed to be acting for both companies involved in the merger? Why should SEC and NSE approve that an unlisted company pick a very high price over and above that of a listed company it intends to merge with? Is it not the market that shall determine which price any company’s stock should have? It appears Alhaji Dangote now wants to have one third of the entire market capitalization. The entire market will finally be his by the time NSE is demutualised, a process conceived by the sacked management which Dangote failed to hijack then. Now is the GOLDEN opportunity for the scheme of ONE MAN to grab the heart and soul of the Nigerian economy by having majority OWNERSHIP of the Stock Exchange.



The Nigerian stock market was beginning to recover until the SEC inordinate intervention dampened investor confidence. Earlier in the year, The Exchange’s All-Share Index had rallied by 24% to become one of the 10 best performers among 93 indexes tracked by Bloomberg globally. In fact, as recent as July 2010, which was the month preceding the SEC’s intervention in the management of The Stock Exchange, there was significant growth in major market performance indicators. However, in August 2010, following SEC unlawful intrusion, equity value fell by N37 billion and All-Share Index lost 6.1%, while turnover value fell from N58.8 billion in July to N46.91 billion in August.


From published pronouncements, the SEC anchored its ill-conceived action on the “protection of public interest”, stressing at every opportunity that The Exchange is a “public interest” organization. There is a lot of subjectivity in the definition of “public interest” as applied by SEC. The pursuance of Public Interest should shore up investor confidence and stem falling share prices on The Exchange, but this has not happened, as share prices have been falling since the SEC intervention in the management of The Exchange. Please see ThisDay of Monday 13th September 2010, page 33 (“Equities maintain 3-week downward trend”).



The Interim Administration was appointed on 5th August 2010 and by 26th August 2010 had sacked 32.5% of the workforce. For outsiders in the business, they certainly could not have in the short time understood the organization and its business as a basis for this drastic action. The interim administration can only be acting a script:

i.        Personal interest, as opposed to national interest, informs the current siege on The Nigerian Stock Exchange. New issue/listing approvals have been given in questionable circumstances and demutualisation has become the new mantra. Demutualisation is about the reincorporation of The Exchange as a for-profit organization and the sale of its shares, in this instance, to certain interest groups. Nigerians should begin to ask who these interest groups represent. We have seen the application of the Core Investor concept in the Privatisation programme and know that it could be abused.


ii.        I have it on good authority that the original proposal by the previous Management of The Exchange on the allocation of the shares of a demutualised NSE as thus: 30% for Dealing Member firms; 10% for the 19 Settlement Banks; 9% for Institutional Investors (PFAs {3%}, CSCS {3%}, and Insurance Companies {3%}), and 51% for the generality of Nigerians, with no single investor (individual or company) expected to get more than 1%. This promises to offer the desired spread and should be supported. People like us who believe that The Exchange is for all Nigerians must insist on a demutualisation model that is seen to benefit all Nigerians instead of allowing The Exchange to be hijacked by a cabal.


iii.        It should also concern Nigerians that there is an active interest in the demutualisation of The NSE when there is active disinformation that The Exchange is “near-bankrupt”. If the intention of demutualisation is to sell The Exchange to the generality of Nigerians, why would SEC be interested in selling a so-called financial wreck to the Nigerian public? Obviously, there is more to this than meets the eyes.


iv.        Contrary to what has been demonstrated in the recent past in the Nigerian capital market, investor protection is not merely about protecting the interest of the big investors in the stock market; in all responsible jurisdictions, the thrust of investor protection is in favour of minority/small shareholders. Unfortunately, small investors have continued to lose value in the market as a result of SEC’s extant regulatory misadventure that is aimed at serving vested interests masquerading as ‘whistleblowers’ and reformers – men that should actually be at the receiving end of the regulatory cane and who I will soon proceed against for their various economic crimes and blatant disrespect for the judiciary in Nigeria.



We have identified numerous flaws in recent actions on SEC that led to our action to challenge the unlawful disengagement of the sacked staff of The Nigerian Stock Exchange through a class action suit. As a background to our case, we invite Nigerians to note some of the flaws in the actions of SEC:


i.    SEC deployed an unorthodox and violent method in forcing the exit of the Director General of The Nigerian Stock Exchange from office. It should be clearly noted that Professor Okereke – Onyiuke is NOT one of my clients and is not included in this Class Action Suit. The Investment & Securities Act (ISA) provides fully for the process of removing the CEO of a securities exchange from office by its Council/Board of Directors. However (and curiously), SEC trampled upon the law in its highly questionable move against the management of The Nigerian Stock Exchange led by Professor Okereke-Onyiuke. Nigerians should worry about the implications of this for our civil liberty, where the administrator of an Act wantonly disregards the provisions of the law it administers, especially in a democratic government that we now proudly have in Nigeria.


Incidentally, by a letter dated 4th August 2010 to the Council of The Nigerian Stock Exchange SEC unwittingly admitted to being aware of a procedure for removing the Chief Executive Officer of a Registered Securities Exchange (in this instance, The Nigerian Stock Exchange) but subverted the process midstream for an expediency that is now beginning to manifest as response to the desires of a vested interest. Apparently, the Commission came to a sudden realization that the objective of removing Professor Okereke-Onyiuke from office must be done expeditiously, by hook or crook. For the avoidance of doubt, we know for a fact that the DG/CEO of The Nigerian Stock Exchange is appointed and removed, when necessary, by the Council. There is nothing under the SEC rules, Investment & Securities Act and the Memorandum and Articles of Association of The Exchange for an Interim Administrator or the removal of the DG and appointment of Interim Administrator for The Exchange by SEC. Also, this is the context in which Nigerians must see the SEC letter of 4th August 2010 directing Council to remove the DG/CEO (albeit without indicating a timeframe as required by law) or indicating her offence). That letter, at least, was anchored on due process, which, ironically, the SEC subverted by issuing another letter to Professor Okereke-Onyiuke on 5th August 2010 notifying her of her removal from office without recourse to the Council/Board of The Exchange despite the fact that the D.G had given Notice of Voluntary Retirement as far back as April 2008, January 2009, January 2010 and June 2010 to the Council and this has been in the Press and Punch carried her Retirement Leave Date of Sept. 5, 2010.


ii.    On the issue of “ongoing litigation”, have our democratic ideals become so bastardised and Nigeria has degenerated to the extent that the legitimate prosecution of a matter in the court of law has become an offence and a basis for unceremonious termination of a person’s career, more so when the person being punished was not involved in the litigation? The litigation under reference was between the aggrieved shareholders of African Petroleum Plc and Aliko Dangote, Not Okereke-Onyiuke and Josephine Igbinosun (NSE company secretary).


iii.    Also, should SEC be relying on the unsubstantiated allegation of Aliko Dangote to punish the Management and staff of The Exchange as has happened since 5th August 2010? It must be noted that Aliko Dangote was at the time of the alleged financial mismanagement a member of the Council (board) of The Exchange. He had never at any time expressed any reservations with financial management at The Exchange. In fact, the Council of The Exchange is not aware of the allegations by Aliko Dangote on which basis SEC intervened in the management and Council of the organization. Dangote’s conduct in this instance is self-indicting and should be condemned for the instability it has brought to the stock market.


Also, SEC has not been sufficiently circumspect in its handling of the allegation, given that the accounts under consideration were not Management Accounts but Audited Accounts of The Exchange that went through all the required levels of approval without any qualification. For the avoidance of doubt, the accounts in question were prepared by the Council of which Dangote was a member, vice president and briefly, the president until the Court removed him. (show the accounts).


Incidentally, I know that these accounts had been subjected to special audit by SEC working with external consultants. In an October 2009 report of this extra-ordinary inspection, SEC inspectors remarked that “the auditors of The Exchange gave unqualified reports for the three years ended 2006, 2007, and 2008”. Furthermore, the SEC report noted that The Exchange had no external liabilities between 2006 and 2008, adding, among others, that the functions of the Finance & Accounts Section were “distributed to staff in such a way as to facilitate internal checks and controls”. By the published statement of the SEC, the Commission has commenced investigation into the allegation of financial mismanagement at The Exchange in order to confirm the veracity of the allegation. This is putting the cart before the horse because Professor Okereke-Onyiuke and the rest of the management of The Exchange have already been subjected to a severe punishment by SEC, including international malignment of their Integrity, even though the Commission cannot as we speak accuse them of any offence. In the circumstance, it does not take a genius to know that the said SEC investigation is contrived, hostile, imbued with a hidden agenda, and has a pre-determined outcome – that is, the investigation can only work towards an answer with a view to justifying the unjust and condemnable actions of the SEC.


The question should be asked: What manner of investigation is done in a major institution without talking to its Directors, erstwhile Chief Executive Officer, erstwhile Chief Accountant (who was the Assistant Director General), and other Management Staff? Instead, questions are being hauled at middle level managers and very junior staff who did not make decisions. They are being intimidated to answer questions on issues discussed at Council (board) meetings to which they were not privy. What business does SEC and the Sole Administrator have in directing retired executives of The NSE, including a long-retired DG, to return cars that they were entitled to, but which may no longer be functioning? Is that part of corporate governance? What business does SEC have to want to take over the construction of The NSE’s office building in Port Harcourt? Is this also corporate governance?


Why is SEC/Sole Administrator of The NSE sending letters to retired Council members of The NSE to refund monies paid to them as Council members to go on industrial trips to other stock exchanges and thereby strengthen their role as directors of The NSE? When did director education become an offence in Nigeria? The so-called forensic auditors have labeled such legitimate payments as “productivity bonus” instead of money paid as travelling expenses for industrial visit to other stock exchanges. Nigerians should not be deceived by the deliberately leaked false findings of the much-touted forensic auditors. I know for one that the real Council members of The Exchange have vowed to challenge the findings in court. Even though the “whistle blower” himself (Aliko Dangote) has acknowledged that he intends to return the N80 million he collected and spent as travelling expenses between 2007 and 2008, he has not denied ever collecting money and utilization of it for Traveling Expenses or Productivity Bonus.


The media should know that it is common knowledge that certain persons in the Council of The Stock Exchange always destroyed whatever they could not control. Unfortunately, Nigerians are folding their hands and watching this monopolistic tendencies being played out at The NSE with the active connivance of the Government Regulator.


iv.    SEC alleged “inordinate delays” in the implementation of The Exchange’s management succession programme. But what is unknown to the public is that SEC was a major part of the problem. There is evidence that The Exchange was committed to the implementation of a management succession programme and the process had progressed smoothly until SEC, prodded by some vested interests, intruded into the process under the guise that The Exchange was a “public interest organization”. Suddenly, the Commission came up with a draft Rule 115 in April 2010, which even though it has not gone through the known process of Rule Making by the Commission, is now held as the standard that must guide The Exchange in its proposed appointment of DG/CEO and Executive Directors.


v.    It is worthy of note that the illegal interim administration at The Exchange and SEC are now vacillating on the timeline for the appointment of a new DG and EDs for The Exchange. It is now being said that a new CEO would not resume at The Exchange until “early 2011”. Nigerians should ask SEC how much time is required to perform this “simple task”, especially in view of the fact that the stock market is today suffering as a result of the management vacuum elicited by the ill-advised actions of SEC.


Also, in considering this matter, I believe that the time has come for an exhaustive examination of the role of Accenture in the unfortunate drama that is threatening the future of the Nigerian capital market. I recall that at the height of the media campaign that set the stage for the SEC’s intervention in the management of The Exchange, Accenture was prominently reported as not being party to the Executive Recruitment exercise at The Exchange. Against rational expectations, Accenture chose not to respond to this falsehood and in doing so reinforced the disinformation that the Executive Recruitment was without independent professional input. But, curiously, soon after the management of The Exchange was taken over by SEC, Accenture availed SEC with statistics of responses to the advertisements it placed in respect of the executive recruitment programme of The Exchange. The question is: Who is Accenture working for? Who is paying Accenture? Answers to these questions will manifest in due course.


vi.    Finally, on the allegation of “governance challenges” against The Exchange, I can only describe it as obtuse and lacking in substance, seeing that every organization, including SEC, is constantly dealing with some form of governance challenge. If anything, it is now, following the intervention of SEC, that The Exchange is facing the worst kind of governance challenge imaginable – which is to be expected, as the Commission, in spite of the many flaws attendant to its actions (and the premise of the actions), has since 5th August 2010 proceeded to alter the governance framework of The Exchange by installing a “Sole Administrator”, an “Interim President” and a Mobile Police Force for The Exchange when SEC itself is NOT a “Member” of the Exchange. Does it mean that Stock Exchange is now a parastatal of SEC? Obviously, SEC is now a Regulator as well as a Day – to – Day OPERATOR of the Capital Market!!!!


Definitely, no foreign investor will invest in a market where a Regulator can “INVADE” the Capital Market in a military coup – style and take over the functions of a Registered Exchange! No where in the world has this happened; not even during the military Governments in Nigeria!



Current developments at The Nigerian Stock Exchange have blighted the future of The Exchange, which had always been positive and assured, and threaten the socio-economic development of our dear nation.


i.     Already, as widely reported in the Press last week, officials of Ghana Stock Exchange, are worried that the developments in the governance of The NSE and its market would not augur well for the proposed integration of the stock markets of West Africa. Mr. Ekow Afedzie of the Ghana Stock Exchange had warned that The NSE officials were at the fore front of the integration and doubts that envisaged integration would be achieved in the absence of these officials. The tragedy is that Nigeria would have been a major beneficiary of the proposed integration, given the size of our market in the sub region.


ii.    International investors have adopted a wait-and-see attitude to these developments, especially in the light of the poor picture they paint of Nigeria as a country whose regulators are disrespectful of the laws, rules and regulations of the capital market. This attitude explains in part the renewed and sustained drop in stock prices following the SEC’s martial intervention in the market processes.


iii.   In contemplating the current situation in the Nigerian capital market, we must remember that the Federal Government’s Financial System Strategy (FSS) Vision 2020 programme is in large part focused on the capital market as a vehicle for achieving Nigeria’s aspiration of becoming one of the Top 20 global economies by 2020. Arbitrariness and lawlessness, as demonstrated by SEC (and its collaborators) and the activities of an Interim Management and Council (Board) at The Nigerian Stock Exchange undermine the workings of the capital market and should be condemned by all.


Thank you.





Wednesday, September 22, 2010.


Source: Proshare


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