The House of Representatives Committee on the Capital Market's probe took a nose-dive since March. Reason? Ms Arunma Oteh, the Director-General of the Security and Exchange Commission (SEC), came under fire, though she was not in charge of the commission when Nigerians lost their investments in the collapse of the stock market. We explored why Nigerian-British lady Arunma Oteh made a name on Monday, March 15, 2012, when she looked straight into the eyes of Honourable Herman Hembe, the Chairman of the House Committee of Capital Market, and accused him of soliciting for N44 million bribe. For that courageous encounter, which was like self-sacrifice to deliver government Ministries, Departments and Agencies from the nagging demands of the lawmakers for undeserved financial support, Ms Arunma Oteh's profile as an anti-corruption ideologue shot up and tore through the cloud like a rocket. But since those split seconds when she metaphorically spit into the eyes of the honourable lawmakers, she has not known peace. From accusations that her fingers were soiled with dirty funds to an insinuation that she didn't qualify to head the capital market's regulatory body, it has been her word against a crowd, made up of commissioners, directors and staff of the Security and Exchange Commission, who were speaking in tandem with the House of Representatives. Last week, the refrain across the airwaves and newspaper pages was 'Oteh-must-go".
Armed with a letter of reinstatement from the Secretary to the Government of the Federation Senator Anyim Pius Anyim, after being sent on compulsory leave by the commission's board a month ago, she attempted to resume at work last Wednesday. She met a stiff resistance from a sizeable work force at the commission. They came out in their numbers to stop her from gaining access. The presence of armed security agents did not deter them.
The letter from Senator Anyim read in part: "I am to note that government has studied the report submitted by the external auditors and you are neither indicted for fraud nor criminal breach in any form. However, some administrative lapses were reported, particularly, in cases where administrative procedures were not thoroughly observed."
While Aruma Oteh accused Hembe and members of the committee of demanding for huge sum to have the probe on live television, which amounted to bribery, Rep Hembe said the commission made the gesture. The case is still pending in the court. Hembe has denied wrong doing.
It is interesting to note that during the hearing by the new committee, members of the commission's management all turned their backs on Oteh, describing her as a one-man management team who never cared to carry them along in the running of the commission. She was accused of illegally recruiting ad-hoc staff, numbering 15 without following due process. After a lull came another drama. The SEC board on June 11, then chaired by Senator Udo Udomah, ordered Oteh to commence on a compulsory leave to pave way for the investigation of alleged graft in the SEC Project 50. The board announced Ms Daisy Ekineh, Executive Commissioner, Operations, to act in her absence.
Ms Oteh accused the board members of a plot to elongate their tenure, which was about a week to expire. That was not to be, as the board naturally died on June 15 after its five year tenure. Ms. Daisy, a board member, went with the others, after spending barely four days in the saddle. The federal government, through the Minister of Finance, Dr Ngozi Okonjo-Iweala then appointed an acting Director General in the person of Mr. Ibrahim Bolaji Bello, while investigations into Oteh's alleged shady deals were on.
Oteh drew further blood while her suspension lasted when she twice attended the National Economic Meeting chaired by President Goodluck Jonathan. The second attendance drew the ire of the workers at the commission who considered her action as smacking of desperation and harmful to the capital market.
The chairperson of the of the SEC Staff Union Barrister Muhammed Salihu had told a news conference in Abuja that "although, the investments and Security Act, 2007 is silent on what should happen if a DG is asked to proceed on compulsory leave, the dictates of good governance demand that such a person should refrain from acting in the capacity of DG pending the determination of investigation and by implication should not be engaged in official functions of the commission."
It was thought that would be the last day for a comeback last week after the federal government said the investigation by the PriceWaterhouseCooper (PwC) found her not guilty of allegations made against her.
How Oteh got the job as SEC DG
Ms Oteh's appointment since January 2010 and her reign as the Director General of the Securities and Exchange Commission has been beset with one controversy or the other. In the first instance, it took the National Assembly about six months to confirm her nomination for the position. President Umaru Musa Yar'adua nominated her for confirmation in July 2009. She was confirmed in January 2010. The lawmakers said she did not have the requisite experience to head the regulatory authority of Nigeria's capital market. According to them, a person for the position of DG of SEC must have a 15-year experience in the capital market.
Former Finance Minister Mansur Mukhtar who presented her name to the President. Mansur had worked with Oteh at the African Development Bank, which she joined in 1992. When she finally assumed office, she was confronted with the onerous task of sanitizing the Nigerian Stock market and to bring about drastic reforms. The capital market was in comatose and risked total collapse when she took up the job.
The first major step she took in the process of reforming the system was the removal of the powerful lady of the Nigerian Stock Exchange Professor Ndi Okereke-Onyiuke as the Director General. But this was the only visible manifestation of the changes she has brought about at the commission. An authoritative source told Sunday Trust that many other institutional and human capital reforms have taken place at SEC since she took over as the chief executive. In the human capital development aspect, Ms Oteh had made a deliberate attempt to align the staff of SEC with the requirement in the financial circle that staff should be drawn from the core discipline of Economics, Law, Accounting and the like.
But when she took over, about 80 per cent of the staff of SEC was of the non-core disciplines, with only 20% of them being of the core discipline. In order to ensure this compliance, Ms Oteh saw to the recruitment of 52 young professionals who have background in Accounting, Economics and Law. For other non-core staff to be converted to the mainstream, they have been sent on local and international training programmes. This is in addition to her dream of making SEC a financial institution with Information and Communication Technology (ICT) standard, comparable to that of the Central Bank of Nigeria (CBN). To actualise this, she has insisted that every SEC staff must be ICT literate. The commission's ICT is being upgraded to achieve this objective.
However, the trouble the woman is facing seems to stem from her efforts to upgrade the regulatory powers of SEC, by, first, ensuring that those who engage in graft and corruption face the 'naming and shaming' penalty. Elements close to the woman told Sunday Trust that over 300 operatives in the stock market have been dragged before the Investment and Securities Tribunal for prosecution as a result of sharp practices. Ms Oteh, our reporter learnt, has also insisted on a new code of corporate governance of total market disclosure, in line with global best practices.
One of her associates summarises the control measure thus: "She's a firm believer in internal best practices, and in an attempt to effect this more stringent internal control measures have been put in place. The implication is that graft and corruption can no longer be condoned in the organisation. Also, in order to get promoted, Ms Oteh insisted, staff must pass relevant tests, in line with extant public service policy and tradition." As the woman attempts to enforce these measures, her road was never smooth. It was either the shareholders are calling for her head or the National Assembly was investigating her.
How her trouble started:
On March 14, 2012, at the commencement of investigative hearing on the near collapse of the Nigerian Capital Market, chairman of the House committee on Capital Market and Institutions Rep. Herman Hembe (PDP, Benue) accused Oteh of fraud, gross misconduct and financial misappropriation that documents available to the committee showed she used N850,000 for feeding on a day alone, and also spent N30 million on hotel bills. The next day, on March 15, Ms Oteh opened the Pandora's Box when she accused Hembe of asking her for a bribe of N44 million.
She said her refusal to give the funds was behind the hostility of the committee to her during the hearing. Because of the allegations, Hembe stepped aside and an adhoc committee was empanelled by the House under Rep. Ibrahim Tukur El-Sudi (PDP, Taraba). On May 9, 2012 senior officials of the SEC told the committee that Oteh arbitrarily ran the affairs of the commission and routinely disregarded the due process since she came in two years ago.
The Human Resources Director of SEC, Husseini Dauda, told the committee that his office was not consulted in the appointment of two Access Bank staff on secondment to SEC and another 10 "young professionals" as special assistants. He said those appointments were done without the approval of the management and board. Dauda said Oteh also ignored advice from the Executive Commissioner in charge of Legal Affairs and Enforcement, Charles Udora, and the audit control unit. When asked if Dauda's claims were correct, the commissioners as well as Secretary to the commission, Mr. Aigbekhan Idahosa, distanced themselves from those contentious appointments. The Committee members remarked that it was wrong for SEC, as capital market regulator, to rely on a listed bank for manpower. But Oteh insisted that there was no conflict of interest because the commission had put in mechanism to check that.
Lawmakers also sought to know how SEC arrived at the decision to organise "Project 50" to celebrate 50 years of capital market operations, which supposedly gulped about N1 billion. Oteh responded by saying that the decision was taken by the executive management. But Executive Commissioner in charge of Finance, Malam Sani Stores with other commissioners, said he was not aware of that decision. Stores said because he was not a member of the committee that planned the event, he had no records of donations received. Oteh, however, told the committee that she came up with a document on "Road Map for a World Class Capital Market" in consultation with the management team, but the Executive Commissioner for Operations, Mrs Ena Esekine, who said she had worked for 30 years at SEC, distanced herself from the document.
Stores also said, "I have been in SEC since 1993, but I have never been involved or seen the document. There is dysfunction in the commission, in the sense that we don't meet. We only receive text messages and emails. There are no scheduled meetings. She brought in people who are occupying positions they are not qualified to. There is no collective decision and trust; certain decisions are taken that we are not aware of. It's done unilaterally and we can't access her."
House committee members said Oteh ignored a caution later from the Bureau for Public Procurement on the expenditure of N42 million on hotel accommodation during the 'Project 50' celebrations. The committee sought to know why SEC, under Oteh, gave approval for the acquisition of Intercontinental Bank by Access Bank at a time when the managing director and deputy managing director of Access Bank were owing Intercontinental Bank N16 billion. Oteh said she would investigate the matter.
The executive commissioners further blamed Oteh for the nationalisation of Union Bank. Udora said he had advised the DG that it was inappropriate for the Asset Management Corporation of Nigerian (AMCON) to take up the losses of N8 billion incurred by Union Bank. "I personally feel somebody should account for the money. My observations were communicated to the DG through the appropriate channel," he said.
SEC commissioners said they used to work as a team during the tenures of Musa Alfaki and Suleiman Ndanusa, but lamented that this was "really lacking in the organisation now."
Ms Oteh, however, blamed the market crash on a former director general of the Nigerian Stock Exchange (NSE), Professor Ndi Okereke-Onyuike, whom she accused of reckless spending and fraud. But on May 8, 2012 Okereke-Onyuike fired back, describing Oteh as a person who did not have the knowledge and experience of capital market operations.
She said: "You cannot supervise what you don't know," noting that the Investment and Securities Act 2007 stipulate that you must have 15 years cognate experience in capital market operations.
The former NSE boss also accused Ms Oteh of illegally appointing eight people on the NSE council, contrary to the ISA Act and added that the 89 watches she bought were for 48 years of service awards, not two years as the SEC boss alleged. In early June, the Board of SEC sent Oteh on compulsory leave to give room for an unfettered investigation into several allegations against her management, particularly allegations of misappropriation of N3 billion on the controversial Project 50 programme.
Last Tuesday, El-Sudi submitted his report to the House, which heavily indicted Oteh for various infractions and recommended that she be prosecuted. The offences according to the report are that she "illegally stayed in Transcorp Hotel, Abuja beyond the period she was entitled to, (which) contravened the monetisation policy of the Federal government, by approving the commission's fund worth N62 million for 5 bedroom apartment." It also asked if it was proper for Ms Oteh as SEC DG to solicit for and obtain donations from companies she regulated for 'Project 50'
Other allegation against her are: "Purchase of three Hilux vehicles at the cost of N32 million without due processes; withdrawal of N200 million from the commission's fund without approval from the board; and running SEC "without input from other commissioners and management."
The report said, "Ms Oteh flies first class when travelling abroad, contrary to government directives that government appointees should fly business class when travelling on official assignment."
It also found that Oteh embarked on illegal recruitment of ad hoc and supporting staff, including hiring of two staff of Access Bank as advisers on technological issues. "Findings revealed that contrary to Ms Oteh's submission, the Access Bank staff members were involved in manipulating the merger and acquisition of failed banks to favour Access Bank, a case of Intercontinental Bank which was acquired by Access Bank is a pointer in this arrangement," it said.
Angered by the deliberate attempt to pre-empt the outcome of their report, the MPs unanimously adopted the El-Sudi report on Thursday insisting that Oteh must not only be fired, but must also face prosecution by the EFCC thus: "that the appointment of Ms Arunma Oteh be terminated forthwith as director general of SEC as her appointment is in violation of section 3 subsection 2 and section 38 and 315 of the Investments and Securities Act 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 the commission and general inability to carry her staff, board and management in decision-making in the commission and questionable staff recruitment policies."
The Attorney General and Minister of Justice Mohammed Bello Adoke was also mandated to prosecute Oteh for contempt of parliament under section 4 and 11 of the Legislative Houses' powers and privileges Act and section 89 of the 1999 constitution.
However, insider sources told Sunday Trust that the allegations above were pushed forward by elements who were opposed to change. On the accusation that Ms Oteh ran a one-person administration, a staff of SEC said, "You should know that the kind of internal control this woman brought to bear here would attract a lot of resistance from those who have the capacity to resist her. The beneficiaries of the old order would not want any kind of change to take place. They must fight back, and what you've seen in the last few weeks is their attempt to do so."
Commenting on whether the DG SEC stayed at Transcorp Hilton illegally, the insider told our reporter that Ms Oteh had in her possession a memorandum which asked her to choose whether to stay in a rented apartment, collect monetised accommodation or stay in a hotel. "The memo said any apartment she decided to stay in would be renewed after every 30 days. Because she was coming from abroad, she decided to stay in a hotel until the issue of accommodation was sorted out."
A memo, signed by Obi Adindun of SEC, on March 19, 2012, explained what happened thus: "this was in line with the terms and conditions of her employment verbally communicated to her on January 7, 2010 and confirmed in writing on January 11, 2010. At the time of Ms Oteh's assumption of duty as SEC DG, she had no home in Abuja. The official policy of the SEC is to provide official accommodation for the DG. Pending the provision of such residential facility, the DG is lodged in a hotel.
Ms Oteh however voluntarily left the hotel before an official residence could be provided, unhappy with the lack of privacy at a hotel accommodation and for security reasons. (At present), she lives in a rented accommodation procured in her personal capacity, on her account.
In accordance with its policy of providing official residential accommodation for its DG, the SEC began on January 7, 2010 to search for official residence for Ms Oteh. This policy on official accommodation was communicated to Ms Oteh in writing upon assumption of duty.
The transaction referred to at the public hearing was in February 2011, in respect of rental property in Maitama, Abuja at N25 million per annum, actually lower than the going rate of similar property in the area. The transaction collapsed when the property owner required the SEC to pay as much as four years rent in advance. The issue of high rents has been a source of concern and been the subject of a bill debated on the floor of the House of Representatives. All the negotiations for an official accommodation failed for reasons relating to high cost, availability, and frequently changing terms.
These transactions never materialized; the SEC NEVER leased any property for Ms Oteh.
The SEC was not successful in finding accommodation for the DG. In line with its policy, the Commission offered rental allowance to Ms Oteh in lieu of official accommodation."
The source further disclosed that any insinuation that the acquisition of Intercontinental Bank by Access Bank did not pass through the due process is only being mischievous. According to the insider, the SEC has a standard regulatory procedure for the sale of financial institutions, and the template was duly followed in the transaction involving the two banks.
REACTIONS FROM THE STOCK MARKET:
Speaking on Oteh reinstatement, the Managing Director and Chief Executive Officer of Lambeth Trust & Invesment Company Limited, Mr David Adonri said her reinstatement by her employer means the Federal Government is satisfied with her innocence and competence.
According to him, "the direction of the market will judge the Federal Government's decision."
Some Shareholders in the Nigerian capital market who spoke with Sunday Trust, however, faulted her reinstatement. The National Chairman, Progressive Shareholders Association of Nigeria
(PSAN), Mr Boniface Okezie, said the Federal Government should have waited for the House of Representative report before taking that decision.
He said the government has not taken time to study the report of PriceWaterhouseCoopers before taking the decision: "Nigerians are interested in knowing the outcome of that report and now government has gone ahead to take a decision. Government should have made the report public."
On his part, the National Coordinator of the Independent Shareholders Association of Nigeria (ISAN), Sir Sunny Nwosu, disclosed that it was great disappointment what the government has done by reinstating her. According to him, there was a very clear signal that the government failed to understand in Oteh's absence, the market started appreciating which never came up when she was there.
"Apart from this, I believe that if you are serving and suddenly you were asked to stop and people are rejoicing, there must be something wrong with such a person. We actually need stability in the market," he insisted.
Nwosu also argued that "I am asking the government to make public the findings of the auditors commissioned to look into the allegations and make same public to investors and other stakeholders to really understand the basis from which they took the decision of reinstating her.".
DR OKONJO-IWEALA TO THE RESCUE:
Last Friday, the Minister of Finance, Ngozi Okonjo-Iweala, held a conciliatory meeting with staff of SEC, in an attempt to placate them to accept the return to office of Ms Oteh. The workers had said they were not particularly against the government's decision to reinstate the DG. They claimed that it was vital that issues raised against her in the report of the House of Representatives Committee on Capital Market Probe be exhaustively addressed. The staff said they would welcome Ms Oteh back once the House committee clears her of the allegations against her.
It was gathered that the minister, who was received by the acting DG, had told the staff that government was not in the mood to rescind its decision, adding that her meeting with them was to plead with them to accept Ms Oteh's immediate return. The workers asked the minister to assure the workers that those who demonstrated against Ms Oteh's return would not be victimized.
Theophilus Abbah, Yunus Abdulhamid, Idris Ahmed, Turaki A. Hassan, Kayode Ekundayo and Kayode Ogunwale