Monday, 14 May 2012

Nigeria: SEC castigates bourse during Committee testimony

The on-going investigative hearing by the Ad-Hoc Committee of the House of Representatives investigating the near total collapse of the Nigerian capital market has continued to throw up revelations about the workings of the stock exchange, its operators and regulators.

Appearing before the Ad-Hoc Committee on 7 May, the Director General of the capital market regulator, the Securities and Exchange Commission (SEC), made certain revelations about the numerous financial infractions committed by the management of the Nigerian Stock Exchange (NSE), which had been led by Ndi Okereke-Onyuike until her removal by SEC in 2010.

According to SEC's Arunma Oteh, it was found that the NSE was riddled with incidents of financial scheming, misrepresentation, false accounting, misappropriation and questionable transactions. For instance, it was found that NSE bought a yacht for N37 million and wrote down the book value within one year by recognising it in its books as a gift presented during its 2008 long-service award, yet there are no records of the beneficiary.

The NSE also spent N186 million for the purchase of 165 Rolex wristwatches as gifts for awardees, of which only 73 were actually presented. The outstanding 92 watches valued at N99.5 million remain unaccounted for.

An SEC Inspection team to the NSE also made the following findings: weaknesses in corporate governance; weaknesses in risk management; weaknesses in internal control; insufficient oversight of brokerage firms and listed companies; and inability to enforce the rules.

The inspection team further found that more than 2,700 investor complaints lodged at the NSE had yet to be treated. These complaints ranged from unauthorised sales of shares to withholding of proceeds of sale of shares. It also found that the NSE investor protection fund was not being properly administered.

For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2012 Menas Associates

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