Oteh unfit to be SEC DG, say lawmakers

By Victor Oluwasegun and Dele Anofi, Abuja.

Ms Arunma Oteh

Director-General of the Securities and Exchange Commission (SEC) Ms Arunma Oteh is unfit to hold the position, the House of Representatives said yesterday.
Ms Oteh was recalled from suspension by the Federal Government on Wednesday after being cleared of “fraud or criminal breach of any form by external auditors – Price Water Cooper Limited (PWC) - which audited SEC’s controversial Project 50.
But workers protested her recall  at the Abuja Central Business District (CBD) office of SEC. 
Minister of Finance Dr. Ngozi Okonjo-Iweala has stepped into the matter to smoothen Ms Oteh’s return to office. The SEC DG failed to resume in office yesterday as widely expected.
Yesterday, the House accepted all the recommendations of the Ibrahim El Sudi-led ad hoc committee that investigated the near-collapse of the Capital Market. 
During the consideration of the committee’s report, El Sudi said: “ I want to correct an impression that has been created in the media that tends to affect the image of the House.
“The Executive and all Nigerians know that this House inaugurated a committee that led to the suspension of the SEC DG  and that the  report of the panel set up by the Executive has not even been adopted. And now the Federal Government has recalled the DG.
“I want to state categorically that Arunma Oteh is not qualified  to be the DG of SEC. Sections 3, 35 and 315 of the Investment and Securities Act are clear on this.
“As at the time Oteh was appointed as the DG SEC, she was not registered with the SEC as required by the Investments and Securities Act. She didn’t have 15 years cognate experience as a Capital Market operator and so, I want to say here today that Oteh is not qualified to be the DG  of SEC.
 The lawmakers also called for the prosecution of some persons they considered being responsible for the near collapse of the capital market.
The committee’s recommendations of all which were accepted include:
•That the Regulatory Authorities in the Capital Market should take proactive and preventive measures to forestall the near collapse of the Capital Market in future as the following reasons were identified by the Committee as the reasons for the near collapse of the market in the past and lack of public confidence in the market:The sum of N8Billion missing from Union Bank Pic public offer of 2005; Nationalisation of some Banks without due process; Banking sector consolidation of 2004/2005; unbecoming activities and market infractions of some capital market operators; 
poor regulation of foreign port folio investors thereby precipitating capital flight; high cost of doing business in the capital market; contradictory monetary policy of the CBN; absence of product variety and low level of new listing thereby hampering dept and liquidity of the capital market; conflict of interest and misconduct of the current leadership of SEC, thereby fettering its regulatory capacity; loss ofjcredibility of the entire SEC management team, led by the DG, Arunma Oteh; Regulatory failure of SEC and CBN; incompetence and lack of statutory qualification by the current DG, SEC, Ms Arunma Oteh ; unguarded utterances by key financial system’s regulators; AMCON’s activities that constitute a time bomb and potential disaster in waiting in that there is doubtful process of Non Performing loans. (NPLS) valuation, inadequate liquidity and capital base, AMCON’s involvement of one of its regulators, SEC, in its Board contrary to Section 10, AMCON Act, non-accountability of AMCON to any authority; layers of moral . hazards in SEC and diversion and.issue of bonds for debt re-financing; irregular acquisition of Intercontinental Bank flc by Access Bank Plc; irregular acquisition by AMCON of the performing loans of SEAWOLF and GEOMETRICS Company etc.
•That consequently, with respect to the missing N8 Billion arising from the Union Bank Plc public offer, a case of fraudulent diversion having been established, the past board and management of Union Bank Pic, the CEO of the Issuing House/Financial Adviser to the Offer, the present members of the Board and Management, including the Managing Director of Union Bank Plc, Mrs. F. Osibodu, should be investigated by the Economic and Financial Crimes Commission, EFCC with a view to establishing and recovering the missing amount. The management of AMCON and SEC, including their respective CEO’s (Mustafa Ch Ike-Obi and Ms Arunma Oteh), should be investigated by the EFCC considering their roles in attempting to conceal the fraudulent diversion and missing fund.
•That the Nationalization of AfriBank Plc, Bank PHB, and Spring Bank, and their subsequent change of names to Mainstreet Bank, Keystone Bank, and Enterprise Bank respectively, is a Violation of the AMCON Act, NDIC Act and Section 44 of the 1999 Constitution of the Federal Republic of Nigeria as the processes of transfer were fraught with potential forgery, unethical practices, abuse of office, and various unacceptable bad corporate governance precedents; the transaction should be reviewed and investigation be carried out on the following by the EFCC and other Security Agencies -  
 i. Umaru Ibrahim, Managing Director/CEOjof NDIC ii. Mustafa Chike-Obi, Managing Director, AMCON; iii.      Sanusi Lamido Sanusi, Governor, Central Bank of Nigeria; iv. All those who were used or offered themselves to be used in the various misrepresentations leading to the corporate registration of the nationalized banks, v.      Bello Mahmud, Registrar General, Corporate Affairs
Commission; vi.      All the faceless “lawyers”; Directors’ of Mainstreet Bank Ltd, Keystone Bank Ltd, Enterprise Bank Ltd should be unearthed and
made to face the wrath of the law.
•That the Governor of Central Bank of Nigeria, Sanusi Lamido Sanusi, as the Chief Executive Officer and Chairman of the CBN Board is hereby cited for contempt of the House of Representatives having refused to produce after demand the special Examination Report upon which the intervention in the 8 Banks in August 2009 was based.
•That the CBN’s action in disbursing N620Billion bailout funds and other intervention funds afterwards did not follow due process of law and the Constitution of the Federal Republic of Nigeria, 1999, as the  source of funds and the appropriate authority did not approve.
•It is further recommended “that in future any bailout plan for the Capital market or financial sector should receive appropriate authorization and should be done after a comprehensive and transparent determination and location of the beneficiaries, borrowers, lenders and relevant collateral provided.
•That the CBN and SEC should produce clear guidelines on margin facilities and related transactions without further delay.
•That to restore investor confidence, SEC should overhaul its regulatory framework, and build requisite technical capacity to enable it tighten regulation on malpractices by market operators.
•That considering the high dependence of the Nigerian Capital Market on foreign investors, and in view of the fact that they were able to pull $15 Billion out of the Nigerian Capital Market, the CBN, SEC, the Debt Management Office, Federal Ministry of Finance, the Federal Ministry of Trade and Investments are hereby requested to produce guidelines and a national policy that should govern the entry, operation and exit of foreign portfolio
investments in Nigeria.
•That in view of the need to reduce the cost of doing business in the Nigerian Capital Market to increase its competitiveness, it is hereby recommended that the SEC and the NSE should be directed to ensure that transaction Fees do not exceed 6% down from the current high level of 12% and that brokerage commissions should not be more than 35% of the Transaction Fees, currently at above 50per cent.
•That CBN and the Federal Ministry, of Finance should henceforth, ensure the harmonization of Nigeria’s monetary and fiscal policy. An accountability framework to hold the CBN responsible for financial system’s instability should be put in place by relevant authorities.
•That SEC is hereby requested to conclude disciplinary actions on all outstanding market infractions that has remained so for more than two months; and report back to the House within 30days of the adoption of this report.
•That the Securities and Exchange Commission should take appropriate steps within its statutory relationship with the NSE to increase product variety in other to boost liquidity, encourage’ listing incentives, and desist from delisting of companies without thorough scrutiny.
•That engagement of Access Bank staff by SEC on Secondment to SEC which regulates the Bank is unethical and may erode investor confidence and they should immediately be disengaged.
•That to further restore investor confidence, SEC should immediately disengage from its intervention in the Council of NSE, and remove its nominees on the NSE Council.
•That Project 50 activities of SEC which appears to lack transparency and accountability be further investigated by EFCC and ICPC to determine whether infractions and possible fraud had taken place.
•That in view of the breakdown of corporate governance in SEC, leading to total collapse of cooperation and coordination within its Board and top management and since the tenure of thefBoard has expired, top management of SEC should be relieved of theirs duties so as to give the capital market an opportunity of credible regulation through appointment of a neutral Board and top management that will regain the confidence of investors.
•That the following persons be further investigated by the House on account of their role in the banking sector crisis that led the CBN to intervene in 8 Banks in August, 2009:
i.        Charles Chukwuma Soludo; Fomer Governor, CBN;
ii.       Ignatius Imala; Former Director, Banking Supervision, CBN
iii.      Tunde” Lemo, Deputy Governor in charge bf Banking Supervision.
•That the appointment of Ms Arunma Oteh be terminated forthwith as DG of SEC as her appointment is in violation of Section 3(2) a and Section 38 (1) (b), 2 and 3; Section 315 of the ISA 2007 in that she did not have 15 years experience in the Nigerian Capital Market as required; she has shown incompetence in the management of human and material resources at her disposal in SEC; lack of transparency in managing project 50, regulatory failure in some of the recent mergers, acquisitions and approvals of transactions by SEC and general inability to carry along her staff, Board, and Management in decision making in SEC, and questionable staff recruitment policies.
•That the Governor of the CBN, the Deputy Governors of the CBN, Directors of the CBN, the DG, SEC, Commissioners, Board members of both CBN and SEC should be subject to a code of conduct which has appropriate penalties for regulatory failures, while officials should be rewarded for outstanding performance.