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A Game of Tit for Tat

19 Mar 2012

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BEHIND THE FIGURES by Ijeoma Nwogwugwu, Emil: Ijeoma.nwogwugwu@thisdaylive.com


For those of us who studied Physics in our final years in secondary school, one of the many subjects we were taught under this natural science was (Isaac) Newton’s laws of motion. The third and easiest of these laws that we were able to grasp with little effort was Newton’s Third Law of Motion. It is summarised as follows: “The mutual forces of action and reaction between two bodies, are equal, opposite and collinear”. Today, the phrasing of Newton’s third law has been slightly modified to: “Every action has an equal and opposite reaction…” It is a phrase used by many without most giving much thought to its origin.


The ongoing probe by House of Representatives Committee on Capital Market and Institutions into why the equities market has been on a downward spiral since 2008 is an apt representation of Newton’s third law. It brought to the fore the action and reaction of contending parties, which were commensurate and opposite.


Other than launching a probe into why the Nigerian equities market has consistently underperformed in comparison to other frontier and emerging markets in last four years, the Capital Market and Institutions Committee set out to ascertain issues pertaining to the nationalisation of three hitherto listed banks which were unable to meet the recapitalisation deadline set by the Central Bank of Nigeria, and the impact this has had on the equities market; Access Bank Plc’s acquisition of the now extinct Intercontinental Bank Plc; and the rights issue and recapitalisation of Union Bank of Nigeria Plc.


The emphasis on the banking sub-sector of the equities market by the committee cannot be downplayed. It stems from the sub-sector’s share of market capitalisation, which is currently estimated at over 30 per cent, down from some 65 per cent of market capitalisation when the market peaked at N12.3 trillion in March 2008. For obvious reasons, the performance of banking stocks has been dismal, with valuations plummeting to an all time low. But even at that, at 30 per cent, the banking sector still accounts for a substantial share of market capitalisation.


As the chief executive of the body responsible for regulating the operations of the capital market, Ms Arunma Oteh, must have known that when the House committee embarked on its probe, she more than any other individual, would feel the heat of the search light. But she got more than she bargained for.


Starting out in the customary fashion last Tuesday by providing an overview of the equities market and a detailed insight into the challenges therein, not much publicity was given to Ms Oteh’s presentation on the first day of the probe. It was deemed routine and blasé by members of the public conversant with the rollercoaster ride that is the market. But it was the next day’s (Wednesday) proceedings that drew the interest of the public and made bigger headlines.


On Wednesday, the House committee, chaired by Hon. Herman Hembe elected to expand the mandate of its probe by questioning the competence and qualifications of Ms Oteh to superintend the capital market. Their line of questioning and the conclusions they reached arose from evidence at their disposal that Ms Oteh as the director-general of the Securities and Exchange Commission had racked up inexcusable hotel and feeding bills at the Transcorp Hilton Hotel, Abuja, for eight months. In that period, the SEC, a public institution, had expended over N30 million on hotel accommodation, and on one day, paid N85,000 on feeding, and on another, N850,000, also to feed Ms Oteh. If the price tags for the meals are to be believed, both must have comprised rich gastronomic cuisine preceded by the best Beluga caviar on toast, washed down by the priciest Champagne that money can buy. But I digress.


In addition to the hotel and feeding bill, Ms Oteh was told in no uncertain terms that she had compromised her capacity to provide effective regulatory oversight to the capital market by recruiting two employees of Access Bank, a public quoted company, and are still on the payroll of the bank.


Expectedly, Ms Oteh did not take kindly to the conclusions reached by Hembe and his committee. From a convivial probe, the investigation turned ill-tempered and ugly. Although Ms Oteh immediately failed to clarify or provide justification for her eight-month stay in the hotel, which was clearly in violation of public sector rules that allow for a 28-day stay in hotels, she defended her decision to recruit the personnel of Access Bank.


In her estimation, there was no conflict of interest in their secondment to her office, because, according to her, they are not involved in the core business of regulating the market. Indeed, SEC was later to explain that the two staff in question worked in brand communication support and project management/premises maintenance, in which the SEC has no personnel with such expertise.


Clearly, Ms Oteh was incensed by the attempt to sully her carefully nurtured reputation. On the next day of the probe, she charged like an enraged wounded lioness. She employed the strategy of attacking the committee as the best form of defence. She more or less opened proceedings by questioning Hembe’s integrity to chair the probe having been compromised himself. She accused the committee of being biased, alleging that this stemmed from her refusal to bow to their monetary demands of N39 million and 5 million respectively for the conduct of the probe.


She went on to expose Hembe’s receipt of a business class ticket and estacode from SEC to travel to the Dominican Republic for a capacity building programme on emerging markets that he never attended in October last year, and his failure to refund/retire the cost of that trip six months later. Not finished, she curiously mentioned in passing the deputy speaker of the House of Representative, Hon. Emeka Ihedioha, whose wife she said works for the Nigerian Stock Exchange, and the fact that he is related to the former director general of the NSE, Dr. Ndi Okereke-Onyiuke, who Ms Oteh was instrumental in sacking in 2010.


After her expose, Hembe was visibly flustered. If he was white, his face would have turned beet red. He flayed and gasped for words, before managing to stutter an invitation to the Economic and Financial Crimes Commission to investigate Ms Oteh’s allegations. Irrespective of the EFFC summons, Ms Oteh had achieved her objective. She had inflicted incalculable damage on the committee, which will be difficult to repair. In summary, what transpired between Wednesday and Thursday last week was the action by the committee and the equal and opposite reaction by Ms Oteh. It was clearly a game of tit for tat.


Of greater significance, the game of tit for tat raised issues that cannot be swept under the carpet with ease. For one, it again raised growing concerns about the capacity of standing committees of the National Assembly to conduct thorough probes, which are usually aimed at correcting certain anomalies in the polity and improving governance and service provision, without getting compromised. Although Ms Oteh’s allegation of the N44 million bribe-for-probe demand will have to be substantiated with incontrovertible evidence, it lent credence to the suspicion that members of the National Assembly sometimes go out of their way to conduct public investigations in order to line their pockets.


They achieve this by making mountains out of molehills, raising dust here and there, and scaring the wits out of officials of ministries, departments and agencies of government, as well as private sector institutions that they oversight. Even more worrisome is the fact that the National Assembly, which since its amendment of the constitution to make its budgetary provision a statutory transfer, has funding provisions in its budget to conduct such probes. As such, it beats the hell out of me why its members still make monetary demands of institutions under investigation, if their intentions are genuine.


Clearly, the Ethics and Privileges Committees of both chambers in the National Assembly have their work cut out for them. It is the responsibility of both committees to investigate members found wanting and hand them over to the law enforcement agencies for prosecution for bringing the National Assembly to disrepute. For now, the integrity of the committee, especially its chairman, has been called to question. Given the gravity of the accusations levelled against him, it will be ideal for him to recuse himself from the probe until he clears his name of wrong doing.


As for Ms Oteh, her charge against the Committee on Capital Market and Institutions does not in any way absolve her of blame for the mismanagement of public resources or the retention of Access Bank staff. Also, a dispassionate review of all that transpired between Wednesday and Thursday showed that she is not conversant with the powers of the legislature and its processes. She openly expressed disdain at the committee for digressing from the mandate of the probe by exposing her wasteful expenditure and lifestyle, and the retention of Access Bank employees, and in so doing, questioning her integrity and competence to manage SEC and therefore the capital market.


But the fact of the matter is that Section 88(1)(b)(i) and (ii) of the constitution empowers each House of the National Assembly to conduct investigations into the conduct of affairs of any person, authority, ministry or government department charged with the duty or responsibility for executing or administering laws enacted by the National Assembly; and disbursing and administering moneys appropriated or to be appropriated by the National Assembly.


What this means is that the Committee on Capital Market and Institutions can ask any question it deems fit of Ms Oteh, including the performance of the market, her prolonged stay in the hotel, the conflict of interest that could arise from the recruitment of employees of a public quoted company, and if need be, what she has for breakfast everyday if a relationship can be established between her morning meals and the daily gyrations in the equities market. Long and short, insofar as she is a public sector official, the committee can subject her to any line of question it deems necessary to achieve its objective.


On the issue of the Access Bank staff, Ms Oteh once again displayed a penchant for beating about the bush. First and foremost, it is bothersome that for all her academic qualifications that she reeled out last week, Ms Oteh refuses to accept that there is something wrong with the retention of staff on the payroll of a public quoted company. It is diversionary and plainly naïve to dismiss the staff as brand communications and project management/facilities maintenance experts who have nothing to do with regulatory oversight of the market.


The fact of the case is that as long as they work in the office of the DG, there is very high likelihood that they will be exposed to and have access to sensitive information on the market that could be passed on to their employer, in this case, Access Bank. In this era when all the financial services sector regulators are harping on improving corporate governance, eliminating insider trading, and raising investor confidence, does this not give Access Bank an unfair advantage over other public quoted banks and companies? Instead of arguing incessantly over a gross misjudgment on her part, what is expected of Ms Oteh is to take corrective measures by sending the staff back to Access Bank. If she is so desirous of building capacity in the SEC, she can turn to USAID, DFID, the World Bank, and perhaps, her former employers the African Development Bank for funding to contract experts who do not work for public quoted companies to plug the gaps in SEC.


Lastly, enquiries have since confirmed that the deputy speaker’s wife, Ebere, a Chartered Accountant with a Master’s degree, has worked in the NSE since 1999 - one year before Okereke-Onyiuike became the DG of NSE, four years before her husband won his first election to represent his constituency in the National Assembly, ten years before Ms Oteh became the DG of SEC, and 12 years before her husband became the deputy speaker. So bringing her into the probe was rather puzzling to say the least.


But perhaps Ms Oteh was too incensed for words and just had to hit out at anyone – imaginary and un-imaginary foes alike. Let us hope that the weekend break would have given all the parties some time to sleep over their utterances and the fury that ensued, so that everyone can refocus on the important matter of getting the equities market back on track.

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  • Ms Oteh was not casting aspersion on the deputy speaker or his wife. She was simply trying to draw a corollary to show that staff of Access bank working in SEC didn't mean she was going to be biased in the favor of the bank. She was simply saying one could not accuse the Deputy Speaker of being biased just because his wife worked at NSE and is a niece of Okereke-Onyiuke.

    I also wondered - is it just me or did others also find issues with Hembe's comportment (he was constantly licking his lips while talking). It looked very unprofessional and he came across as a tout/undignified looking professional.

    I do not support the DG having 4 official cars assigned to her but then I do not blame her since it is said that was written into her contract. In this case, I blame the overseeing agency responsible for setting her salary which awarded her 4 official cars. This seems to be the norm for government officials. This is part of the waste that the agency responsible for setting government employees emoluments should deal with. At most, a CEO should have 1 official car and if the car is faulty, he/she should draw one from the pool.

    From: dele

    Posted: 2 years ago

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  • Four bloody official cars!!!!!!
    if she had a conscience, despite it being in her contract, she should have returned at least 2 of the cars.

    From: Gidi

    Posted: 2 years ago

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  • I am an architec of women to be given positions of high responsibility, but Ms Oteh has disappointed me so much bearing in mind the organisation she left to take the position of DG SEC. If the pay was not enough for her she should have turned down the offer. It is not by force to serve fatherland!
    Lastly, at that level of management one requires alot of patience and self control. It is like she doesn't have good advisers at SEC or may be they are giving her wrong advice for their selfish ends. How can you be staying in company's quarters or rented appartment and at the same time be collecting housing allowance. This is common sense! She as an Ibo woman if she has her own business can she rent a house for her staff and at the same time be paying his housing? It doesnt happen anywhere in the world.

    From: IORSE KWAZA

    Posted: 2 years ago

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  • If The Deputy Speaker's wife started working for the NSE a year before Mrs Ndi Okereke became the NSE DG then we shd remember that Mrs Okereke was already the Deputy DG at this time and might have influenced her employment? It was a commonly repeated fact that she (Ndi Okereke)
    joined the NSE as a manager and rose thru the ranks under Apostle Hayford Alile.

    From: Oladele

    Posted: 2 years ago

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  • Thanks Dele , Your explanation makes sense. I wondered myself and found it confusing re- the deputy speaker and his wife's involvement. On Mr Hembe, I found him grossly inappropriate, occasionally swinging his seat, licking his lips, telling Ms oteh to put off her microphone.it was also obvious how uncomfortable the committee members were when Ms oteh accused them and some frantically picked up their phones and seemed to be texting I assume themselves. However Ijeoma is right regarding Ms oteh not answering some pertinent questions. Lets hope this committee
    is dissolved and a more competent one is set up.

    From: Uche

    Posted: 2 years ago

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  • The game continues, i guess

    From: matthew,greymaterrc@yahoo.com

    Posted: 2 years ago

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  • Shaking my head (smh)...all I can say is the fundamentals of the Nigerian economy is NOT strong. No, not with regulators like Ms. Oteh and a quid duo pro legislative assembly.

    You heightened the drama piece here too with quotes like "On the next day of the probe, she charged like an enraged wounded lioness"...lol. I'm going to rank this next only to the infamous "It is a dark and stormy night"...very dramatic.

    From: Femo Scorpion

    Posted: 2 years ago

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  • So this is not about probity in government, its about the wits of public office holders. From Ij main piece which is brilliant in content and the comments so far, equally analytical ,it seems we have now grown accustomed to these shameful conducts of our public officers such that we do not focus on the core of the issue anymore -corruption in all high places! I submit both Ms Oteh and the dishonorable gentlemen have both conducted themselves shamefully and in a manner that bother on criminality. In other climes, this disclosures are enough for the parties to be summoned by the police for questioning. But Ms Oteh knows that all these will lead nowhere, that's why she will make such allegation on public media. When are we going to start the process of holding public officers accountable? Where is our path to National progress?

    From: Bola

    Posted: 2 years ago

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  • I must commend Ms Oteh on how she swifly defended her qualification as the DG SEC. However, its very instructive that such speed was not applied in explaining why she had to stay in a hotel for eight months while the Public Service Rules says the first 28 days.She was also silent on why she collects her accommodation allowance monthly and still got SEC to pay N60m for her accommodation in Maitama. Nigerians deservedto know what she ate at the cost of N850k a day.We hope she comes back to explain all these issues. Meanwhile, her reference to Rt Hon. Emeka Ihedioha's wife in such public hearing is rather a disgusting blackmail. Mrs Ihedioha deserves her privacy. Thought Ms Oteh said she made "first Class"?

    From: Obunike

    Posted: 2 years ago

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  • Thank you Ijeoma for this indepth analysis.i was worried you would tow the gender line,Thank you once again,let those who have ears listen!

    From: obialo iwuchukwu

    Posted: 2 years ago

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  • I love your objectivity.Oteh is just using emotional blackmail tactics.Why did it take her the following day to realize she had first class and that the committee demanded bribe from her?She should answer the questions and tender evidences of her bribery claims to EFCC and if she cannot she should resign and go back to her former employer who can afford her 850000 worth of food per day.Nigeria economy needs serious minded people who will sacrifice to make the nation survive not the type of Hembe and Oteh (a woman for that matter) thieves chasing rogues.

    From: Bamidele Joseph

    Posted: 2 years ago

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