By Yemi KolapoMonday, 29 Nov 2010

In October 2008, when the Nigerian capital market crisis reached its peak, many stakeholders insisted that there must be a change of leadership at both the Securities and Exchange Commission and the Nigerian Stock Exchange if the market must return to the path of glory. They based their recommendation on the apparent supremacy battle between the erstwhile Director-General of SEC, Musa Al-Faki, and the recently sacked NSE boss, Ndi Okereke-Onyiuke, which had made market infractions difficult to query.

Even before the crisis thickened, market activities had virtually stopped responding to fundamentals of listed companies. Stock prices of moribund quoted companies were rising astronomically in a system, whose laxity could even allow pure water businesses operating from one-room apartments to take the shine at the expense of unsuspecting investors. These were the consequences of unchecked malpractices in a stock exchange that had become a nightmare for its toothless watchdog.

Though, there was a last-minute attempt by the former SEC boss to reform the market on popular demand, the circumstances surrounding his appointment made a mess of his efforts. The strong woman at the Exchange, on whose word the former SEC boss allegedly got his appointment, effortlessly shrugged off Al-Faki’s restraining arms in a way that left the market confused as regards the regulator and the regulated.

But I was impressed that Al-Faki, citing family pressure, opted for the door in May 2009, when the unruly state of market activities amid confirmed infractions compelled him to give madam DG the boot or have his integrity badly damaged. For those who knew Al-Faki well, outside SEC, the job of overseeing an exchange that was being run by Okereke-Onyiuke had been a nightmare for the gentleman. Despite his genuine desire to heal investors’ wounds, his hands were apparently tied with the dilemma of checking the excesses of a difficult benefactor, hence the decision to leave the scene.

Following his exit, many observers had expected Okereke-Onyiuke to also plan a glorious but quick exit for herself, knowing that, apart from a new SEC DG that might also be indebted to her, only a moron would allow her kind of domineering influence to go on unrestrained. But the former NSE boss miscalculated and stayed on under the guise of a restructuring that had made her the chief executive officer of the bourse in October 2008. Her advisers’ thinking must have been that, even if a new SEC DG would call for a probe of NSE’s activities, no horrible detail would be exposed while Okereke-Onyiuke was still in charge. They were right.

The SEC DG, Arunma Oteh’s decision to cap her market cleansing moves by showing the hitherto untouchable Ndi the door, therefore, came as a shock to the benefitting camp. To unbiased stakeholders, however, it was the best decision to be taken in the history of the once bustling stock exchange.

Bold as that decision was, I was sceptical about the fate of the whole reform process, not in terms of the undisputed need to rid the market of unwanted pests, but in terms of the genuineness of the move and the ability of the initiator to withstand the tough resistance that would definitely come from wounded interests.

In the case of sacked bank chiefs, the Governor of the Central Bank of Nigeria, Lamido Sanusi, had demonstrated, from the very beginning, that he would not be intimidated by political pressure. He remained adamant, even when the opposition launched an aggressive campaign against his actions and called for his removal. Sanusi was also smart enough to discard comments of a hidden agenda as distractions that should not interfere with his plans. Knowing how quickly the table could turn against a slow reformer in this part of the world, he gave no time lag between the CEOs’ exit and revelation of overwhelming financial recklessness under their watch. With close monitoring by the Economic and Financial Crimes Commission, which saw the battle as an opportunity to shine, the affected bank chiefs were left with no other option than to first fight to stay out of jail before considering the issue of reinstatement. But that was Sanusi. Oteh’s skin may not be as thick.

I was worried from the beginning that the pretty SEC boss might not be able to handle the dirty politics that might follow Okereke-Onyiuke’s removal. I knew that the many plates that were being fed by the big soup pot would not watch the commission squeeze their benefactor dry without putting up a strong fight. I had, therefore, expected Oteh’s advisers to tell her the importance of not wasting time on such reforms in the Nigerian setting, particularly in an election year when fund-thirsty legislators would be too eager to turn the table in favour of a crook, so long as it will translate into dough. But SEC apparently allowed external influence to slow down the process, perhaps, in favour of witty offenders and their cohorts in the House of Assembly.

Some members of the House of Representatives, who should, on popular demand, create a bill to trim their unjustifiable monstrous salaries and allowances amid widespread biting poverty, are, at the moment, busy playing pocket politics with an exchange that houses over N7tn investors’ wealth in equities.

Apart from knocking down an interim forensic report on the NSE, whose messy details had not even been debated, the lawmakers, alarmingly, suggested that the key player in the NSE saga, Okereke-Onyiuke, should be reinstated and allowed to proceed on her terminal leave as stated in her letter of voluntary retirement. They have now gone further to dig irrelevant skeletons from SEC’s books, perhaps, to shift the public’s focus from the regulated to the regulator.

The lawmakers are accusing SEC of conducting its affairs in secrecy, devoid of public scrutiny. They said, rather than remit its revenue to the Federation Account as provided by the 1999 Constitution (1st Alteration), the commission generated and spent N32bn in four years without recourse to the National Assembly. For them, the solution is, therefore, to “restructure SEC in a way that will guarantee transparency, accountability and probity in expenditure,” and perhaps prevent it from taking such a sweeping action in the capital market without legislators’ approval.

The restructuring process has started with a public hearing on the “Bill for an Act to Amend the Investment and Securities Act 2007 to Provide for Greater Transparency and Accountability in Finances of the Securities and Exchange Commission and Ensure Greater Legislative Oversight.”

Even if SEC’s intervention in the capital market crisis had been biased, the legislators’ counter-allegations at a time they should be interested in a logical conclusion of investigations into activities that allegedly led to the NSE crisis, show that their interests are far from altruistic.

Investors, I’m sure, would not subscribe to a reform that will put SEC in the pockets of greedy lawmakers. The legislators should, therefore, save their faces now by guiding their binoculars in the direction of Nigeria’s real problem – expensive democracy.

 

Source: Punch