Capital Market Probe: Resolutions will restore investors’ confidence – El Sudi

Sunrise Daily crew had in the house yesterday a Lawyer and Capital Market analyst who gave his own opinion on the report of the capital market probe which was headed and completed not by the former head of the probe in the person of Honourable Herman Hembe who was alleged to have had financial issues with the D.G. SEC Arunmah Oteh who was also on the hot seat for questioning in the public hearing.

Joining the crew this morning the 24th of July 2012, the man at the centre of the outcome of the Capital Market probe, Honourable Ibrahim El Sudi who replace Herman Hembe after he was accused of high-handedness by the D.G. SEC. Ibrahim El Sudi came to honour the invite to defend the capital market that after all it can survive its harshest time.

Ibrahim said when asked what brought about the outcome of the probe panel and have they been able to restore the confidence of investor in the Capital Market with their report, he responded saying the basic duty on the panel was find out what led to the near collapse of the Capital Market and bring about a solution the restore the confidence back there.

Court says Hembe has corruption case to answer

An Abuja High Court has dismissed the application filed by the former chairman of the House of Representatives Committee on Capital Market, Herman Hembe seeking to quash the corruption charges filed against him by the Economic and Financial Crimes Commission (EFCC).

Ruling on the application filed by the embattled lawmaker, Justice Abubakar Umar dismissed the suit on the ground that a prima facie case has been established against Mr Hembe and his co-accused, Chris Azubogu who was the deputy chairman of the committee on capital market.

Justice Umar also held that the court has jurisdiction to entertain the case filed by the anti-graft agency as the agency had sought the leave of the court to file the two count charge of corruption against the law makers.

Justice Umar while adjourning the case to 18 July for trial however took a swipe at the EFCC over the inability of the prosecution to proceed with the case after ruling saying the judiciary is being unjustly accused of delaying corruption cases.

The embattled lawmaker had filed an application insisting that the trial court lacked the jurisdiction to okay him for trial, saying the proof of evidence tendered against him by the commission failed to disclose a prima-facie criminal case capable of warranting his prosecution.

The anti-graft agency had also in a 2-count charge it filed against the two lawmakers, alleged that they had at various times, collected gratifications from the Securities and Exchange Commission including funds to attend a capital market conference in the Dominican Republic which they failed to attend.

Capital Market: No certainties in investments – Bayo Rotimi

Bayo Rotimi a market analyst commented on the probe when asked what went wrong with the running of the capital market  leading to the capital market probe said the former CBN Governor Soludo was right with his analysis of the capital market that the capital market will crash again because markets all over the world experience such too.

He said markets crash not because of institutional deficiencies but due to the forces of demand and supply.

Capital Market probe: Oteh says Okereke-Onyiuke lied on oath

The Security and Exchange Commission (SEC) on Tuesday denied allegations made by former Director-General of the Nigerian Stock Exchange, Ndi Okereke-Onyiuke while making her presentation before the House of Representatives Committee probing the near collapse of the capital market.

In a statement released by SEC, the commission claimed that Mrs Okereke-Onyiuke’s allegations “were false and deserve quick refutation and rebuttal so that the investing and general publics as well as the public records do not retain such falsification.

The Director General of SEC, Arunma Oteh had told the Committe on Monday that Mrs Okereke-Onyuike masterminded “a debilitating era of broad financial abuses and violations of processes” that culminated in the eventual destruction of the market and erosion of investors’ confidence in the system.

The former NSE boss had claimed that by virtue of the May 20, 2011 judgment of a Lagos High Court, which awarded her N500 million compensation for alleged illegal dismissal, she remained the lawful Director-General of the NSE.

Mrs Okereke-Onyiuke also claimed that the SEC only appealed the judgement that awarded her N500 million compensation and not her dismissal from office.

However, the SEC said “this is entirely false because the appeal filed by the SEC was against the judgment. The appeal challenged both the substantive judgment, as well as the award of N500million which was not sought for by Okereke-Onyiuke. Given the fact of this appeal therefore, her claim to being the DG of the NSE is clearly false

“She also claimed that the SEC and CBN approved what she called the “Offer Prospectus” for “Private Placements” which have remained unlisted on the NSE. This again is entirely incorrect. At no time did the SEC ever approve offer documents for vendors of private placements. We decry this recourse to deliberate falsification of facts by Okere-Onyiuke under oath. We invite her to deposit proof of this fabrication in the public domain. As a matter of fact, the SEC had placed a number of “buyer beware” advertorials in key national daily newspapers, advising the investing public that private placements were beyond the regulatory purview of the SEC.

“The point she deliberately refused to make is that Public companies also make private placements for which the SEC must approve as opposed to private placements by private companies.

“This deliberate lie was consciously fabricated by Okereke-Onyiuke to hoodwink the general public to the wrong conclusion that the SEC Nigeria was negligent in discharging its regulatory functions in the capital markets. She also sensationally claimed that the SEC was not performing its market development responsibility. Nothing can be farther from the truth. The sub-committee system which has been revitalized by the SEC is a market – wide development initiative which is intended to confront areas of deficiency in the market.

“The recent investor outreaches in Sokoto, Port Harcourt and Kano, as well as ongoing capital market awareness programmes in secondary schools and universities, and market wide capacity building in collaboration with sister regulatory agencies and multilateral financial institutions, are instances of market development effort undertaken by the SEC.

“On the NSE’s trading platform, all her claims were false. It is within the forte of the NSE to offer a detailed refutation of these. What is material for us, from a regulatory point of view, is that appropriate machinery has been set in motion to overcome the challenges posed by the platform bequeathed by Okereke–Onyiuke through wholesale replacement. Contrary to the misinformation offered by her, the platform has a lifespan which lapsed in December 2011. It is not a renewable or upgradable technology like she claimed. “But more significantly, Okereke – Onyiuke, before her removal, had initiated the process of acquiring a loan of $20 million from African Export – Import Bank, AFREXIM Bank for replacing the NSE trading platform.

“This is the same platform that the current leadership of the NSE has concluded arrangements to procure from the same supplier at $10 million!

“On succession planning, Okereke-Onyiuke claimed that she had a succession plan in place. Contrary to this, it is common knowledge that she kept vacillating on succession and delaying her exit despite having spent 10 years in office as Director General and 26 years in the employment of the NSE in senior managerial cadre.

“The SEC intervention was the only way to cut short her reluctance. It was the only way to put paid to the regime of unaccountability and financial recklessness which she had instituted to the point that the exchange was on the verge of bankrupt”.

Further hearing on the matter continues on Wednesday (Today) by 10am and will be broadcasted live both on Channels Television and www.channelstv.com

Capital Market Probe: The issues

On the Capital Market probe presently going on,Femi Ademola;Head of research at BGL group discussed several issues raised at the probe with our Business Morning presenter Esther ugbodaga via live phone-in.

Capital market probe adjourned for live transmission

The investigation by the House of Representatives into the near collapse of the Capital market has been postponed.

The chairman of the ad-hoc committee, Ibrahim el-Sudi, said the latest adjournment is to enable the hearing to be transmitted live on television.

Most of the regulators and supervising agencies, who were present, such as the Securities and Exchange Commission and the Ministry of Finance, agreed that the adjournment was necessary.

SEC bribery scandal: EFCC summons Hon. Hembe for questioning

House of Representatives’ member and former chairman of the House Committee on the Capital Market, Herman Hembe, reportedly appeared before the Economics and Financial Crimes Commission on Friday to face questioning over allegations that he had requested N44 million in bribe from the Securities and Exchange Commission (SEC) ahead of a probe investigating the commission’s role in the Capital Market crash.

Arunma Oteh, SEC DG (L) and Hon. Herman Hembe (R)

Hon. Hembe, who was reportedly still with the EFCC as of 3 p.m. this afternoon, was chairing a public hearing during the probe when the SEC boss Ms Arunma Oteh accused him of demanding money from her to the tune of N39 million at first, and another N5 million a week before the hearing commenced.

The shocking allegations led to Hembe’s withdrawal as chairman of the Committee. He maintained his innocence, even accusing the SEC of offering him N30 million in bribes, but also welcomed the investigation of the EFCC in a bid to clean up his sullied reputation.

Sources were unable to confirm if SEC DG Oteh, who is also embroiled in the bribery scandal, answered summons for questioning.

The House had indicated earlier this week, that Oteh will face questioning after internal SEC memos leaked to the press showed that the Commission had offered to “assist” the proceedings by donating N30 million to the Committee.

Oteh, whose credibility and competence were questioned during the public hearings, had fought right back, questioning Hembe’s credibility in turn and accusing the lawmaker of collecting estacode from the Commission for an emerging markets conference in the Dominican Republic, which he never attended.

The SEC further refuted allegations that the Commision had attempted to bribe the Committee. Following the cross-fire of accusations and counter-accusations, the House of Representatives set up an ad-hoc committee to continue the probe under different leadership.

SEC denies offering Hembe N30 million Bribe

The Securities and Exchange Commission (SEC) on Tuesday denied allegations that it offered bribe to the Chairman of the House of Representative Committee on Capital Market and other financial institution, Herman Hembe and the committee that was conducting an investigative public hearing on the capital market.

Mr Hembe while resigning as the Chairman of the House committee conducting an investigative public hearing on the capital market told his colleagues that it was SEC that tried to bribe him and members of his committee.

“I made no attempt to collect any bribe, rather I worked hard to avoid the offer of such by the SEC DG,” he said.

The Lawmaker was forced to resign after the Director General of SEC, Arunma Oteh publicly accused him of demanding N39 million bribe from the commission among other financial abuse of his office.

Mr Hembe while delivering his resignation speech claimed he had documents he alleged were internal memos from the commission which indicates that SEC offered N30 million to him and his committee.

The memo showed that the Director General of SEC, Arunma Oteh had asked the management to consider paying for two items in the budget of the Committee. These items, according to the memo, were the live coverage of the three weeks public hearing which was budgeted at about N26 million and the needs of the committee’s secretariat which would cost about N4 million.

Responding to Mr Hembe’s accusation, SEC on its official website published a statement which was signed by the commission’s spokesperson, Obi Adindu denying the claims of the lawmaker.

“We note the allegation made by Hon. Hembe on the floor of the House and on live television that it was Ms. Oteh who made financial overtures to him,” the statement reads.

“We wish to state unequivocally that at no time and in no place did the SEC, Ms. Oteh offer Hon. Hembe any financial inducement.

Despite Hon. Hembe’s claims even as he said he had copies of internal memos which he purportedly obtained from the SEC, however Ms. Oteh did not issue or cause to be issued any correspondence to Hon. Hembe which offered him financial gratification.

We confirm that the SEC received a document in respect of the public hearing with a list of items with cost implications totalling N39, 844,490.00,” the statement said.

The statement said that Ms Oteh sent only two letters to Mr Hembe before the public hearing.

Watch a comprehensive background report on the drama which led to the resignation of Mr Hembe and the accusations and counter accusation between the lawmaker and SEC boss.

In the first letter the DG “expressed her support for the Public Hearing in line with the SEC’s role as the apex regulator of the Nigerian capital markets,” while the second letter according to the statement was the cover letter for SEC’s submissions to the Public Hearing dated 12TH March 2012.
SEC said “we totally disagree with the claim that we tried to financially induce or influence Hon. Hembe or anyone else.”

I did not spend N850,000 on food – Arunma Oteh

Head of the Securities and Exchange Commission in Nigeria, Ms. Arunma Oteh has denied, among other things, spending N850,000 on meals or purchasing cars worth N42 million.

Arunma OtehIn a bid to salvage its bruised reputation of the SEC, the Commission released a press statement on Monday in which it denied several allegations of unlawful practices leveled against it by the House of Representative Committee on the Capital Market.

The Committee led by Honourable Herman Hembe launched an investigation into the SEC on Tuesday 13 March which opened up the flood gates of accusations and counter accusations.

Shocking revelations followed each probe session, including allegations that the SEC boss had lived in the lap of luxury even as the nation’s Capital Market took a tailspin for the worse. Arunma Oteh, appointed to head the SEC in January 2010, was accused of splurging with a N850,000 feeding budget, as well as lodging at the Hilton Hotel in Abuja for an eight-month period following her appointment – instead of the 28 days permitted by law – which cost the SEC N30 million.

Her credibility and competence under attack at the probe sessions, Ms. Oteh went on the defensive. The embattled SEC boss in turn questioned the credibility of Hon. Hembe whom she claims had demanded N39 million from her ahead of the committee’s investigation and another N5 million a week before the probe.

With both parties squaring off for another round of public hearings on Tuesday, the Commission, in press statement signed by Mr. Obi Adindu and posted on their website, is responding to the shocking accusations made during the probe public hearings.

During the first of the public hearings, the Hon. Hembe led committee alleged that the SEC boss had consumed a whooping N850,000 in meals daily.

The press release addressed this allegation first, promptly denying it. “No, Ms. Oteh has never consumed a meal worth N850,000 no has she ever submitted such a bill to the SEC,” the release stated. It further clarified that it had reviewed the bill, which the SEC boss was said to have racked up during her 8 month-long stay at the Hilton Hotel following her her assumption of duty, and found that “the highest charge for food was N83,400”.

According to the statement, Ms. Oteh had charged that amount two months into her stay at the Hilton, on 24 March 2010, because of “an official dinner hosted by the SEC with a group of international capital market experts who were visiting Nigeria to provide technical assistance to SEC Nigeria”.

The SEC claimed the hotel’s billing records would prove as much, but still fails to clarify how the N30 million hotel bill was amassed or why the DG SEC had spent seven more months than was lawful at the expensive lodgings. The statement said Ms. Oteh had left the hotel on her own accord even before the Commission had provided her with suitable accommodations as she had been “unhappy with the lack of privacy at a hotel accommodation and for security reasons.”

It further denied renting property for Oteh, contrary to allegations made during the hearings. The SEC leader “lives in a rented accommodation procured in her personal capacity on her own account,” the statement claimed, adding that after several failed attempts to procure suitable accommodation for Ms. Oteh, “the Commission offered rental allowance to Ms. Oteh in lieu of official accommodation”.

The question remains, how much is being disbursed as “rental allowance”? Allegations made during the public hearing implied that the Commission spent as much as N62 million in rent for the SEC boss’ plush Maitama residence.

The committee asked the management of the commission to explain a memo that was issued by the Technical adviser to the DG, Franca Chukwuogu to the Head of Administration.

In the Memo (CADEO) dated 26/01/2011, Ms Chukwuogu had demanded through the head of Administration that the commission pay the rent for a five bedroom bungalow as the official rent for the DG. Another Memo from the Head of Administration, Bello Ibrahim showed that the rent for the five bedroom apartment at Maitama district of Abuja cost the commission over N62 million.

The Committee asked the management of the commission to explain why it paid the rent of the DG despite the enactment of the monetisation policy by the Federal government.

The House of Reps Committee further investigated claims that the Commission purchased four cars for the SEC boss at N42 million.

“She uses the two pool cars assigned to her, one in Lagos and one in Abuja,” the statement said. “The two pool cars were purchased to replace two old cars that were subject to frequent breakdowns. The purchase of these cars followed due process and the provisions of the public procurement laws.”

Finally, the SEC boss denied compromising “her regulatory function by engaging Access Bank staff on secondment”.

“Laid down rules, procedures and processes have been strictly complied with by the SEC since January 2010 (including in the processing of any transaction involving Access Bank). The seconded Access Bank staff were: a project adviser and a communication assistant, and these two areas are not at the core of the SEC’s regulatory function.”

The Commission, in the press release statement, conceded that many Nigerians suffered losses as the equity market fell from a capitalization of N12.6 trillion at its peak in March 2006 to N3.99 trillion at its lowest in February 2009. It further insisted that it had taken serious steps toward identifying the causes of the market downturn in Nigeria and putting a stop to further decline.

“Since Ms. Oteh assumed office as SEC DG,” the statement reads, “she has led a reform program to restore market integrity and revive investors’ confidence”. The reforms implemented by the SEC boss included “charging over 260 individuals and entities before the Investment and Securities for market abuses that led to the downturn, and seeking orders of disgorgement and restitution of investors”.

The SEC claims reforms set in place by Oteh have resulted in boosting the equity market capitalization which now stands at N6.6 trillion.

Ms. Oteh has faulted the public hearings, describing it as a “Kangaroo court”. During the last session, the SEC boss expressed her disgust at the line of questioning at the public hearings. “I believe that if we want to carry out an investigation in the interest of Nigeria and not in your own interest, I should not be subjected to what you subjected me to because the SEC did not give you N5 million in cash,” Ms. Oteh said addressing Hon. Hembe during the last public hearing, which she called unfair.

Hon. Hembe says all the counter-accusations and allegations of bias made against the Committee would be taken into consideration and invited the Economic and Financial Crimes Commission, present at the hearing, to fully investigate the Committee as well as himself.

SEC boss accuses lawmakers probing her of demanding N39 million bribe

Another drama ensued on Thursday at the House of Representative Committee on Capital Market and other Financial Institution’s public hearing on capital market as the Director General (DG) of Security and Exchange Commission (SEC), Oteh Arunma accuses the Chairman of the House of Rep Committee on Capital Market, Herman Hembe of demanding bribe from her.

Ms Arunma said that the Committee Chairman had demanded a bribe of N39 million from SEC for the ongoing hearing.

She further accused Mr Hembe of demanding N5million from the commission to enable him travel to the Dominican Republic to attend an Emerging market conference without embarking on the journey.

The DG made these accusations in response to the claims by the Committee that she has mismanaged the affairs of the commission and the committee was out to tarnish her intergrity.

She questioned the credibility of the Chairman of the committee  in conducting the probe, considering her allegations.

In his response, Mr Hembe noted all the allegations listed by the SEC and subjected himself and the committee to another probe which he ordered the Economic and Financial Crimes Commission (EFCC) to take up.

Ms Arunnma described the probe as a ‘Kangaroo court’, and likened the probe to an era of former Uganda leader, Idi Amin, saying “not even during the Idi Amin regime, did we have this kind of session.”

The visibly angry former Vice-President of the Agriculture Development Bank, who was questioned about her competence to preside over the SEC, the day before, brought all her credentials and narrated her career path to the sitting. She demanded an explanation why the committee chairman questioned her integrity despite her screening by the Senate.

She stated that she was warned before her appointment, over two years ago, that “corruption will fight back at me.”

Illegal purchaes

The Chairman of the House of Rep Committee on Capital Market also questioned the Legal Commissioner and the Director of Finance on the rational of buying three Toyota Hilux vehicles for N32 million without following the procurement act of passing the resolution to buy the vehicles through the proper tenders’ board.

The Executive Commissioner Legal and Enforcement, Charles Udora confirmed that a memo to buy the vehicle was raised but that he refused to sign it.

He said he did not sign the tender bid to buy the vehicle because he did not attend the tenders’ board meeting where the purchase of the vehicle was resolved, “and as the most senior lawyer in the commission, I cannot sign the memo.”

The commission’s Finance Director said though he did not attend the tenders’ board meeting, he signed the memo assuming that the meeting held as a ‘virtual meeting’.

The committee resolved that the tender board meeting never held and that the memo was passed around for people to sign.

Mr Hembe said though the public procurement acts categorically states that the Secretary of the tenders’ board must be the director of the procurement department or someone from the department nominated by the director, in SEC the Secretary is a staff from the tenders’ board secretariat.

SEC paid N62 million as rent for DG

The committee asked the management of the commission to explain a memo that was issued by the Technical adviser to the DG, Franca Chukwuogu to the Head of Administration.

In the Memo (CADEO) dated 26/01/2011 Ms Chukwuogu had demanded through the head of Administration that the commission pay the rent for a five bedroom bungalow as the official rent for the DG.

Another Memo from the Head of Administration, Bello Ibrahim showed that the rent for the five bedroom apartment at Maitama district of Abuja cost the commission over N62 million.

The Committee asked the management of the commission to explain why it paid the rent of the DG despite the enactment of the monetisation policy by the Federal government.

Furthermore, the committee questioned the rational of the commission for paying the bill of the DG who on appointment stayed at the Hilton Hotel for eight months instead of the 28 days recommended by civil service rule.

The committee also accused the management of SEC of abandoning its own training institute – The Nigeria Capital Market Institute (NCMI) while dishing out training contracts to private consulting firms.

It took the intervention of the Chief Whip of the House of Representative, Mukthar Mohammed, who was present at the hearing, to calm the exchange of words between the committee’s Chairman and the SEC boss.

Mr Hembe adjourned further hearing on the matter to next Tuesday.