Monday, August 30, 2010

SEC and impunity in stock market

“Financial institutions which are poorly governed pose a risk to themselves and also to others and could pull down financial markets. Recent experience in the Nigerian financial market attests to this fact.” SEC DG, Ms. Arunma Oteh at the International Conference on Good Governance and Regulatory Leadership, May 2010

Yours truly is an investor in Nigeria's capital market having bought small units of shares in some of the quoted companies on the Nigerian Stock Exchange. I had been taken in by the huge return on investment and the humongous profit after tax that many of the companies listed in the NSE declared at their annual shareholders meeting.

That was before the bubble burst in March 2008. Today, my shares are not worth the share certificates on which they were written. My personal loss is miniscule compared to many big time investors in the stock market. Many lost millions and probably billions.

The total loss is actually in trillions. My sense of loss was relieved on 5 August, 2010 when the new DG of Securities and Exchange Commission, Ms. Arunma Oteh gave the marching orders to the then Director General of the Nigerian Stock Exchange, Prof. Ndi Okereke Onyiuke and also placed a suspension order on the president of the council, Aliko Dangote. The move which is long envisaged came on the heels of earlier vow in January, 2010, when the SEC DG promised before the House of Representatives Committee on Capital Market that the era of sharp practices and malpractices in the nation's capital market was over.

Ms. Oteh assumed duties at the regulatory agency on 11 December 2009. She was quoted during the 2010 budget defence session at the House of Reps as saying that “henceforth, SEC will ensure that “inappropriate behaviours” of capital market operators will not go unpunished.” At the forum, she allegedly pledged a new regime of zero tolerance to share price manipulation, insider dealings and other sharp practices bedevilling the nation's capital market over the years. She further said that the Commission would strengthen its regulatory oversight, intensify monitoring activities and collaborate with other regulatory agencies in the financial sector to ensure the restoration of investor confidence in the capital market.

I believe it is the promise of January that is being kept in August 2010. Unfortunately, this seems like medicine after death. To my mind, the SEC hammer should have come on the NSE authorities much earlier to save Nigeria's investing public from further loss having lost trillions of Naira between March 2008 and now. A news report in Thisday of 1 January, 2010 had said that “the Nigerian stock market dipped by 34 per cent in 2009. The dip was caused by external pressure from the global financial crisis and internal ones such as over- speculation and arbitrary pricing of shares.”

It is an open secret that there have been a lot of underhand dealings at the Exchange. In recent times, there were claims and counter claims over the share manipulation of African Petroleum (AP) stocks. It is disheartening that it took the petition of the suspended President of the Council of NSE, Alhaji Aliko Dangote that the Stock Exchange is insolvent before the SEC sprung into action by removing the NSE DG and suspended the whistle blower.

While giving a background on events leading to the tsunami of 5 August in NEXT on Sunday of 22 August 2010, information attributed to the office of DG SEC says “as part of moves to determine the true state of affairs, SEC in April engaged a team from the US Securities and Exchange Commission which compiled a confidential report detailing lax oversight at the Nigerian Stock Exchange and the financial regulators. The report detailed cases of bribery inside the Stock Exchange, dysfunctional enforcement, “complicated and entrenched governance problems”, “clear instances of insider trading and market manipulation that resulted in no action”, and “woefully inadequate” surveillance, a clear indictment of the NSE authorities.

“The allegations regarding the leadership and membership of the council of the exchange against the NSE are very grave and that is why in our opinion, the SEC has decided to take this step in exercising its powers under the Investment and Securities and other applicable regulation.” In my own opinion it is on the basis of these revealing indictments that the DG of NSE should have been removed alongside the NSE Council Executives, however, SEC curiously directed the council to implement a clear succession plan and for the DG to handover to a successor by June. This is untoward.

Anyway, apart from the intervention at the NSE, the SEC, we are told, has also concluded moves to sanction about 260 stock broking firms alleged to be involved in unethical practices. While the Commission is still working on how and when to bring the erring stockbrokers to book, the Economic and Financial Crimes Commission (EFCC) on 12 August preferred a 22-count charge against the duo of Adeniyi Elumaro and Rakiya Mamman, who allegedly used their stock broking firm to defraud some notable Nigerians of a total of N405 million.

This, the report said, happened between January 2006 and December 2008. Scam in stock exchange is not the exclusive preserve of Nigerians, Bernard Madoff, an American investment manager, defrauded investors of about $50 billion in what probably is the largest swindle in Wall Street history. He is currently serving 150 years in prison having pleaded guilty to 11 felony counts on 12 March 2009, and sentenced on 29 June 2009.
All said, the issues herein have shown that Nigeria's financial sector has been in a quagmire over time. Just about this period last year, the incumbent Governor of Central Bank had removed eight Managing Directors of some ailing banks.

There is no gainsaying the fact that the capital market and its operators need to engender good corporate governance through their disclosure, reporting and transparency requirements. It, however, behoves, the regulator to ensure compliance. My prayer is that all Nigeria's equivalent of Bernard Madoff should have their days in court and get their deserved punishments. The culture of impunity in Nigeria's financial system must be halted if Nigeria's economy will ever get out of its current doldrums. As rightly observed by the SEC DG: “Government's macroeconomic policies will come to naught if financial institutions are not well governed.”

Article first published in Daly Sun of Monday, 30 August 2010

Thursday, August 26, 2010

Preserving the Legacies of Nigeria's Heroes and Heroines Past

Arise, O compatriots, Nigeria's call obey
To serve our fatherland
With love and strength and faith
The labour of our heroes past
Shall never be in vain
To serve with heart and might
One nation bound in freedom, peace and unity.

These are the lines of Nigeria’s current national anthem. Sadly, not many Nigerians, including those who are holding public offices, could recite the national anthem, let alone believe in the words. Nigeria is in her year of Golden Jubilee having got independence on October 1, 1960. There have been series of lectures, seminars, colloquia, conferences, exhibitions, debates etc planned in celebration of the country’s 50th anniversary. There is no gainsaying that Nigeria still grapples with the challenges of nationhood and governance. It is doubtful if this state of underdevelopment; anomie and morass were envisaged or hoped for by the founding fathers and mothers of Nigeria. I mean the political, labour and media bourgeoisie who were actively involved in negotiating the independence of Nigeria from the British colonialist. Nigeria, like many African countries have been unfortunate to be plundered and pillaged for three hundred years under the trans-Saharan and trans-Atlantic slave trade. With the abolition of slavery came the dismemberment of Africa at the Berlin Conference of 1884 or thereabout. At the Berlin Conference, it became the lot of Britain to administer Nigeria through what is now famously regarded as Indirect Rule. Nigeria became a British Colony and a system of administration akin to what obtains in Britain was institutionalised in Nigeria. While the slave trade and colonialism lasted, Nigeria’s human and material resources were exploited not to develop the colonies as it were but to build Western Capitals of Europe and America.

Early in the 19th Century, anti-colonialist elements begin to mobilise to resist the colonial rule of Britain. At the fore-front of the struggle for self-rule in Nigeria were progressives like Sir Herbert Macaulay who established the Nigeria National Democratic Party (NNDP) in 1922, Pa Michael Imodu who led labour movement revolt against the colonialist autocratic and inhuman practices. Chief Obafemi Awolowo who was one of the brains behind the establishment of National Youth Movement (NYM) and Action Group (AG) and later Unity Party of Nigeria (UPN), Awo also established the Nigerian Tribune in November 1949; late Dr. Nnamdi Azikwe established National Council of Nigeria and Cameroon which later metamorphosed into National Council of Nigerian Citizens (NCNC) as well as Nigeria Peoples Party (NPP) in the 70’s. Zik was also the brain behind the establishment of West African Pilot newspaper. From the Northern Nigeria, we had people like Alhaji Tafawa Balewa, and Sir Ahmadu Bello who were the arrowheads of Northern People’s Congress (NPC). What all the aforementioned people had in common was that they form part of Nigeria’s depleting genre of heroes.

According to the New 7th Edition of Oxford Advanced Learner’s Dictionary, a hero is a person, especially a man, who is admired by many people for doing something brave or good while a heroine is a female version of a hero. Nigeria has been blessed with sizeable number of heroes and heroines. Being from the South-Western Nigeria, I am more familiar with some of Nigeria’s widely acclaimed heroes and heroines from the Yoruba ethnic group. In this category are folklore heroines such as Moremi Ajasoro and Olurombi who sacrificed their children for the peace of their communities. Others include late Chief (Mrs.) Funmilayo Ransome Kuti who led women revolt against the oppressive tendencies of a former Alake of Egbaland, Madam Tinubu and Prof. (Mrs.) Jadesola Akande who was a former Vice Chancellor of Lagos State University and women’s right activist. There are however, longer list of heroes from the South West, ironically, in spite of the cynicism many of us have about Nigeria’s brand of politics, many of our national and regional heroes are politicians.

Leading the pack of the South West national heroes is Chief Obafemi Awolowo. Awo it was who as Premier of Western Region established first television station in Africa in 1959, built the Cocoa House which then was the tallest building in West Africa through proceeds from the sale of Cocoa, established farm settlements across the length and breadth of the South West region, instituted the Free Education programme for the entire region in 1955, built the University of Ife now Obafemi Awolowo University, established several industrial estates including the Wemabod Estate, Lagos as well as Oodua Investment Company. Awo was a visionary, a principled and selfless politician, human rights activist and a nationalist of note who as Federal Commissioner for Finance under the Yakubu Gowon administration helped Nigeria to prosecute the 1967-70 civil war without any external borrowing. I have been privileged to visit the Awo Mausoleum erected within his private residence in Ikenne, Ogun State and also knows his house where he lived in Ibadan along Oke-Bola road, these are modest residences compared with earthily paradises our contemporary politicians now erect for themselves. Awo served Nigeria in his life and times selflessly and is an all time hero of the Yoruba race. Other South-West Nigeria heroes include, Fela Anikulapo Kuti, a music icon who used his brand of music to fight oppression and promote human rights; Chief MKO Abiola, a business mogul, philanthropist and politician; Chief Gani Fawehinmi, human right crusader, lawyer, philanthropist, publisher and politician and Prof. Wole Soyinka, 1986 Nobel Laureate in Literature and Human Right Activist. Of all the aforementioned, only Prof. Soyinka is alive.

There are other pockets of heroes across the Nigerian landscape. There was J.S Tarka from Benue State in the Middle Belt, the South-South has produced heroes and heroines like King Jaja of Opobo, Isaac Adaka Boro, Ken Saro Wiwa as well as late Chief (Mrs.) Margaret Ekpo. In the South East, apart from Zik of Africa, we have heard of heroes like Chief Alvan Ikoku and Dr. Sam Mbakwe. North Western Nigeria has also produced heroes and heroines like Alhaji Aminu Kano, Hajia Gambo Sawaba and Queen Amina of Zauzau. These are just to mention but a few of Nigeria’s heroines and heroes.

Even though successive governments have deemed it fit to name one monument or the other such as universities, streets, airports, stadia etc after some of these fallen heroes and heroines, whether while alive or post-humously, the best way to preserve the legacies of these great men and women is to better their performance in areas of their excellence be it politics, philanthropy, governance, human rights advocacy, commerce and industry, music, journalism etc. Government, particularly, federal and state need to mass produce literatures on the heroic deeds of these people and circulate them widely so that many of the present generation of Nigerians who know little or nothing about these fallen heroes and heroines can deepen their knowledge about their great works and learn or perhaps model their lives after theirs. The heroic deeds of these great Nigerians also need to be thought in our schools from primary to tertiary institutions as part of History, Politics and Civics. Learning about these past legends and working tenaciously to implement their ideals, ideas and principles is one broad way we can ensure that their labours are not in vain.

This article was first published in The Ethics Magazine (Third Quarter 2010)

Tuesday, August 10, 2010

The Worth of Character

Daily Sketch Wednesday, 18 November, 1998

You can get through life with bad manners, but it is easier and more honourable with good ones. Character is the only religion there is. Anonymous

The late Mahatma Ghandi of India identified what he called seven deadly sins. These are: Wealth without work; pleasure without conscience; knowledge without character; business without ethics; science without humanity; politics without principles and religion without sacrifice of pride and prejudice. It is a truism that ‘the true rule in determining to embrace or reject a thing is not whether it has any evil in it, but whether it has more evil than good’. There is no gainsaying the fact that most of the world nations, with special emphasis on Nigeria are guilty of these seven deadly sins of Ghandi. Gone are the days when good and exemplary character is regarded as a virtue in Nigeria. Moral upbringing counts little and less these days with testimonials not worth the paper on which they were written. Students only obtain them for formality sake in contemporary times. Admission into tertiary institutions without due cognisance of the moral rectitude of the applicants has made our schools to be populated with deviants who later revel in being members of campus cults.

In the good old days, parents never compromised good character for their children. They ensured that their offspring were morally and intellectually sound. Home training inculcated through extensive discipline was their priority. A wayward, recalcitrant and obdurate child is heavily punished and in some extreme cases taken to juvenile homes for reformation. If he failed to change for better, parents do isolate or disown such a child in order to prevent him or her from soiling the family’s good name. That was a time when good name was worth more than silver and gold. Not anymore! Things have changed drastically; character, nay, good character worth much less these days. People only pay lip service to honesty and integrity in contemporary times. In fact, good character is no longer exemplary if majority opinion is anything to go by. This is because truth, honesty, respect for elders, courtesy, decorum, discipline and all other virtues which give a person good character have long been jettisoned. They have all been sacrificed on the altar of insatiable quest for money and civilisation.

Anybody that will be of good character would not contravene God’s injunctions nor is he or she expected to infract any of the seven deadly sins as enunciated by Mahatma Ghandi. What do we see today? All the laws of God and those of man are trampled upon with impunity. Any wonder things are at sixes and seven in our society? If we would respect the laws of man alone, which is an adjunct of that of God, this world would have been a better place to live in. If we would work honestly for our wealth, would allow our conscience to prick us when we indulge in sinful pleasure and would not seek knowledge that is devoid of character. Society would be orderly, peaceful and prosperous. Progressive development would also be the lot of any human society where ethics is the bedrock of business, where science is not pursued to the detriment of humanity, where there are principled politicians and politicking and also where there is religious tolerance. Utopian and fantastic as these might seem, any society that has these principles largely in practice cannot but be progressive and develop.

Conversely, it is an irrefutable fact that anybody that engages in these seven aforementioned sins is not patriotic, human nor of good character. What is the worth of character of someone who looted the nation’s treasury to amass ill-gotten wealth like many of our public office holders are doing? What is the ethic consideration of a swindler and a cheat who masquerades as a businessman or woman? Or what moral value is there in politics of prostitution, devoid of scruples and targeted at personal aggrandisement? Is hypocrisy not the name of religion without sacrifices of pride and prejudices? What also would be the worth of knowledge that is devoid of character? To my own mind, science is useless without humanity as its focus.

It goes without saying that the character of the people would reflect in the nature of government of any human society. After all, government and states are abstract entities run by people. Like a philosopher once observed, ‘let people be good and government be bad, when government is sick, the good people will heal it.’ Invariably, when we say that government is bad, it is the public office holders, the administrators and managers of government that are of questionable character.

There is a Chinese proverb that says: If there is righteousness in the heart; There will be beauty in the character; If there be beauty in the character; There will be harmony in the home; If there be harmony in the home; There will be order in the nation; When there is order in the nation; There will be peace in the world. What a cheap way to attain world order. The big question is, are we prepared to follow these simple steps instead of spending billions of dollars prosecuting wars and embarking on pace keeping missions? Believe you me; being of good character solves everything. Do I hear you say we need ethical revolution? Certainly. Let it start from ourselves, our individual homes, before it spreads abroad. Then you can be rest assured that good governance that is presently not in our character would manifest and we would all be happy for it.