I had worked in a Nigerian Bank for about 2 years between 2005/06 and admired Soludo and Okereke-Onyuike in the beginning. As a BDO within that period, I advised clients to invest in stocks as well as used some of my own money to do the same. By the time I left the bank, I was less naive about how these things worked.
Some of that experience was what fed into writing the character of Edward in AHTM and setting the book in 2006. That year was quite a volatile one for the financial institutions in Nigeria, some of it good, some bad.
Just before I quit, my bank had just gone public, and employees were getting delayed salaries, and our bonuses were arbitrarily being converted to shares and stock of which we never saw certificates. There were rumors of margin trading, insider dealing, etc. By the time I checked on my stock investments by 2009, it was back to square one, and in some cases, ground zero.
Now, the truth is coming out gradually;
"The extent and nature of the market abuses carried out between 2006 and 2008 are primary reasons for the continuation of the investor apathy that we see today," Oteh said
The financial crisis saw shares lose 60 percent from market peak at the end of March 2008 to the same month a year later. The central bank had to bail out nine banks at a cost of $4 billion.
"There were incidences of financial skimming, misappropriation, false accounting, misrepresentation, and questionable transactions," Oteh told the hearing.
The stock exchange bought a yacht for 37 million naira ($235,300) that was meant to be presented as a gift during a 2008 award ceremony, yet there are no records of the receiver.
It also spent 186 million naira on 165 Rolex wrist watches as prizes, but only 73 were actually presented. "The outstanding 92 Rolex watches valued at 99.5 million naira remain unaccounted for," Oteh said.
Oteh noted that it was the banks' dealings in the capital markets that largely led to their demise.
Abuses included banks borrowing money to buy their own shares, misusing banking funds to fund fuel import companies owned by its directors and buying and selling the bank's own shares in short-term plays to turn a profit. [Source]
But Ndi Okereke-Onyuike is not taking the allegations sitting down. She's throwing her own punches. According to her,
the government regulators; the Central bank of Nigeria (CBN) and the Security and Exchange Commission (SEC), failed to provide any guide lines for margin loans which she said banks used to speculate on share prices.
“It was margin loans that led to the collapse of the Nigerian Stock Exchange, nothing more” she affirmed as she blamed the failure of the regulatory bodies to fulfill their responsibilities.
Professor Okereke-Onyuike in her presentation, largely blamed the banks for solely being responsible for the collapse of the capital market as she accused the CBN and the SEC of failing to protect investors when margin loans were indiscriminately given out by commercial banks.
She noted that the CBN cordoned the banks establishment of several arms, such as their own registrars, which they will now use when they want to come to market for a public offer. “We opposed the banks using their own registrars whenever they come to the market for offers” she said.
She also accused the SEC, of illegally collecting money from the stock exchange and market brokers to fund its regulatory activities.
Responding to the allegations levelled against the council of the NSE on Monday by SEC’s DG, Dr Arunma Oteh, that the council spent N138 million on wrist watches and N39 million on yachts, Professor Okereke-Onyuike, stated that it is unfair for the SEC to accuse the NSE of mismanaging its finances when the SEC was one of the beneficiaries. [Source]
My problem in all this is that I still don't see light at the end of this tunnel. Okereke-Onyiuke has been sacked since 2010 and yet not much has been done to prosecute her for fraud or whatever, or even to stabilise and develop the sector.
Instead, these recent SEC accusations are borne by DG Arunma Oteh, who has still not explained the allegations of financial mismanagement leveled against her.
I'm beginning to think this all a drama to entertain Nigerians, or is there something I'm missing?