October 7, 2010

 

Hauwa Audu, Council member for the financial years of 2005 – 2008, has questioned both the intent and appropriateness of the publication released by the Securities and Exchange Commission (SEC) to the she did not partake in any shared bonus.

 

Recall that the SEC commission issued a press release –

http://www.proshareng.com/news/12222 yesterday confirming that it had “requested the Interim Administrator take reasonable steps to recover all such shared ‘bonuses’ from the Council Members for the 2006 – 2008 financial year”. The release also disclosed that the ex-president of the NSE, “Alhaji Aliko Dangote has returned the full N40 million, being what was his own share”.

 

The SEC release came a day after Proshare had published a schedule of the payments to council members which covered the period of 2005 – 2008 given the interest the development was generating in the market place since a national daily went public with the disclosure on September 6, 2010; and before the report was submitted to the SEC.

 

Hauwa Audu, chief executive of Amyn Investment Ltd, a stock brokerage firm which she founded after serving in different capacities in the industry…is convinced that a line must be drawn between those for whom the SEC intends to hold accountable for actions considered as infractions; and those who received monies to aid the performance of their fiduciary duties as council members.

 

The concern expressed by her is premised on the professional integrity, reputation and rights at stake. More importantly is her  disappointment at being brought to ridicule over what she believed was a service to the market; the consequences of which she is still dealing with owing to the challenges her business and customers suffered while she served the Exchange.

 

The impression being created by the public communications it would appear, is that she, along with other persons appropriated unto themselves huge sums of money illegally. This, she insists, is not her understanding of what transpired between her and the Council of the Exchange.

 

Highlights of her Rebuttal

1.      I, Hauwa Audu, never partook in the alleged sharing of surpluses at the NSE.

2.      The monies given and received was specific as to the purpose each time – to undertake global travel to stock exchange events globally in the year to acquaint myself with developments in the market in order to be able to contribute effectively as a council member.

3.      Each time I was given a cheque by the NSE, an accompanying letter was given to me (for which I intend to make available) to support the purpose for which the sums were given.

4.      I have kept evidence of my travels – passports, hotel accommodations, exchanges visited etc. I do not know about others, but I worked for the money collected and applied it for the purpose for which it was intended.

5.      I did not limit myself to international programs and it is on record that I toured the whole country undertaking enlightenment programme, seminars and production of information materials in part fulfillment of this purpose.

6.      I am not a philanthropist and could not have funded all this engagements for and on behalf of the stock exchange on my own.

7.      The last N5m (Five Million Naira) I got from the NSE was spent along this line and part of which included my attendance of the same New York Stock Exchange (NYSE) programme that the Interim Administrator of the NSE, Mr. Emmanuel Ikazoboh attended last month.

8.      To my knowledge, such allowances have been given to council members since 1983 and not once has the external auditors raised any objection on this.

 

Bonus or Duly Approved Expense?

The decision to publish the schedule with figures for 2005 speaks to the point that this appears to be a practice that has been in existence before the Oba Otudeko led Council raised the ante.

 

Questions are now being raised as to whether the funds in question are bonuses (under whatever name) to serving council members in direct violation of the legal structure of the exchange or whether they are payments within the corporate governance ambit of the council of the exchange. A third concern relates to the payments and formal letters issued to members describing what the sums were for (without a request for retirement since they were not advances).

 

These developments appear helpful in resolving past issues but speaks less to the future challenges apparent in the set up and structure of the NSE as is. This point was highlighted in the commentary here –

http://www.proshareng.com/news/12208 – “this situation not only presents the opportunity to resolve the questions now being raised by auditors and SEC alike (both of whom have audited the accounts of the NSE all these years) but the status of the company as a non-profit entity operating with and in a profit motivated environment/business model. The time has come for the NSE’s status to be properly defined they say, to avoid the corporate governance trap, it has found itself”.

  

Intimidation & Blackmail as a tool for compliance?

Some of those involved have expressed a sense of fear arising from alleged intimidation and blackmail through the suggestion that if they fail to return the monies published by the SEC, they would be blacklisted and possibly lose their licences.

 

This statement was denied by the NSE hierarchy who insists that this is a purely procedural matter based on the interpretation of what the auditors Messrs Akintola Williams Deloitte said on the matter of sharing of funds: “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 transferred directly or indirectly by way of dividend, bonus or otherwise.”

 

Based on this, the auditors had 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.

 

If this information was not made available to the individual members, this would be because the council did not do so and not because the auditors failed to bring it up, a source added.

 

Some of those included in the list and are brokers however continue to insist that feedback indicates that the supervising ministry has made arrangements to invite the EFCC to ensure that those who fail to pay up are answerable for this sums.

 

The Unanswered Classification & Utilisation Question

A common thread with the past council members spoken to is the palpable shock at the varying amounts received by council members. To them, this has been a rude shock.

 

Hauwa Audu lamented the lack of engagement in this whole exercise – stating that no one called her formally to explain the monies received and she received no formal letter, as a professional courtesy to allow her respond and provide evidence to back her claim up.

 

“The notion that one or two persons have paid back does not constitute a group guilt as I do not know the reason for which they were paid” said another affected member.

 

In the main, the key question raised by Ms Hauwa Audu presents a fresh dimension to the issue as she insists that she was not given “a share of the surplus” but funds to embark upon an “education and enlightenment exercise” for and on behalf of the exchange; to improve her contribution as a council website.

 

As things stand, she indicated her intention to go to court to defend her rights, good name and professional responsibility.

 

Source: Proshare