SEC probe: The unanswered questions

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The Wednesday’s unanimous resolution of the House of Representatives to dissolve the panel set up to probe the activities of the Nigerian Stock Market brought to a close the tragic comedy of the N44 million bribery allegation leveled against the embattled Chairman of the committee, Hon. Herman Hembe, by the Director-General of the Security and Exchange Commission (SEC), Ms Arunma Oteh.

After the meeting of principal officers of the House, the lawmakers agreed that the only way to redeem the image of the House was to disqualify Hembe and his committee from continuing with the probe.

In its place, they constituted an eight-member committee to continue with the public hearing with a view to restoring investors’ confidence in the collapsing capital market. The new probe panel headed by Ibrahim El-Sadu (Taraba) has as its members Hon Ini Udoka, Hon Toby Okechukwu, Hon Buba Jibril, Hon Usman Adamu Mohammed, Hon Dogara Daramola and Hon Rose Okoh. The House leadership also directed the Ethics and Privileges Committee led by Samson Osagie to investigate Oteh’s allegations and report back to the House.

As the new committee is about to commence its assignment, what most stakeholders are now looking forward to is a new approach that would unravel the circumstances that led to the crisis in the sector. There are so many unanswered questions in the public hearing conducted by the sacked panel. Apart from the bribery allegation which marred its proceeding, many financial experts have also blamed the committee for going after the personality of the SEC boss rather than addressing the fundamental issues that are of major concern to the investors.

Unanswered questions
Some of the questions begging for an answer, according to the financial experts, are: What brought about the crisis in the first instance? Who and who played what role in the emerging financial crisis? What are international best practices visa-vis the Code of Corporate Governance for Capital Market regulators in Nigeria? What are the identifiable areas of weaknesses? What measures need to be put in place to strengthen them? What is the scope of the investigation the panel is about to go into? How true is the insinuation that some firms influence the price of shares in the market? Does the practice still exist?

A financial services expert and former President of the Manufacturing Association of Nigeria (MAN), Mr. Henry Boyo, giving an insight into some of these issues in an interview with Sunday Sun, had this to say, “The committee should be better prepared to do a thorough investigation of what has happened to the Nigerian Capital Market which had been rated among the best in the world. They should not start asking ad hoc questions that would not address the real issues. First and foremost, they should have concerted position on what they want to do.

They should be able to find out what constitutes the international best practice in other civilized markets, know the comparative positions; what are the weaknesses of the Nigerian market and trace the historical perspectives on what gave rise to the crisis in spite of assurances of former Governor of Central Bank of Nigeria (CBN), Chukwuma Soludo.

There are insinuations that some firms sponsored prices of shares. Are those things still happening? They should go and do their preliminary homework to compare the practice here as against the standard in the developed economies. They should find out and tell Nigerians why Soludo has not been indicted for deceiving the country.

Public institutions should be strengthened to perform their oversight functions. The crisis in the capital market is beyond what the SEC boss is accused of spending on food and all what have you. One is not trying to exonerate Oteh for the accusations leveled against her. But if they are crucifying her for the outlandish amount allegedly spent, somebody should also question the National Assembly for the outlandish expenditure of the members.

The factional Chairman of the All Progressive Grand Alliance (APGA), Chekwas Okorie, in a similar reaction, said there is a need for the panel to engage consultants on financial services to serve as a leading light in its investigation. He said, “Nigerians look up to the panel with high expectation that they would be able to address the rot in the capital market and the issues of concern to the investors. But the way the former committee went about the assignment showed lack of knowledge of what they set out to do.

They failed to ask the right questions because they didn’t employ consultants who are the experts in the field. Security and exchange matter is a specialized field of profession and can only be handled by the experts. But now that a new panel has been put in place to continue with the probe, my advice is that they should engage experts who are knowledgeable in the matter.”

Reshaping the ethical standard
The crisis in the Nigerian Capital Market has been partly blamed on the global economic meltdown. And apparently, the crisis has created an unprecedented raft of financial regulations across the globe with a view to making international securities markets work better and more safely in the future.

Therefore, the scope of the committee’s assignment is expected to include lessons Nigeria has learnt from the international financial crisis so as to be able to make appropriate recommendations on how to safeguard investors’ hard earned money in the future. There is also the need to focus on the ways to improve transparency in operation of individual financial institutions.

Above all, the committee must be able to work in concert with relevant stakeholders to draw appropriate and relevant Code of Corporate Governance for Capital Market regulators in Nigeria covering all relevant areas including their roles, principles, ethics, guidelines and relevant implementation and operation of the governance plan.

Integrity question
The bribery allegation leveled against Hembe has already cast a shadow of doubt on the integrity of the House. And, of course, this is not the first time the House of Representatives would enmesh itself in unnecessary controversies bordering on financial scam. For instance, when the last National Assembly set up the Godwin Ndudi Elumelu-led committee on power probe to look into the $13bn allegedly spent on the power sector by the administration of former President Olusegun Obasanjo without commensurate results, so enthusiastic was the public that the lawmakers almost became heroes of democracy. At last, the prolonged investigation ended up in fiasco. The Senate and House of Representatives Chairmen Committee on Power, Senator Nicholas Ugbane and Ndudi Elumelu were indicted of alleged N5.2 billion contracts scam in the Rural Electrification Agency (REA).

Apprehension has also been raised as to what may likely become the fate of the report of the just concluded Farouk Lawan-led subsidy probe. The same skepticism greeted the public hearing earlier conducted on the Nigerian capital market by the former committee. And many are still reluctant to give the new panel the benefit of the doubt. Boyo, expressing his reservation for the possible outcome of the ongoing trial said, “The fundamental problem with the National Assembly is that most of them have soiled their hands in many sordid deals. So, you cannot expect much from them because the purpose of people going into government is to steal. Anti-corruption agencies must go and interrogate the members of the National Assembly on their outlandish expenditures.”

The Spokesperson for the Presidential candidate of the Congress for Progressive Change (CPC), Gen Muhammadu Buhari, Yinka Odumakin, didn’t mince words either, saying, “We knew all along that there is hardly anything done in the public interest. And it is now clear that corruption is what defines our life in Nigeria. It is not enough that Hembe has stepped down as the Chairman of the committee, there must be a thorough investigation into the allegation by the Economic and Financial Crimes Commission (EFCC) and whosoever that is found wanting must be prosecuted.”
The onus therefore lies on the new panel to prove the cynics wrong by doing a thorough investigation of the rot in the capital market without fear or favour to any individual and institutions.

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