Wednesday, May 9, 2012
SEC chiefs disown Oteh
UNKNOWN to the investing public, the Securities and Exchange Commission (SEC) – supervisors of the Nigeria Stock Exchange (NSE) – has been held down by self-inflicted ailments, which obviously slowed down its battle to revive the troubled stock market.
SEC Director-General Ms Arunma Oteh seems to have been acting alone, going by yesterday’s proceedings at the House of Representatives hearing on the near-collapse of the Capital Market – once touted as the world’s fastest growing by its major players.
The gulf between the DG and her executive team was exposed as Oteh was left to defend her actions all alone. Besides, the Executive Commissioners reeled out reasons for the division in the Commission.
The entire Executive team denied knowledge of the Road map to making the capital market world class. Only Executive Commissioner (Operations) Daisy Ekina said part of her presentation for the DG shortly on her assumption of office was in the Road Map.
Ekina and Executive Commissioner (Legal and Enforcement) Charles Udora said that the staff were unhappy with Oteh’s management style and that trust and team work were no longer part of the work ethics of the organisation.
Udora also faulted the status accorded contract staff by the Commission as regular workers felt short-changed in remuneration and other welfare matters.
Ekina noted that the morale of the staff had been at its lowest since Oteh’s assumption of office, adding: “What I can confirm is that the morale is low, there is mistrust among the staff.”
The Commissioner in charge of Finance and Administration, Sani Stores, decried lack of respect from the leadership, saying since respect is reciprocal, the management should imbibe the culture of respect for one another to develop the organisation.
Ekineh, Udora and Executive Commissioner (Stores) Alhaji Lawan Sani, denied knowledge of the engagement of two officials of Access Bank PLC on secondment.
Udora alleged that there was a total breakdown of official communication, mutual disrespect and mistrust and the tendency to run a one-man show by Oteh.
He said the engagement of contract staff at the commission was affecting the morale of staff.
“There was a young man who graduated in 1998 and was made a director. The contract system that we have has created friction among the staff.
“We seem to be in a situation of regulatory comatose. Our staff are no longer giving us what we need to regulate the market.”
Ekineh said there was need for the leaders to respect their subordinates.
“I will agree that there is a dysfunction because we have not been working as a team. I would suggest that we should communicate more, face-to-face instead of text messages.’’
Oteh made no comment on the allegations and way forward proffered by her team.
Oteh said she was not aware that two Access Bank officials were owing the defunct Intercontinental Bank N16b when the latter was acquired.
The SEC boss maintained that conflict of interest was not a factor in the acquisition of the two banks, but the Committee was shocked at the classification of the N8b realised by Union Bank on its IPO as a loss.
Oteh disclosed the strategies being put in place to reposition and foster unity within SEC as well as turn the capital market into a world class market.
Oteh, who appeared before the Committee in compliance with its directive on Tuesday, replying to a question by a member of the Committee, Bimbo Daramola, said she was not aware that the Group Managing Director (GMD) and the Deputy Managing Director (DMD) of Access Bank were owing Intercontinental Bank N16b.
“As individuals or as in their official capacities in the bank, I am not aware,” she said.
The committee asked that should it be discovered that those two actually owed Intercontinental Bank, whether the DG would still believe that her approval of that acquisition was correct?
Oteh said: “The basis of approval of the scheme document is not just on that, but has a lot of issues and in each case you work on case-by-case basis. So, I would not be able to say to you what will be my decision today because we will have to go through the process on specific circumstances and take a decision on that basis.”
The Committee also tasked the DG on the morality behind the engagement of two Access Bank officials by SEC, but she insisted that conflict of interest was no issue.
“On whether we compromise on the engagement of the two officials, laid down rules and procedures have been strictly complied with by the SEC since January 2010, including the processing of any transaction related to Access Bank.
“The seconded officials were the Project Advisers, in charge of managing our facilities because we have had challenges in the management of our offices, and the other a Communications Assistant,” the DG said.
She said the two officials were taken, based on their competence in assets management and expansion as well as branding, adding that it was felt that their skills would be useful in the planned capital market resources centres, where any Nigerian can walk into and be educated about the capital market.
“The choice of these two people were in the areas not in our regulatory functions. These Access Bank employees have no connection with the core regulatory functions of the Commission in any manner as to create a conflict of interest.
“In fact, Access Bank has been very open about this and disclosed details of this specific secondment in its 2010 annual report,” she added.
Oteh noted that several private sector companies were contacted on the kind of expertise required by SEC and that direct recruitment of staff by the SEC would have taken too long a time. Besides, the DG added, due process was followed in the recruitment.
She affirmed that it was a management decision to engage the two bankers and that SEC’s Human Resources Unit handled the recruitment. She was not directly involved in the selection of the two bankers, Oteh said.
While she held on to her affirmation that the decision to take on the two bankers was jointly taken by the SEC Executive Commissioners, the Executive commissioners said they were not aware of it.
Oteh insisted that two Access Bank officers on secondment to SEC could not have influenced the process of the acquisition. “There were mechanisms in place to check conflict of interest issues in the SEC,” she added.
On the N8b realised by Union Bank from Initial Public Offer IPO) that was later acquired as loss to the bank by the Asset Management Corporation of Nigeria (AMCON), Udora said SEC followed due diligence.
According to him, Union Bank later stated that the money was used to set up Union Bank UK, which was against the rules. At that point of SEC’s insistence, the AMCON consultant inferred that SEC was interfering in the process but the Commission insisted that the use of the proceed must be proved, Udora said, adding:
“AMCON now wrote that the fund should be classified as loss to Union Bank and on that basis we approved the clearance but, in my opinion, which was officially communicated, the usage of that proceed should be investigated.”
On the proposed Finbank and FCMB merger, the DG said the acquisition was delayed by six of 30 issues that were to be settled by Fin bank.
On Project 50 designed to mark 50 years of capital market regulation, Oteh was accused of double speak – that donations were received from sponsors and that records would be presented while she now claimed that there were no donations.
“There were no donations at all. The arrangement we had was for our sponsors to fund specific events and we only funded our own part of the event,” she said.
The DG insisted that the entire executive team was involved in the project, but only Ekina said she attended two meetings at the initial stage. Others claimed ignorance of the project.
The Committee promised to investigate the Project.
Oteh also noted that the 3 per cent of all transactions charged by the Exchange was to cover cost of regulation and that 80 per cent of the surplus of revenue is remitted into the consolidated account; 20 percent is retained by the commission – in line with the provisions of the Act.
The committee adjourned the hearing till next Tuesday.