Monday, April 21, 2014

ANALYSIS: SEC: A regulator tainted by corruption and immorality

Published:

Herman Hembe faces corruption allegation from SEC DG, Arunma Oteh

The Securities and Exchange Commission (SEC) probe by the House of Representation Committee on Capital Market was to unravel the causes of the 2008 crash of the country’s capital market. But, it has ended up stirring a whirlwind that has blown open a cauldron of incestuous corruption between SEC and members of the committee.

Throughout last week, the original objectives of the probe was forced to the back seat, as Chairman of the committee, Mr. Hembe and the SEC director-general, Ms. Oteh, took turns to throw mud at each other.

The Pandora box has emptied its bowels in public and the stench has fouled the senses, leaving a damning verdict that none of them may be a saint after all.

At the opening session, Mr. Hembe called to question the conduct of Ms. Oteh, which tended to bring to public scrutiny her competence as head of the regulatory agency, ostensibly to make the point that without integrity in the handling of some innocuous personal and official issues, it may be a wink in the dark for Nigerians to expect a fundamental turnaround in the capital market’s dire situation.

He spoke about Ms. Oteh’s accumulation of a whooping N30million bills at the Transcorp Hilton, Abuja for over eight months on her assumption of office, including about N85,000 spent on food every day, and  about N850,000 on one occasion, and hiring two staff of Access Bank, Charles Ugheli and Titi Olubiyi as project adviser and a communications assistant respectively to work for the commission, while they are still on the payroll of the bank, against the recommendation of the board.

Besides, he spoke of the Commission overstepping due process in the procurement of cars for Ms. Oteh, who is alleged to have also accepted to stay in an official accommodation paid for by SEC after she was paid a rent allowance to hire her accommodation in line with the provisions of the Federal Government monetization policy, applicable to all public officers.

Mr. Hembe had presented copies of correspondences showing requests by the Technical Adviser in the DG’s office, one Frana Chukwuko, requesting (on behalf of her boss) for the Commission’s approval for over N66million to rent a tastefully furnished five bedroom detached duplex at Maitama, which Ms. Oteh had reportedly indicated interest to have as her official residence.

If Mr. Hembe thought these revelations were capable of coaxing Ms. Oteh to eat the humble pie and dance to his rhythm, he was thoroughly mistaken, as what he got from her totally miscued his wildest expectations.

Ms. Oteh’s response to these allegations was startling, forcing skeletons to fly off their closets in awe. She did not only question Mr. Hembe’s credibility to conduct the probe, but she also accused him of concealing some vital information for which she believed he owed Nigerians some explanations.

“When I accepted to take this job, I was told that when I fight corruption, that corruption would fight me back,” Ms. Oteh began. “But, I could not have imagined that that would happen in the House committee on Capital Markets. And now I question, Honourable Chairman, your credibility in carrying out this public hearing.

“The reason I am questioning your credibility is that on October 20, the SEC gave you estacodes and a business class ticket to travel to emerging markets conference in Dominican Republic. Please tell the Nigerian people whether you actually went there, and if you didn’t, please also tell the Nigerian people whether you have retired the monies.”

Ms. Oteh, who accused the lawmakers of denying her a fair hearing in pursuit of clannish vested interest to tarnish her reputation and the integrity of the apex market regulator, also revealed that they demanded and got N39million from SEC towards hosting the public hearing, apart from N5 million cash Mr. Hembe demanded.

“Is it fair, Honourable Chairman that you would try to damage my own reputation, because I want to serve my country, because I am fighting to sanitise the Nigerian capital market? Is it fair on me as a Nigerian? Is it fair on the apex regulator? Is it fair on the Nigerian capital market?

“Is it fair given what we have done in the last two years to restore investor confidence? Is it fair to talk about incompetence without consideration to my credentials as a 1984 first class computer science graduate from the University of Nigeria, Nsukka, as well as the best graduating student in physical sciences in her year,” she queried.

Though Mr. Hembe, stoutly denied the allegations, to prove his innocence, he did not only openly invited the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices Commission (ICPC) to investigate him, he disqualified himself as Chairman of the committee, threatening to seek legal redress to clear his name and defend his integrity.

As a parting shot, Mr. Hembe handed in copies of memos from SEC indicating that rather than the committee soliciting for the controversial financial support, it was actually the Commission that made overtures to it with an offer of N30million, consented to by Ms. Oteh, and endorsed by the board of SEC.  

SEC has since denied that its director general consumed a meal of N85,000, neither did the Commission pay a bill of N850,000 for her, claiming that the highest charge for food throughout her stay in the hotel was N83,400 on March 24, 2010 for an official dinner for a group of international capital market experts who were in Nigeria to provide technical assistance to SEC.

This contradicts the facts on receipt No. 049785 for services to Room 1026 on March 24, which showed a total bill of N260,600, with N84,300 paid for one of the three times food were served.

Let’s face it, in a country where the National Bureau of Statistics (NBS) says about 112million (about 67.1 per cent) of the country’s 167million population are living below poverty level, is it fair for Ms. Oteh, a self-confessed reformer, to spend so much on her personal comfort and not expect people to raise eyebrows?  

Though some commentators condemn Mr. Hembe as the villain with the tar brush, but could the SEC boss be exonerated as the saint? Many think otherwise, for both have fallen short of the minimum standards expected of public officials.  

Except we are operating different laws for different public servants, then it would be right to ignore the point that Ms. Oteh brazenly breached the Federal Government’s monetization policy, which provides that officials resuming in new locations are entitled to 28 days hotel accommodation pending an accommodation acquired with the rent allowance paid to the official.

If, as she claims, the terms and conditions of her contract, included getting “a fully furnished and maintained official accommodation in a suitable location, befitting the status of DG,” and she opted for a rental allowance, was it fair to Nigerians for Ms. Oteh to have stayed in the hotel for more than eight months after exhausting the initial 28 days limit, accumulating over N30million, just to avoid her “living under the bridge as the apex regulator,” or asking somebody to host her?

Why did it take eight long months to find a “tastefully furnished and maintained official accommodation in a suitable location, befitting the status of DG,” for Ms. Oteh, if the will was there at all to move out of the luxury of hotel accommodation in the first place, even if a fresh property were to be built?

The actions or inactions of public officers must not only be fair, but must be seen to be manifestly fair. If Access Bank is one of the institutions in the financial sector that SEC is supposed to regulate, is Ms Oteh saying in good conscience that hiring on secondment to her office two staff of the bank is not capable of compromising her objectivity, if an issue places its interest against those of the competition?

Access Bank’s recent history, particularly its involvement in Asset Management Corporation of Nigeria (AMCON)’s attempt to nationalize three of the eight distressed banks, gives it away as one institution that has been in bed with most of the regulatory authorities to realize its inordinate ambition of emerging as a mega force in the country’s banking sector.

The bank’s wily-dilly manipulative role with the Central Bank of Nigeria (CBN) in the run-up to the acquisition of Intercontinental Bank and Finbank does not bear repeat, and cannot be wished away that its staff are seconded to SEC to add any value other than protecting its interest against those of the competition.

Before stepping down as the chairman of the probe committee, Mr. Hembe produced correspondences, alleging that SEC, with the full consent of Ms.Oteh and the Board of the Commission, bribed the Committee with N30million to procure fair hearing (see documents).

Perhaps, what must have incensed the SEC boss may have been Mr. Hembe’s antagonistic posturing, which, in spite the hefty pay off from their steamy incestuous romance, still went to town with those sly details that appeared to dress the apex market regulator in robes it never wanted seen in public.

Interestingly, bribe givers and takers are equal in status before the court of equity, and whoever appears must do so with clean hands.

Therefore, if the House Committee and its chairman are grouped as villains, SEC and its director-general cannot be any different. The inconvenient truth is that if SEC can seduce lawmakers with a N30million bribe to bargain for fair hearing, little wonder investors were savagely ripped off and raped in the run-up to the 2008 market crash, while the regulator, whose responsibility it is to protect their interest, was busy in bed with some of the perpetrators.

 

GTBank SME MarketHub campaign