Arunma Oteh is beautiful, both in looks and intention to have a resounding golden jubilee for SEC. But she might have boxed herself unnecessarily into a corner of compromise by accepting ‘support’ from her ‘subjects’, reports Finance Editor, KINGSLEY IGHOMWENGHIAN

If all was normal at the Securities & Exchange Commission (SEC), all its human and material resources should have been geared towards an investment forum slated for October 2012, to wrap up one year of activities to commemorate 50 years of capital market regulation in Nigeria which commenced on October 31, 2011.

The event was a well attended international investor forum in Abuja under the theme “Nigeria, the preferred investment destination”, and it attracted leading international and local investors, as well as chief executives and financial sector leaders. It showcased the wealth of investment opportunities in Nigeria.

There are, however, doubts now as to whether the October developments will still hold, going by recent events that culminated in the directive by the board of the SEC that Ms. Arunma Oteh, its director-general and chief executive, to proceed on “compulsory leave”, after its meeting that lasted several hours on Monday, June 11.

According to a statement by the secretary of the SEC board, Edosa Kennedy Aigbekaen, the decision was taken after considering the report of its Audit and Finance Committee, which on March 27, 2012, was directed “to investigate all the issues raised during the public hearing”.

The committee had, in its conclusions, Aigbekaen said, “recommended an independent audit of Project 50, and that the key actors in the management of the funds should be asked to step aside to allow an unhindered investigation.”

Daily Independent, our sister publication, on Thursday, quoted a source close to the commission as linking the SEC’s action to the fact that Oteh admitted chairing the Project 50 planning committee, to celebrate five decades of the nation’s capital market. She also admitted being the key person in the management of the sources and disbursement of the accrued funds. The board had directed its audit and finance committee headed by Christopher Chukwu, a representative of the Central Bank of Nigeria (CBN), to investigate the project and present its report in four weeks.

The committee could not, however, conclude the assignment within the timeframe, due to what the source said was the uncooperative stance of the DG, who insisted on presenting her report to the full board when she did appear on March 9, 2012. When she finally did, according to the source, Oteh made an oral presentation on March 23. The oral report did not also come at the committee’s meeting of May 3 and 4, 2012, when she sent an e-mail to members saying she would not be available. Her written report presented on May 22, and further clarifications she supplied two days later, were subsequently reviewed and submitted to the SEC board.

Considering the committee’s report, the board turned down the recommendation that key actors in the Project 50 be suspended, but ordered Oteh to go on compulsory leave to allow for an independent investigation, as recommended by the committee.

Project 50 and House probe

Project 50, and how it was managed, it would be recalled, was one sticky thumb during last month’s appearance of the SEC executives before the Ibrahim El-Sud ad-hoc committee probing into the near collapse of the Nigerian capital market. The commission denied any involvement in the project, which Oteh insisted took no donations, but had “partners” like the CBN, the Federal Ministry of Finance, Ministry of Trade and Investments, Association of Issuing Houses and “several other private sector players”, who handled specific aspects. The commission, she said, spent N42.5 million on its own part, providing no details of what the “partners” funded, following which she was directed to provide the information at the next adjourned date.

But Elombah.com, an on-line news portal, alluded to documents proving, for example, that Oteh “forcibly sought and obtained donations from banks and capital market operators amounting to over N1 billion, which was lodged in private accounts contrary to provisions of Part IV, Section 19(1C) of the Investment and Securities Act (ISA) 2007, which requires all monetary gifts, donations, contributions and other funds received by the commission to be paid to a fund or account established by the commission.

“In addition to the donations received, about N200 million was spent on this one-day event from SEC’s account without proper accounting and due process. It is from this sum that over N42 million was paid to Transcorp Hilton Hotel for accommodation and other services.”

The Reps may indeed have records showing, among others, that Zenith Bank donated N50 million, Chapel Hill/Denham Stock Brokers N100 million, Access Bank N100 million, Africa Finance Corporation (AFC) N2.5 million, while First Bank paid for the services of Quo Vadis who was the Project 50 consultant engaged by the commission.

Expectedly also, Obi Adindu, Oteh’s media aide and one of the contract staff hired by her at the SEC, reacted to the submissions of the SEC commissioners at the probe panel in an e-mailed statement to newsmen after the appearance of the SEC chiefs, insisted that “SEC’s Executive Commissioners lied.”

Adindu accused the SEC commissioners of having an “entitlement mentality – the feeling that Ms. Oteh is an outsider and that the SEC really belongs to them,” with two of them having spent about 20 years within the system, just as they assumed office in June 2008 for a four-year tenure that expires next month. Oteh’s tenure expires in 2015, which is also “easily the genesis of the mutual distrust which came to light on Wednesday (May 9).”

On the Project 50, he accused the executive commissioners of perjury, as “there is ample evidence that they took part in the planning, and played key roles in the October 31, 2011, formal launch and investment forum events. For instance, as they admitted, the board of the commission, comprising all executive commissioners, the DG and non-executive commissioners, approved the SEC expenditure for the project to the tune of N42 million.

“The Commissioner Legal, Charles Udora, also seemed to suggest that regular staff of the SEC were not involved in any way. A list of SEC Project 50 sub-committee heads obtained today, however, shows that only two contract staffers were committee heads, namely Frana Chukwuogor and Obi Adindu. Below is the list of sub-committee leaders:

Microsite, Technology and Facilities: Mr. Henry Rowlands; Security and Crowd Controls: Mr. I. B. Bello; Travels, Protocol and Logistics: Mr. Ismaila Ville; Events Planning: Ms. Placida Awuna; Stakeholder Communication: Mr. Shaka Braimah; Media and PR: Mr. Lanre Oloyi/Obi Adindu; Content: Mr. Obi Adindu; Corporate Gifts & Memorabilia: Ms. Frana Chukwuogor.”

Adindu equally attached photographs taken at the event to buttress the alleged lie, with the various executives paying different roles, including the vote of thanks by Ms. Ekineh; while Udora “introduced Alhaji Shehu Shagari, an award recipient who was recognised for establishing the SEC in 1980.”

Analysts react

Reacting to the decision of the SEC board on Tuesday, Bismarck Rewane, CEO of Financial Derivatives Company, a Lagos-based consultancy and friend of Oteh, told Reuters it is the handiwork of corrupt individuals sanctioned by her clean up, who are fighting back.

“The same corrupt people are fighting back,” he quoted as saying.

David Andorin, chief executive of Lagos-based Lambert Securities Limited, told Sunday Independent that “the suspension of the SEC DG is not surprising, considering the weighty issues thrown up about her administration during the last public hearing on the capital market.”

An analyst, who craved anonymity, on Thursday blamed the fact that Oteh tended to have become more powerful than the institution whose board is chaired by Udoma Udo-Udoma, a former senator.

Another source noted that by directly managing the Project 50, with donations in the neighbourhood of N1 billion, Oteh compromised her office, going by evidences of conflict of interest through her involving and soliciting support from individuals and institutions under her supervision.

“Ordinarily, SEC should not obtain incentive, sponsorship, support, or any other adjective whatsoever, under any circumstances from captains of industry who are owners of quoted companies or market operators, and banks involved in the recently concluded mergers,” he added.

In a text message to our correspondent on Thursday morning, Gbadebo Olatokunbo, a shareholder activist, said “Oteh’s suspension is okay for proper investigation. Nobody is above the law. But, it must be pure investigation and not political moves, because of the bribery issue with the National Assembly and the attendant stigma. Enough of playing politics with every national issue to our detriment.”

He noted that “the investing world is watching” developments in the Nigerian capital market.

Concerning the original Reps’ committee on Capital Market headed by Herman Hembe, analysts also find worrisome that the SEC board approved N30 million “support” (bribe) for the panel to do its job.

Oteh did not reply to a text message by our correspondent on Tuesday to her mobile phone, seeking audience to enable her react to the action of the SEC board and answer to some of the issues raised.

But addressing journalists in Abuja on Tuesday morning when the news of her compulsory leave became public knowledge, Adindu, one of the two contract staffers engaged by Oteh, and who chaired the Project 50 content committee, besides co-chairing that of Media and Public Relations, assured that Oteh “will communicate what has happened now to her employers and also look at due process to ensure that not too much under-the-table dealings led to this decision by the board.”

According to him, specific questions were asked by the Audit and Finance Committee to which Oteh responded to, arguing, however, that it was wrong for anyone to submit that about N2.3 billion was spent on the Project when only about N155 million was spent by SEC.

His words: “Only about N155 million was spent on the event, and Oteh had received commendations from other organisations that have organised such events in this area for her prudence.”

He insinuated that the decision of the board might not be unconnected with a ploy by some members to subtly extend their tenure which was expected to terminate officially last Friday.

Oteh, he said, has vowed to fight back, to clear her name.

She reportedly did that on Wednesday, when she petitioned President Goodluck Jonathan and the Ministry of Finance, seeking a reversal of the board’s order which Adindu said was taken to ridicule her as well as pursue an agenda of tenure extension.

An aide of Oteh was also quoted on Thursday as describing the directive as “reform-resistance”, with the instrumentality of the board hijacked by few ambitious officers.

Dysfunctional SEC

For one market operator, “in the capital market, the word ‘support’ has been used to weaken the institution. How come the board approved the unsolicited help?”

Alluding to the lack of cohesion at the commission before the El-Sud committee, Ms. Daisy Ekineh, Executive Commissioner (Operations), now acting DG, blamed the lack of team work and respect for one another at the SEC under Oteh. Communications among the executives of the SEC, she hinted, became limited to “more of emails and text messages”.

As she told the bewildered legislators: “There is a dysfunction in SEC, because we no longer work together as a team. There is also absence of respect and team spirit. During the time of the last two DGs, we used to hold meetings in their office regularly. This helped a lot, especially in bringing unity and cohesion to our activities, while helping us achieve more.”

According to her, in the past, management staff usually assembled in the DG’s office to rub minds before returning to their offices for the day’s work, a situation that is now absent.

“This is why we are having some of these issues. So the communication is very important… You set up institutions and systems and not individuals, and this is done by setting out rules so that whether you are there or not, the job will be done. What is going on is because there is lack of trust among us,” she said.

Also speaking, Sani Stores said: “Oteh is inaccessible and very distant from the executive team and other staff of SEC. There is also no cooperation among the management and staff, lack of trust and team work.

“For the commission to succeed, we should be able to work together, trust ourselves and carry one another along.”

Many agree that the revelation at the capital market probe only goes to show that there is no corporate governance in the SEC.

Qualification issues

One other issue that has plagued Oteh in her 18-month stint so far, which was alluded to by Hembe, is her qualification for the job, for which she was appointed by the then President Umaru Yar’Adua on the recommendation of his then Finance Minister, Dr. Mansur Muhtar – Oteh’s former classmate. The argument for her appointment was hinged on the need for a neutral candidate that would not be easily influenced by the system, despite oppositions by stakeholders. In the process, the government may have brushed aside the provision of the enabling Investment & Securities Act that the holder of the position must have a minimum of 15 years cognate experience in the capital market.

Before her appointment, Oteh was treasurer at Tunis-based African Development Bank, (ADB), a development finance institution.

This search for a neutral candidate is believed to have placed her ahead of other top contenders like Alhaji Lawal Sani Stores, current executive commissioner at the SEC, and former Deputy General Manager at the Nigerian Stock Exchange (NSE); Robert Orya, then executive director of Afribank Capital Market Limited; Alhaji Umaru Kwairanga, MD/CEO of Finmal Financial Services (a stockbroking firm), a fellow of the Chartered Institute of Stockbrokers (CIS); Uchenna Ogbu, also a senior stockbroker and lawyer, as well as Dr. Nnenna Orji, Chairman, Investments & Securities Tribunal (IST).

Oteh, from Bende Local Government in Abia State, South East Nigeria, is not entirely new to Nigeria’s capital market environment, having worked at Centre-Point Merchant Bank, from where she moved to AfDB as Vice President in charge of Finance, armed with an MBA from Harvard University.

Unending questions 

Speaking with our correspondent, mid week, Femi Awoyemi, market analyst, chartered accountant and chief executive of Proshare Nigeria, an on-line portal, insisted that “the SEC board approved N42.5 million, and then she went to people she licensed and supervised to seek funds. The questions that then immediately play up are: How much did she ask for originally? Did she tell the board that more money was coming from donors? What was the percentage of extra donations to the size of fund needed to implement the project? Was it in cash or kind? If cash, why was it not lodged in the SEC’s own bank account as a regulator and government agency? Who were signatories to the third party account, if there was any? In which bank was (were) the account(s) domiciled? Was it wise for the commission to receive support from stakeholders without compromising the regulatory process and the institution in the process? How then can you sanction a man who has given you money (support)?”

Source: dailyindependentnig.com