For lessons in how not to build investor confidence, look no further than Abuja. A public hearing into the inability of the capital markets to recover strongly from the 2008-09 stock market crash began in the capital last week – a good thing, one might think.
Instead, the sessions quickly degenerated into a damaging confrontation between chairman of the House of Representatives Committee on Capital Markets, Herman Hembe, and the director general of the Securities and Exchange Commission, Arunma Oteh (pictured), who traded accusations of bribery on live television.
Oteh, who in January 2010 was tasked with cleaning up the financial markets, arrived at the hearing to make a presentation on the reasons why the Nigerian Stock Exchange (NSE) fell more than 70 per cent in less than a year. In summary: irresponsible bank lending; lax risk management by brokers; widespread market abuse and poor oversight by some senior NSE staff who were too busy rewarding themselves with epic travel allowances, Rolex watches, cars and even a yacht.
Soon, however, Oteh found herself in the dock. Among other things, she was questioned by Hembe about allegedly spending 850,000 naira (more than $5,355) on a meal and having four cars purchased for her use.
Oteh, a steely woman who is well respected in local financial circles, was furious. First, she strongly rejected the accusations: the restaurant bill came to around 85,000 naira ($535) for a meal with international finance experts, the SEC said; and she only has two cars allocated to her, one each for the commercial capital Lagos and Abuja.
Oteh then turned the tables on Hembe, accusing him of having sought cash bribes from the SEC. Hembe countered that the SEC had in fact tried to bribe him, which the regulatory body swiftly denied.
With the hearing in disarray, Hembe resigned from the lawmakers committee and said he would go to court to clear his name. The national assembly then asked the entire committee to step aside, in favour an ad hoc body.
Oteh appears to have emerged on top – for now. One fund manager in Lagos believes she will face more challenges after upsetting powerful business and political figures who oppose transparency in the financial markets.
“It’s a victory, but the war is not won,” he said. “We have not seen the end of this.”
What a way to improve the standing of Nigerian markets.
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