Ndi Okereke-Onyiuke, former director- general of the Nigerian Stock Exchange (NSE) Tuesday, at the ongoing hearing on causes of the near collapse of the Nigerian stock market, queried the decision of the new management of the NSE to replace the existing trading platform.
The platform will cost N1.4 billion and is scheduled to go live in the second quarter of 2013.
Okereke-Onyiuke said: “There is absolutely nothing wrong with the trading platform of the Nigerian Stock Exchange. The same one that we bought two years ago is the one that they want to buy again. During my time at the Exchange, the NSE did not have the word “system is down”.
The Nigerian Stock Exchange recently signed a contract with NASDAQ OMX on a new trading platform.
“If someone wants to spend money, let them say it, not that anything is wrong with the system which we bought from NASDAQ OMX. You don’t supervise what you don’t know. Our trading platform is very robust. The new system they are proposing is the same as the one we bought. There is absolutely nothing wrong with the platform,” Okereke-Onyiuke told the House of Representatives adhoc committee on near collapse of the capital market.
The former DG denied appointing Musa Al Faki, former DG SEC. “I didn’t appoint Al Faki. We went to a meeting where members complainted about Al Faki’s predecessor. When it was time to get a replacement, I sent four names. It was the president (Olusegun Obasanjo) that appointed Al Faki and not me.”
She also called on the regulators to revive the Abuja Securities and Commodity Exchange (ASCE), adding “I will revive Abuja Securities and Commodity Exchange in six months, free of charge.”
Okereke-Onyiuke claimed that the NSE was extremely stable before the SEC came and sent them away. “There was no quarrel between the NSE and the dealing members. It is not true that the committees were not meeting. NSE and stockbrokers met almost every two days apart from other meetings held by other committees within the Exchange. Demutualisation which I started is the beginning and end of what happened. There was no litigation in the NSE.
The then Lagos State Police commissioner did not give the police to SEC to send us away. Those policemen were illegal policemen. I lost my birth certificate and marriage certificate as a result of the incidence (forced exit out of the Exchange). The NSE didn’t have any money for anybody to steal.”
She added: “There is absolutely nothing to stabilise in the Nigerian Stock Exchange. They said Emmanuel Ikazoboh, Interim Administrator, was brought to stabilise the NSE. Ikazoboh was the auditor of the NSE for six years and never said there was anything wrong with the NSE. When he was managing partner of Akintola Williams Deloitte, SEC indicted him (Ikazoboh) personally for his role in a company he worked for. This is the man that you brought to come and stabilise the Exchange that never had problems.”
The former NSE boss said there was no illegality in the establishment of the Central Securities and Clearing System (CSCS). She also denied raising funds for President Barack Obama,saying , “I didn’t raise money for Obama. I am smart. I know the laws. I know that I cannot raise money for a person to contest election in the US, not to talk of a presidential aspirant”.
Ndi Okereke-Onyuike also called for 100 percent funding of the nation’s capital market by the Federal Government, as well as intervention of the Asset Management Corporation of Nigeria (AMCON).
“SEC as government regulator of the Capital Market should be fully funded by the Federal Government. At the moment, SEC is partly dependent on the market fees and penalties collected from the market operators. This may have the tendency of compromising its regulatory functions.
“Assurances were reiterated that AMCON will bail out both the money market and the capital market i.e. beneficiaries will be banks, stockbroking firms and Nigerian shareholders. Urgent action needs to be taken on this because AMCON is largely servicing banks only at the moment,” Okereke-Onyuike said.
She disclosed that the banking sector accounted for 60 percent of the listed securities on the capital market, adding that the indiscriminate granting of margin loans by the banks to all manner of investors and market operators caused the market crash.
“However, in the case of Nigeria, the banks gave out these loans indiscriminately, and in most cases insisted that such margin loans were used to purchase their own shares. Some banks were deeply involved in granting margin loans that were not properly structured and this created excess cash in the market, and the share prices got bloated.
“The Nigerian Stock Exchange Management at several occasions warned market operators that regulators i.e CBN and SEC had not issued guidelines on margin loans. Subsequently, it became quite evident that the margin loan facilities had been abused. However, they are off balance sheet items, not easily detected. (CBN/SEC recently issued the Guidelines on Margin Loans).”
The former DG also blamed the SEC for encouraging numerous unlisted private placement (IPOs), adding that “most of the issuers of these private placements ‘misled’ the public via the style of placing and also wanted to list their shares at very high premium, instead of listing at the prices the securities were issued.
“The management of the Nigerian Stock Exchange objected and rejected any attempt of listing any shares above the price they were issued at private placement offer.”
Meanwhile, the adhoc committee yesterday threatened to invoke necessary provisions of the law against Aruma Oteh, director- general of SEC, following her failure to appear before the committee.
Ibrahim El-Sudi, chairman of the Adhoc committee directed Oteh to appear before the committee today, Wednesday, by 10am.
This followed content from a two-page letter from Oteh in which she called for the understanding of the committee to allow her “to respond to any additional questions that you may have in writing, being that you had already given the commission an opportunity to present and interact with the committee for five hours yesterday.”
Oteh also explained in the letter, that she could not appear before the committee because she needed to attend the National Economic Management Team (NEMT) meeting chaired by the President Goodluck Jonathan, as well as attend the power sector retreat.
El-Sudi, who acknowledged the receipt of the letter from Oteh , however described Oteh’s attitude as “an aura of arrogance and looks down upon the integrity and authority of the National Assembly. This committee has been fair to everyone that appeared before it. We will not sit here and allow anybody to undermine the National Assembly.
“Appearance before this committee or any of the National Assembly committee is not a matter of personal idiosyncrasy or discretion. Ms Arunma Oteh is hereby ordered to appear before this committee by 10am tomorrow (Wednesday), 9/5/12 unfailingly, otherwise we shall be compelled to invoke the necessary provisions of the law.”