![](https://www.informationng.com/wp-content/uploads/2012/06/Arunma-Oteh-300x187.jpg)
Following allegations of financial impropriety, Ms. Arunma Oteh, Director General of the Nigeria Securities and Exchange Commission (SEC), has been ordered to proceed on compulsory leave in order to pave the way for an investigation into her tenure as the head of the commission.
The Executive Commissioner, Operations, Ms. Daisy Ekineh, is to take over as acting Director General and Chief Executive.
This decision was reached by the Board of the Securities and Exchange Commission after a prolonged meeting lasting till late Monday night.
![](https://www.informationng.com/wp-content/uploads/2012/06/Ms-daisy-ekineh-acting-DG-SEC-300x202.jpg)
Ms. Oteh took over as Director-General of the Commission in 2010 after her predecessor, Musa Al-Faki resigned on the heels of another financial scandal involving the commission in the sale of AP stock in May 2009. Ms. Ekineh again acted as DG in the interim until Oteh’s appointment in January 2010.
Specifically, the board of the commission will like a probe into allegations of financial impropriety especially concerning the SEC Project 50 to mark the regulator’s 50 years of existence in Nigeria and disharmony in the regulator of Nigeria’s capital market which led to the probe of the capital market by the House of Representatives.
Ms. Oteh has however reacted that the move was nothing but a ploy by the board members to elongate their tenures. Their tenure is supposed to expire officially on Friday, June 15.
The SEC Board has Udoma Udo Udoma as Chairman, eight executive and non-executive members including Daisy Ekineh, as Executive Commissioner (Operations); Lawal Stores, as Executive Commissioner (Finance & Accounts); Charles A. Udora as Executive Commissioner (Legal & Enforcement).
The non-executive Commissioners include Yahaya Ali and Ronke Fatade as well as Daniel Kifasi representing the Federal Ministry of Finance and Christopher Chukwu, representing the Central Bank of Nigeria (CBN).
FULL TEXT: The petition that cost Arunma Oteh her job
Posted by editor | at 2:26 PM | 0 comments
Embattled SEC DG Arunma Oteh
The Securities and Commission is the Apex Regulator of the Nigeria Capital Market. It has the vision of becoming the leading capital market regulator in Africa. Its mission is to develop a capital market that is dynamic, fair, transparent and equitable to contribute to the nation’s economic development.
Broadly, the commissions mandate is to regulate and develop the Nigerian capital market in accordance with the provision of Investment and Securities Act.
In carrying out these functions, the commission is expected to enshrine, maintain and sustain investor confidence in the market. All stakeholders rely on the commission’s ability to formulate rules and regulations that will ensure fairness, accountability, transparency as well as good corporate governance in the market. It is important to state that the Securities and Exchange Commission is a vital agent for the Federal Governments macro-economic management and therefore its stability, consistency, functionality and astuteness in the performance of its regulatory mandate should never be compromised.
Recent development in the Nigeria Capital Market, which culminated in the removal of the leadership of the Nigeria Stock Exchange, requires an ardent and virile regulatory regime, for the desired investor confidence to be sustained.
However, following the appointment of Ms Arunma Oteh as the DG of the Commission, who formally was working with the African Development Bank in Tunisia, and whose appointment was received with cheers and enthusiasm by the Commission’s staff and other stakeholders in the market, there were high expectations upon her resumption in January 2012, as she promised to bring about positive changes and carry everybody along.
On the contrary, recent developments in the Commission clearly indicate that Ms. Arunma Oteh came with a different agenda, which from all indications is not in the best interest of the Commission in particular and the capital market in general.
The following catalogue of the issues will corroborate the above assertion:
*Gross incompetence, lack of Organisation and un-necessary delays in handling operations activities of the commission.
As you may be aware, the operation arm of the Commission does the core regulatory activities of the Commission that enable it to effectively carryout the regulation and development of the Nigerian Capital Market. Therefore, the speed with which operational issues are handled, determines how well the market operates. This is because the capital market is a market driven by time factor and therefore, any delay in delivery of issues will lead to multiplier effects on the investors, Capital Market operators and indeed the economy.
Every securities issue is time bound and any unnecessary delay in processing an issue may lead to a failure of such issue. The investors who may have been contacted and indicated their willingness to invest will change their positions if there is long delay. As there are competing investment opportunities, and they may put their funds somewhere outside the Capital Market.
Due to lack of cogent experience in Capital Market operations, the Director-General of the Commission does not value time as vital in granting approval for Capital issues and other operational activities.
Before her assumption of duty, applications for Security issues took an average of two days to be approved by the past Director Generals, today, some applications take minimum of two Months. This unfortunate situation constituted a great deal of pressure on the issuers and issuing houses, which leads to information adjustment by the issuers and issuing houses.
It is important to note that the Securities and Exchange Commission is one Parastatal in Nigeria that has highly trained and experienced Staff that are passionate in carrying out their duties. However, due to incompetence, intransigence, procrastination, arrogance and stubbornness, the Director General, has persistently refused to work in harmony with the Board, the Executive Commissioners and the entire Members of staff of the Commission. Rather, she depends largely on few inexperienced Staff she had illegally employed. This has grounded the Commission’s operations.
Today, the morale of the staff has gone down drastically at all levels of the Commission’s staff cadres. She operates the Commission as if she is the sole administrator. Most decisions were taken unilaterally and other members of the Executive were merely informed. Due to the fact that she incessantly and frivolous travels, there are many operations reports sent to her, which requires her urgent attention, but remain unattended to.
Some of the operations reports has been in the Director General’s office for over six months and above. This has affected the image of the Commission, which is supposed to lead by example. As a matter of facts, the Commission has a rule which gives time threshold for capital market to submit their report and where they delay, they are charged appropriate penalty, if the office of the Director General of the Commission is committing same offence against the Operators and other stakeholders in the Capital Market.
To this end, it will not amount to an overstatement to say that since Ms. O. Oteh has been appointed as the Director General of the Commission in the last two years, there is no tangible or intangible value that she has added to the Commission to enhance its operational performance. The market kept on failing in volume and value. Notwithstanding, unprecedented number of Consultants appointed by the Commission, no improvement has been recorded in any form, except that millions of naira has been paid to the so called consultants.
*Investigation of failed Banks and the abrupt stoppage of APC hearing.
The Commission in August 2008 was involved in the investigation of the five failed Banks i.e Afribank Plc, Intercontinental Bank Plc, Finbank Plc, Oceanin Bank Plc and Union Bank Plc. The Commission carried out the investigation in collaboration with the EFCC, CBN and SSS.
The role of the Commission in that national assignment was to find out the role of the Capital market operators in the reckless lending by the Banks. The Commission played a key in the investigation and alot of findings were made. The essence was to determine how the recklessness of the banks contributed in making shareholders lose their investments and who the key culprits were.
At the end of the investigation, a comprehensive report was submitted to the then Director General of the Commission (Malam Musa Alfiki) and he gave a directive for an administrative proceedings on the matter, to take a civil decisions on those capital markets operators involved. While the APC processing was going on, Malam Musa Alfaki left the service of the Commission and Ms. Oteh was appointed.
When Ms. O. Oteh assumed duty, she was advised by one Mr. Simeon Obadiaro, who was appointed a Director by her, to revisit the investigation and some new set of staff were commissioned to carry out the same investigation. The second investigation did not bring out anything new, but the administrative proceeding was abruptly brought to an end on the day the decision was to be made on the matter.
The next thing that was heard was the transfer of the cases to investment and Securities Tribunal (IST). However, IST as an appeal agency does not have primary jurisdiction on the matter. It is only when a decision has been taken by the Commission and some parties are not satisfied, they can then appeal to the IST for a second hearing. The Commission does not on its own transfer a matter before it to the IST. It therefore, came as a surprise when the Commission took such a decision.
Since the matter was sent to the IST, nothing on it.
Today, the shareholders of these banks have lost their investments, as the banks have been taken over by NDIC and core investors were invited to buy into them. This development has a negative effect on investors’ confidence, as people no longer their investment in those banks. What remains to be asked of the commission’s Director General is; what informed her decision to stop the APC Proceeding and send the matter to IST.
What explanation can she provide on the fate of those investors who invested in those banks? Why would the Commission abdicate its responsivity of protecting the investors in these banks for no fault of theirs?
*Approval of payments beyond he approval limit/authority.
The Director General does no take into consideration the policy on approval limit and threshold issued by the Bureau of public procurement and thus, approved various expedition beyond her approval limit of N2.5million.
For example, she approved N7,384,006.25 in December, 2011 for media publicity support for the maiden Capital Market retreat in Uyo Akwa-Ibom State. (See anex 3A & 3B). She also approved N10,179,00 paid to Message Wise Limited without evidence of due process in awarding the contract for assisting the Security and Exchange Commission on a 3-day issuer/investor outreach programme in Port Harcourt, River State (see anex 4A & 4B).
The Director General also approved for herself a two rent of N66million for her Official residence at Maitaima District. The house for which the rent was approved was not known to anybody in the Commission and thus there was no prior inspection of the house before payment was made.
Subsequently, the Director General further directed that additional payment of 66million be made to make it four years rent for the unknown property. The attention of the Director General was drawn to the Federal Government Monetization policy urging her to return the initial payment of N66million to the Commission, but she did not take it kindly. This is a proof that the Director General whimsically take decisions that exposes the Commission to enormous financial implications without due process.
*Huge Hotel Accommodation Expenditure
Prior to the illegal approval of the N66million two years rent, the Director General spent a whooping sum of N30million at the Transcop Hilton Hotel, during her unnecessary long stay in the Hotel. There is no justification for such a use of Public funds when residential accommodation abounds in Abuja.
If the N66million she approved for her residential accommodation was not returned by the agent, the commission would have been made would have been made to incur a whooping sum of N92million on the accommodation of the Director General alone (see annex 5).
*Excessive Travel Expenditure.
The Director General habitually incures travel expenses for both personal and official trips on the account of the Commission. She had from time to time requested the Commission to deposit N1million each to two local airlines and with that pre-payment goes on frivolous trips without internal processes being followed on the travel expenses.
In line with internal Control Process in every government establishment, the travel by any officer at any level start with the request, approval and clearance by internal audit of the organisation to ensure that the trip is legitimate thereafter, it is forwarded to the account department for payment.
Therefore, the pre-payment made to Airlines is absolutely a violation of public service process. It is important to state that some time in the Director General travel abroad with NYSC members serving in her office. This is contrary to the policy of the Commission, which permit only Assistant Managers and above to travel abroad officially.
*Purchase of Director General’s Motor Vehicles.
The Director General approved and purchased 2-Nos Toyota Land Cruisers at the cost of N37,555,555.56million and 1No Toyota Pick-up, Hilux Double Cabin Pick-Up used as a pilot car at the cost of N5million. This is despite the federal Government policy on Monetization of official Motor Vehicle for Public Officers.
Even though Tenders Board meeting were scheduled, but each time the Director General who is the Chairman was invited, she failed to attend. However, on Saturday December 18, 2010 an email from Mr. Adeleke Omotayo, a contract Director in the office of the director General, conveyed the directive of the Director General to the head of Administration of the Commission, asking him to buy 2Nos Black Toyota Land Cruiser Jeeps and 1No Toyota Hilux Double Cabin Pick-Up for the director General by December 31, 2010. (See annex 6A & 6B).
This expenditure was not approved by the Tenders Board of the Commission. It is important to point out that as at the time the Director General made the request for the 3-vehicles, the other members of the Executive management, the newly appointed Directors for the Commission as well as the existing Directors were equally supposed to be paid similar entitlements. Surprisingly, she refused and insisted on for her own.
Indeed, of recent, she made a request for two additional vehicles, but was turned by the Internal Control Department for lack of cogent justification (see annex 6).
*Irregularities In Staff Employment.
It is possible knowledge that the Director General had recruited thirty-one (31) staff ranging from Senior Supervisors to Directors without formal interviews and Board approval as applicable.
Contrary to the commission’s staff manual provision in chapter (2) page (5) item (2) and I quote “Recruitment of Senior Staff is the responsibility of the Board and Junior Staff by the Executive management of the Commission”. However, this policy was and is still being undermined by the current Director General of the Commission.
All categories of senior staff were illegally recruited unilaterally by the Director General, without recourse to staff manual and the Board of the Commission. For instance, two full substantive Directors, four Deputy Directors, and one Assistant Director, two Assistant Managers, (19) Senior Supervisors that were engaged.
However, some of the Senior Supervisors that were engaged on Contract were disengaged when their contracts expired in December, 2011.
The positions of Assistant Directors and above are by the policy of the commission and indeed that of the Public service supposed to be filled by the Staff within the Commission, who have been working for over a decade and enthusiastically looking forward being promoted to those positions. It is only after promoting those deserving staff and there existed additional vacancies, which will require giving opportunities to outsiders that the need for it may be considered. In all cases, the Board of the commission must review and approve such appointments before they are made (see annex 7A & 7B).
In a similar manner, the Director General engaged the services of Messrs KPMG professionals to recruit (10) additional Directors vide an award Letter dated October 22, 2010 at the cost of Eleven Million (11,000,000) naira only. The process was abruptly aborted by the Director General after payment of more than half of the contract sum to KPMG and without recourse to the Tenders Board that approved the earlier recruitment contract, the Director General vide a memo dated January 17th, 2011 approved the engagement of two consultants i.e Executive surf and Phillips Consulting to conduct the same exercise, at a fee twice higher than the previous contract cost without recourse to due process (see annex 8).
It is therefore, the conclusion of the existing staff of the Commissioner that the Director General has the intention of frustrating them and pushing them to the brink to either resign or retire forcefully.
It is important to note that by the provision of section 3 (2a) of ISA 2007, which clearly states that “In the case of the Chairman or Director General, he/she should be a holder of a University Degree or its equivalent with not less than 15yrs cognate experience in Capital Market operations. By the provision of this section of ISA, the current Director General of the Commission is not fit to occupy that position. Therefore, what is going on in the Commission is a perpetuation of illegality in all its ramifications. It has also been noted that the Director General of the Commission issued a directive to the effect that only graduates from certain universities particularly private universities should be accepted for NYSC in the Commission. This is totally against the Federal Government Policy.
*Massive fraud in Financing of project 50 Celebration (50years of Capital Market Regulation).
Under the guise of celebrating 50th anniversary of the Nigerian Capital Market, the Director General Ms. Arunma Oteh forcibly sought and obtained donations from banks and Capital Market Operators amounting to N1billion, which was lodged in private accounts contrary to the provisions of Part 1V, section 19(1C) of the Investment and Securities Act (ISA) 2007, which requires all monetary gifts, donations, contributions and other funds received by the Commission to be paid to a fund or accounts established by the Commission.
In addition to the donations received, about N200million was spent on this one day event from SEC’s account without proper accounting and due process. It is from this sum that over N42million was paid to Transcop Hilton Hotel for accommodation and other services.
The details of how the N42million was utilised had still not been made known to the Executive Commissioners and the Board, neither had the funds been retired despite the instance of the Commissioners and the Board that the funds be accounted for and duly retired. Is is important to put on record that the N42million spent on Hotel Accommodation and Services was queried by the Bureau of Public Procurement for not following due process. (See annex 1A & 1B).
From the information gathered, Zenith Bank donated the sum of N50million, Chapel Hill/Denham Stoke Brokers, N100million, Access Bank N100million while First Bank paid for the Services of QUOVADIS who was the Project-50 Consultant engage by the Commission, also without due process of competitive bidding as required by the Public Procurement Act. In addition, First Bank also gave an unspecific amount.
The Director General also obtained donations of N25million to produce a Nollywood Movie (Breeze) despite the advice of the Administrative Department that the cost was on the high side. The amount so donated did not hit the Commission’s Account neither did the award of the contract pass through due process as required by law. (See annex 9).
There was a donation of N2.5million by Africa Financial Corporation. Invoices for predetermined amounts were forwarded to the donors to settle directly. (See annex 2). This is contrary to the provisions of Public Procurement Acts, which requires that all procurement by Public Agencies/MDAS must pass through due process of Advertising and selection of preferred bidder. However, nobody can tell where the amounts so donated were donated, but it is strongly believed that the monies were paid into private accounts of the following who are cronies of the Director-general. Most of whom were illegally employed staff in the Commission:
1. Orisabiyi Titilope- Senior Manager DG’s office who is less that 6months in the service of the Commission and seconded from Access Bank Plc. He is also made the chairman of Project 50 Committee, which comprised of AD’s DD and Directors who are far his seniors, by strangulated to serve under him, by the Director General.
2. Tunde Kamal– Senior Manager- DG’s office.
3. Sanson Eyo–DG’s office
4. Franca Chukwugor– Deputy Director-DG’s Office
5. Obi Adindu–Deputy Director- DG’s. Office.
All approvals for the expenditures were unilaterally done by the Director General without recourse to other members of Executive Management nor the Board of the Commission.
*Interventions:
The scenario painted in this submission depicts the true situation of the Apex Regulatory house of the Nigerian Capital Market. It is a picture that is daily becoming gloomier. The leadership of the commission of the Commission is definitely not leaving up to expectation, particularly at this time when the Market is at its lowest ebb. As you know, only 2years ago, the Director General of the Nigerian Stock Exchange was removed for reasons of Corporate Governance. Incidentally, Ms. Arunma Oteh carried out that assignment. However, the current situation in the Securities and Exchange Commission is that of a hunter that need to be hunted.
As the custodian of Corporate Governance code, her actions and behaviour does not portray her as an exemplary Leader in the Nigerian Capital Market. Based on the issues raised in the body of this petition, we fervently appeal for immediate intervention in the following area:
1. That the Director General of the Commission be prevailed upon to disengage all the 31 staff she unilaterally employed, without recourse to the Executive Management Committee and the Board of the Commission.
2. That the Director General must be prevailed upon to shelve her intention to employ 9 Directors. This is because there exist suitably qualified and highly experienced personnel who can be promoted to those positions. In a nut shell, there is no vacancy in the Commission for these positions.
3. The Director General should be requested to stop unnecessary trips that have not brought any applicable be benefit to the Commission. She should be on her seat and understand the workings of the Commission as the Apex Regulator of the Nigerian Capital Market. A lot of the expenditures of the Commission did not follow due process. There were lots of illegal approvals which were above the approving powers of the Director General, but which she did with impunity.
This is the plight of the Staff in the Securities and Exchange Commission, who are passionate and diligent in carrying out their duties, but are held hostage by a gang of incompetent, inexperienced and greedy fellows made up of Ms. Arunma Oteh, Mr. Obi Adindu, Mr. Adeleke B. Omotayo, Miss Cynthia, Miss Franka Chukwugor, Mr. Tomi Oni and Charles Ughele who are the only trusted staff that are running the Commission.
Apart from these illegally engaged Staff, the Director General does not consider any other staff, from the Executive Commissioners to the Securities Personnel fit to work in the Commission.
The funny thing however is that since the coming of Ms. Arunma Oteh, one cannot point out anything new she initiated at improving the operational efficiency of the Commission, but she is busy telling anybody who cares to listen that the staff of the commission are not competent. We are therefore, asking for justice between the staff of the Commission and the Director General Ms. Arunma Oteh.
Leading Questions:
1. When hotel bills for accommodation and services were paid for from the Commission’s account, what other expenditures attracted such huge sums as to require asking for donations of hundreds of millions from banks entities regulated by the Commission?
2. The advantage of asking the donor to pay to a third party is to avoid due process, raise fictitious invoices in which case no goods or services were received. Did the invoices pass through competitive bidding?
3. The list of donors and invoices settled should be provided so that the identity of the people behind these vendors can be traced at CAC.
4. What were the methods of selection of the vendors? Is it in line with Public Procurement Act or someone just handpicked them?
5. Did the award of contract for Nollywood Movie (Breeze) pass through due process before it was funded by the donor? How was the preferred bidder chosen and who were the bidders?
On Failed Banks:
6. What informed the decision of the Director Gener of the Commission to stop the Administration Proceeding Committee Hearing from taking the final decision on the failed banks investigation?
7. What is the rationale for transferring the hearing to the Investment and Security Tribunal (IST) knowing full well the agency has only an appeal jurisdiction and not primary jurisdiction on such matters?
8. Why would the Commission abdicate from its responsibility of protecting the investors in these banks by abruptly stopping hearing?
9. With the takeover of these banks by NDIC and the creation of bridge banks, which will eventually be taken over by core investors, what happened to the investment of existing shareholders?