By PETER EGWUATU, MICHAEL EBOH, & NKIRUKA NNOROM
Following the revelations of the principal officers of the Securities and Exchange Commission (SEC) and the deluge of questions by the ad hoc committee of the House of Representatives probing the near collapse of the Nigeria capital market on Wednesday, Director-General of the SEC, Ms. Arunma Oteh, has admitted that there was division and rancour within the rank and file of the commission, saying that she has learnt her lesson.
Also, in reaction to the on-going probe, stakeholders in the capital market reckoned that the probe is a welcome development and will help in addressing critical issues that had contributed to the near collapse of the market.
However, Vanguard gathered that the SEC commissioners lied about some of the issues that were raised at the public hearing. Specifically, it was gathered that the commissioners participated in the project 50, which they claimed they did not know about.
Meanwhile, in a statement made available to Vanguard, Oteh said, “The hearing provides very useful lessons that will guide the Commission’s continuing institutional strengthening programme. The Commission wishes to state categorically that the SEC remains a cohesive institution whose activities are driven by highly professional and patriotic staff under the headship of a very experienced management team and board delivering exceptional service to participants in an envisaged world class Nigerian capital market.”
Continuing, she said: “The SEC recognises the challenges to its institutional cohesion arising from the implementation of its on-going transformational programme. The Commission is fully committed to overcoming those challenges and strengthening the organisation to position it to successfully birth a world class Nigerian capital market which is the object and vision of the transformation project.”
She said: “The SEC is not unlike other human institutions; the commission is not immune to common challenges arising from cultural and personal differences.” She remarked that the change project she is leading has the final objective of converting the SEC to a regulator with the best tools, personnel, systems and processes to discharge its regulatory oversight and market development mandate to international best practice standards.
She stressed that the multi- dimensional transformation process includes Information Communication Technology (ICT) upgrade and migration to a technologically savvy organisation with emphasis on e-culture; personnel recruitment at leadership, middle management and entry levels with emphasis on training and re-training; streamlining of the institution’s value system to make it more evocative; leading to the charge for consistent human capacity upgrade through collaboration with regulators and resource institutions in other jurisdictions and the global financial market place.
Ms Arumah Oteh
According to Oteh, a transformation project of this magnitude has culture shock and cultural lag implications which are sure to create feelings of apprehension and even alienation among some members of the SEC family. Such feelings, she pursued, “… are short run and medium term consequences of far reaching institutional change management.”
She, however, assured that SEC , having closely followed and actively participated in the on-going House of Representatives public hearing, had noted the frank disclosures at the hearing and intends to factor these into the change management element of the institutional transformation project.
Stakeholders’ reactions
Reacting to the on-going probe, Mr. Bayo Olugbemi, Managing Director, First Registrars, said: “So far, it has been fair. The Committee and the process are highly rated by me. Hopefully, depending on the results which should be fearless and fair, it will address some of the issues that had hindered growth of the market. If the presentations made by SEC and NSE are anything to go by, there is definitely light at the end of the tunnel. What they should focus more on is rebuilding investors’ confidence and investors’ education, not rhetorics.”
Reacting to the on-going probe, Mr. Bayo Olugbemi, Managing Director, First Registrars, said: “So far, it has been fair. The Committee and the process are highly rated by me. Hopefully, depending on the results which should be fearless and fair, it will address some of the issues that had hindered growth of the market. If the presentations made by SEC and NSE are anything to go by, there is definitely light at the end of the tunnel. What they should focus more on is rebuilding investors’ confidence and investors’ education, not rhetorics.”
Asked if the probe would affect the market positively or negatively, he answered in the affirmative, saying however, that it would depend on the truthfulness and fairness of the report and if ultimately the recommendations were implemented.
In his own submission, Mr. Johnson Chukwu, Managing Director/CEO, Cowry Asset Management Limited, said, “I think the probe has so far been objective and fair to all the parties. The Committee has largely focused on issues instead of personalities although there is no way such fact-finding mission can completely avoid issues related to personalities that played or are playing critical roles in the capital market crises.”
On the way the committee has so far conducted itself, Chukwu said: “I think they should be commended for remaining focused so far on finding the causes of the Nigerian capital market crash and ways to revive the market. I believe that most Nigerians who have been following developments at the Committee’s sitting would rate them to have so far performed above average.”
He, however, argued that the on-going probe will likely not have any positive effect on the market, saying that the market has been inundated with negative revelations of the workings of the regulators. “What may affect the market are the final recommendations of the Committee, such as the practicality of rescue or remedial measures and nature/severity of sanctions to market abusers,” he enthused.
For him, there was nothing either the NSE or SEC would do to turn around the market in the immediate, even as he urged for maximum cooperation among all stakeholders in revamping the market. “NSE for instance has already announced an elaborate short, medium and long-term programme to turn around the market.
“These measures are already being implemented. I think that what we need is to support the NSE programme with fiscal policy instruments to make the market more attractive to investors and quoted companies alike. Such policy measures could include waiver of tax on dividend paid by quoted companies, reduction of corporate tax for quoted companies among others.”
Mr. David Adonri, Chief Executive Officer, Lambeth Trust & Investment Company Limited, said, “From general issues, I expect the probe panel to drill down to the specific matters that remotely and directly contributed to formation of the asset bubble that wrecked the equities market.
“The roles played by the financial regulators, operators, issuers and banks in inflating the asset bubble should come under intense scrutiny. The probe offers a rare opportunity for examination of the fundamental weaknesses relating to inability of the capital market to form capital for the strategic heavy industrial and agricultural sectors of the economy.
“The migration of trading in Federal Government bonds away from the trading platform of the NSE to the unregistered OTC platform needs to be probed. The action denied retail investors an alternative investment outlet that would have prevented over concentration of assets in equities. It is my hope that the new panel will avoid sensationalism and dwell on concrete issues like the role of fiscal indiscipline in crowding out the equities market and revival of the equities primary market.”
Also reacting, Chief Timothy Olufemi, a shareholders’ activist, noted that the current probe panel is okay and is seen to be performing according to the expected standard. He stated that it was particularly commendable that the Ad hoc Committee has been able to uncover a lot of malfeasance in the Securities and Exchange Commission by the way it was being conducted.
Olufemi believes that the on-going probe has taken a turn for better, saying that it would definitely affect the fortune of the market if the recommendations by the various stakeholders that have appeared before the committee were implemented.
For him, the revelation made about the way the SEC D-G, Ms. Arunmah Oteh, has been running the commission was a pointer to the fact that she does not possess the qualities that would elicit success and ultimate turn around in the market.
He said: “We, the shareholders have been complaining right from the time she assumed office that she is not capable of managing an institution like SEC. A situation where she runs the commission like one man show is not good for the market. Things are not done that way. She has officers who have spent over 30 years working for SEC and yet, she does not listen to them.”
