The House of Representatives Ad Hoc Committee probing the near collapse of the Nigerian Capital Market Tuesday ordered the Central Bank of Nigeria (CBN) to furnish it, Wednesday, with the report of its forensic audit which it relied upon to sack the management teams of eight commercial banks in 2009.

The Ad Hoc committee gave the directive Tuesday in Abuja at the resumed sitting of the public hearings on the capital market.

Also former Director-General of the Nigerian Stock Exchange (NSE), Mrs. Ndi Okereke-Onyiuke, said her removal from office by the Securities and Exchange Commission (SEC) was wrong.

The order was sequel to a submission by the former CEO of Afribank  Plc, Mr. Sebastain Adigwe, who had  blamed the crisis in the capital market on policy inconsistency and arbitrary actions of industry regulators.

Adigwe told the Ad Hoc committee that the actions and inactions of the industry regulators contributed significantly to the near collapse of the capital market in 2009.

He disclosed that while the global meltdown was a trigger to the crisis that hit the banks and the capital market, both the CBN and SEC were busy looking for scapegoats instead of seeking ways to resolve the crisis.

He took exception to the testimonies the CBN and SEC tendered before the panel over alleged manipulation of banks’ shares by the managements of the banks.

According to him, the regulatory agencies misled the panel when they said the management of Afribank Plc recruited and funded some firms to buy back the shares of the bank during its public offer.

Adigwe said the best way out of the current investor apathy and market stagnation was for the regulators to strengthen their oversight responsibilities and ensure that the banks complied strictly with the rules on margin loans.

He also recommended that the nationalised banks be returned to their original owners as the takeover by CBN, NDIC and AMCON did not follow lawful procedures.

The intervention by the CBN under its current Governor – Malam Sanusi Lamido Sanusi – in 2009, had led to the removal of the CEOs of then Oceanic Bank, Intercontinental Bank, Finbank, Afribank, Equitorial Trust Bank, Bank PHB, Spring Bank and Union Bank Plc.

The intervention was as a result of a stress test which revealed that the banks had liquidity and heavy corporate governance issues, which posed systemic risk to the industry.

The CBN then injected N620 billion to bailout the banks and appointed a new set of CEOs to manage them.

Meanwhile, questioning her removal, Okereke-Onyiuke said rather than blame the crisis in the capital market on the NSE under her management, the CBN and SEC should be blamed because they failed to regulate the huge margin loans given by banks to stockbrokers and investors to buy shares which pushed their prices to unprecedented levels.

According to her, SEC does not have the power to intervene in the affairs of the Exchange because the NSE is a private company.

“SEC or any other regulator does not have the power to interfere in the affairs of the NSE because it is not a public company. It is a private company that is performing a public function. Also, as a private company, SEC does not have the right to conduct any investigation finances of the Exchange,” she said.

Okekere-Onyiuke, who said she would not comment on forensic report ordered by SEC, which she and other former members of staff of the Exchange stopped through a court order, stated that the Exchange did not violate any law by sharing money realised by providing services to operators in the market.

Meanwhile, the Ad-Hoc Committee has declared war against  the Director General of SEC, Ms Arunma Oteh, following her absence at the ongoing public hearing. 

Oteh had appeared before the Ad-Hoc Committee on Monday and given a testimony that lasted about five hours. She was billed to appear before the investigators Tuesday but sent a letter notifying them of her inability to attend the session.

According to the letter, Oteh was unable to be at the legislative inquiry because she was billed to attend a meeting of the National Economic Management Team (NEMT) chaired by President Goodluck Jonathan at Aso Rock, the  Presidential Villa, Abuja.

In her letter, Oteh reminded the panel that she had dutifully and diligently entered appearances at the hearing in spite of several rescheduling at the instance of the Committee since April 17,2012.

She pleaded with panel to allow her respond to any additional questions that they may have in writing.

Chairman of the House Ad-Hoc Committee, Hon. Ibrahim El-Sudi, who  expressed anger at Oteh’s absence and excuses  promptly  issued a summon on her and all directors of the regulatory agency.

El-Sudi said that the contents of Oteh’s  letter sent to the committee had an aura of arrogance and a slight  upon the integrity and authority of the National Assembly.

“This committee has been fair to everyone that appeared before us. We will not sit here and allow anybody to undermine the National Assembly.

“Appearances before this Committee or any of the National Assembly Committee is not a matter of personal idiosyncracy or discretion. Ms Arunma Oteh is hereby ordered to appear before this committee by 10.00 am tomorrow (May 9, 2012) unfailingly with all the documents earlier requested otherwise we shall be compelled to invoke the necessary provisions of the law.

“The National Assembly is the only true democratic arm of government because all through the years of military rule it was the only arm that was absent. Attending meetings and conferences are not more important than what we are doing here. In fact legislative proceedings are more important than any other meetings. Let this be warning to all that you cannot undermine the authority of the legislature,” El-Sudi said. 

In a separate testimony, Okereke-Onyiuke said that the global meltdown in the United States and Europe set the stage for the crisis that later hit the Nigerian market. 

According to her, the entry point of the crisis was the banking sector which constituted sixty per cent of the players on the Nigerian Stock Exchange.

She said that the banks got into trouble because of their huge portfolio of margin loans acquired in the race by the banks to be ahead of their competitors.

Another reason she gave for the crash was the divestment of foreign investors from the market and the inability of local investors to mop up these dumped shares.

Okereke-Onyiuke said the CBN as well as the  SEC failed to play their regulatory  roles  of warning the public about the looming danger.

She debunked all the allegations of fraud levelled against her by SEC, stressing that she was neither corrupt nor reckless during her tenure as the boss of the stock exchange.

She also denied any wrongdoing in her stewardship of Transcorp Plc and in the run up to the electioneering campaigns of US President, Mr Barack Obama. 

The former NSE boss also denied allegations that she blocked the incorporation of another stock exchange in Nigeria because she wanted NSE to run as a monopoly.

She explained that the council of the NSE did not at any time object to competition but were simply against government using public funds to set up a parallel exchange.

The way out of the capital market crisis, she said, was for the present managers of the stock exchange to implement fully the blueprint drafted by the NSE and Accenture shortly before she was forced out of office.

She also advised the Federal Government and the National Assembly to explore ways of getting major oil companies as well as telecommunications firms operating in Nigeria to enlist in the stock exchange.

Source: Thisday