Former Director-General of the Nigerian Stock Exchange (NSE), Prof. Ndidi Okereke-Onyuike, has blamed both the Securities and Exchange Commission (SEC) for the collapse of the capital market.
She also described the intervention of the Security and Exchange Commission (SEC) in the affairs of the NSE since 2009 as a plot to cover up its illegalities
Testifying before the House of Representatives Ad hoc Committee on the collapse of the capital market, Okereke-Onyuike said allegations that she mismanaged about N1 trillion were unfounded.
On a day of accusations and counter accusations that has become the hallmark of the ongoing probe, Director-General of SEC, Ms. Arumah Oteh, had accused Okereke-Onyiuke of wasting funds on frivolous things. Oteh, who has irked the committee by her actions in the course of the probe, will take her turn Wednesday.
However, in her own testimony on Tuesday, the former DG insisted that SEC has no powers to dictate how a private company like the NSE spends its money and condemned unguided pronouncements by regulatory authorities including the Central Bank of Nigerian (CBN), saying their actions contributed to the eventual crash of the capital market.
She also faulted the nationalisation of Afribank, Bank PHB and Spring Bank by the Asset Management Corporation of Nigerian (AMCON).
“SEC has no business over how a private company spends its money. NSE is not a profit-making entity but it makes its money from fee paid by stock brokers for its services, which was 0.6 per cent before it was reviewed downward in 2006 to 0.3 per cent following the boom in capital market,” Okereke-Onyuike said.
“As at 2006 when the market was booming, I implored the Council to review the fees to 0.3 because we were making too much money and we had no place to put the surplus. So, before I was forced out, the Nigerian stock exchange market was healthy and vibrant.
“SEC had no problem with our succession plan but all they were saying was to cover up their illegality of taking over the NSE. For instance, in 2008, SEC gave us a clean bill of health after the inspection of our books and operations.
“I want to say that there is no law backing the decision of SEC to take over NSE; it was all orchestrated on the excuse that the transition programme put in place by the Council was not transparent. I want to say that we informed SEC about it and they gave no objection. What they said was that they would have preferred that it was thrown open. However, what we did was in line with what our founding fathers did by grooming insiders that have the experience to take over.
“There was no such thing as public interest members and why they have to force me out was because even if I retired at the end of 2009, I would still be on Council for the next three years. Being there means I would still be able to oversee the demutualisation process. I introduced the demutualisation process but unfortunately it was the same demutualization that got me out.”
According to the former DG, both the CBN and the Nigeria Deposit Insurance Corporation (NDIC), by their actions, must be held responsible for the collapse of the once buoyant market.
“Regulatory pronouncements and actions were the major factors that led to the crash of the market because those pronouncements hurt. Yes, there were some banks that did some things wrong but there are certain aspects of business that, even if something was found to have gone wrong, should not be for public consumption until you have proven it beyond reasonable doubts and you want to punish the culprits.
“So a regulator does not just make wild pronouncements and accusations because it hurts the system. If you say all the banks are criminals, how would anyone want to go and put their money there? Same way, nobody would want to go to the stock market when you say the engine room of the Stock Exchange is about to collapse.
“We, in the stock exchange, punish stock brokers when we judge stock brokers and clients by sending them on suspension such that they cannot trade for a specified number of days depending on the magnitude of their offence. But we don’t make public pronouncements of that unless it is a serious infraction that can negatively impact the market.
“So for the CBN to call the capital market ‘kalokalo,’ I would have come out to make a statement because you cannot call me a thief and expect me to keep quiet. I am not a thief and the stock market is not a kalokalo but a place [where] people make informed decisions because it is information-driven. That is a grave statement.”
Okereke-Onyuike wondered how assets of citizens could be nationalized, describing the CBN’s actions as illegal. “Are we not Nigerians?” she queried. “Even if the person is a criminal, you go to court and prove that he is a criminal then you take the assets.”
“The CBN did not give the shareholders a fair hearing; they were not given any chance at all. The CBN and the NDIC were telling directors and managers of the banks to recapitalise; nobody called the shareholders to an Annual General Meeting (AGM). If SEC had made a pronouncement to say, ‘CBN you can take over the banks but do not nationalise them by following the delisting rules and methods of the stock exchange…
“It is wrong to seize a quoted company. The reason people buy quoted company instead of private quoted is because of safe investment. Even as you are protecting the depositor, the investor should also be protected by calling an AGM to inform them of the need to increase their share capital.
“Even if you know that they cannot meet up with the recapitalisation, you would have given them a chance and it would have felt better; then you can now follow the delisting rule set by SEC.”