The House of Representatives recently adopted the report of its ad hoc committee which investigated the "near collapse" of the Nigerian capital market and recommended the sack of the director general of the Securities and Exchange Commission (SEC), Arunmah Oteh. But with the resumption in office of Oteh last week, the question is whether President Goodluck Jonathan will muster the will to implement the report.
Indications that the Nigerian economy was about to collapse became imminent during the 2009 fiscal year. Despite claims that the Nigerian capital market was insulated from the economic meltdown that was ravaging the globe, the Nigerian capital market, being a vital component of the financial system, was almost brought to its knees by the end of 2009.
The Nigerian Stock Exchange (NSE) market capitalization stood at N0.294 trillion by the end of 1999. By the end of 2003, it rose to N1.302 trillion; and by the end of 2004 moved up to N1.93 trillion and N2.521 trillion in the 2005 fiscal year. In 2006, capitalization which closed at N4.23 trillion, rose to N9.98 trillion in 2007, and opened with N9.98 trillion in 2008. It rose to N12.5 trillion within the first 60 days of 2008; and stood at N12.5 trillion by end of March. It was only by the end of December 2008 that it nosedived to N6.80 trillion and has been fluctuation according to the vagaries of the market.
By December 2009; it fell further by closing at N5.00 trillion, but climbed to N7.81 trillion by 2010 end and closed at N6.53 trillion by the end of 2011. At as March this year, it stood at N6.61 trillion accounting for mainly mergers and acquisitions in the banking sector.
The House had initially mandated the committee on capital market and institutions to investigate the monumental loss innocent Nigerians suffered in the capital market which amounted to about N8 trillion; but after allegations of corruption were leveled against the then chairman of the committee, Herman Hembe, the House asked Hembe to step aside and appointed Ibrahim Tukur El-Sudi from Taraba state and seven others to carry out the task.
On Tuesday 17th July, 2012, El-Sudi presented an 83 paged document which made startling revelations of monumental fraud in the capital market.
Among reasons for the market crash, the panel discovered that N8 billion was missing from Union bank Plc public offer of 2005; banks were nationalised without due process, banking sector consolidation of 2004-2005 pursued by former CBN governor Chukwuma Soludo, unbecoming activities and market infractions by operators, poor regulation of foreign portfolio investors thereby precipitating capital flight; high cost of doing business in the market and contradictory monetary policies of the CBN.
Others include, conflict of interest and misconduct of the current leadership of the Securities and Exchange Commission (SEC) management team led by Oteh, layers of moral hazards in SEC and diversion and issue of irregular acquisition by Assets Management Corporation (AMCON) of the performing loans of SEAWOLF and GEOMETRIC company among others.
Consequently, the House called for the prosecution of past board and management of Union bank including the managing director, Mrs. F. Osibodu, AMCON MD; Mustapha Chike Obi, and Oteh by the Economic and Financial Crimes Commission (EFCC) for their roles "in attempting to conceal the fraudulent diversion and missing fund".
The MPs also asked SEC to conclude disciplinary actions on all outstanding market infractions that has remained for more than two months.
The committee also noted that the engagement of Access bank staff by SEC under Oteh, which was complained about as SCE regulates the bank, is unethical and may erode investor confidence while the staff be immediately sacked immediately. In the same vein, SEC's nominees on the NSE board were asked to vacate their positions and the EFCC was asked to investigate 'project 50' set up by Oteh as according to the committee, it "lacks transparency and accountability and is contrary to Investment and Securities Act (ISA) 2007".
The report also suggested that former CBN governor, Prof. Chukwuma Soludo, former director of banking supervision of CBN, Ignatius Imala and Present deputy governor in charge of banking supervision, Tunde Lemo, be further investigated by the parliament.
On Oteh, the House recommended her appointment be terminated. Said the report: "the appointment of Ms Arunma Oteh be terminated forthwith as SEC DG as her appointment is in violation of section 3 (2), 38 (1), 2 and 3 and section 315 of the ISA, 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, acquisition and approvals of transactions by SEC and general inability to carry along her staff, board and management in decision making in addition to questionable staff recruitment policies".
The report also mandated government to produce guidelines and national policies that will govern entry, operation and exit of foreign portfolio investments in Nigeria as the withdrawal of the $15 billion reported, was said to have exacerbated the market crisis.
"All former banks' executives who are recipient of national honours and who are currently being prosecuted for crimes and unethical practices which led to the collapse of their banks, be stripped of their national honours by the President in line with section 7 of the national honours Acts and international norms".
The committee also pointed out that the CBN deputy governor, Kingsley Moghalu, NDIC boss Umaru Ibrahim "lied on oath in their testimony with respect to the ownership structure of the nationalised banks and they should be prosecuted under section 10 of the Legislative Houses Powers and Privileges Act by the Attorney General".
The duo according to the report had in their separate testimonies, informed the panel that nationalised banks were 100 percent owned by government, but documents from the Corporate Affairs Commission showed that Afribank which is now Mainstreet Bank is a private company with authorized share capital of 100,000 and owned by Mr. Gideon Agbedo of 1 Olaniyi street PedroN Lagos and Mr. Innocent Obi of 21 Zion street, Karu, Abuja and each owned up to 50,000 shares. For Bank PHB which is now Keystone bank, the committee discovered it is owned by Mr. Benson Igbanoi of 12 Blantyre Street Wuse 2 Abuja and Innocent Obi. While Spring bank which is now Enterprise bank is also owned by Mr. Gidoen Agbedo and Mr. Barnabas Olowoselu of plot 6 Akor estate, Lugbe Abuja. "Generally, the roles of NDIC, CBN, AMCON, CAC and the act of omission by SEC, in all these is quite condemnable. The nationalised banks were contrived in misrepresentations of monumental proportions. The nationalisation of these banks is built on forgeries, with presentations and appearance of fraud and corruption. It makes mockery of corporate governance, lacking in due diligence, ethics, and professionalism and integrity and legal compliance. It was done in a brazen and very irregular manner, a violation of section 44 of the 1999 constitution and section 25 of the Nigeria Investment Promotion Act", the House resolved.
CBN governor Malam Sanusi Lamido Sanusi, Oteh and Chike Obi were also indicted by the probe and the Attorney General was asked to prosecute them under section 4 and 11 of the Legislative Houses Powers and Privileges Act and section 89 of the 1999 constitution because "they were cited for contempt of the House of Representatives for refusing to produce documents as requested by the committee".
The committee also recommended that the acquisition of Intercontinental Bank Plc by Access bank "should be reviewed by requisite regulatory authorities with the aim of ensuring that violations of extant laws were not made while, the transactions involving AMCON, Seawolf and Geometric should be reversed and board of AMCON be investigated by the EFCC for possible fraud and violation of extant laws".
But Oteh, despite the recommendations of the committee has been recalled and has since resumed duties as DG of SEC, while those indicted are either in government or have links with people in government.
The question here is with all that had transpired after the probe: can President Jonathan summon the much needed courage and will to implement the report, or will it also go the way of the subsidy, Senate Privatisation, Senate Pension reports and many others which have since been abandoned by the Jonathan administration?