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Analysts are raising eyebrows over the reassignments of portfolios in the Securities and Exchange Commission (SEC), announced by the Finance Minister Kemi Adeosun, which is seen as having a negative impact on market confidence due to a perceived lack of independence of the Capital market regulator.
This follows the appointment of two acting DGs by Adeosun in less than five months.
“Market confidence is already affected, what should be done now is to regain it,” Bismarck Rewane, CEO of economics consulting firm, Financial Derivatives told BusinessDay by phone.
The Federal Government of Nigeria through the finance minister appointed Abdul Zubair as the acting Director General of SEC on 3rd of December 2017, to replace the suspended Mounir Gwarzo, the former Director General of the commission.
This was however followed by the appointment of a new acting DG of SEC on Friday 13, April 2018, by the finance minister, as announced through the Special Adviser, Media and Communications. This brought forth Mary Uduk as the assigned DG to head the commission.
“Overtime, foreign investors will worry over independence of the market. This is inappropriate and it is uncalled for. The integrity of the financial market is at stake,” an analyst who asked not to be quoted said.
“This is a major negative development, it speaks to inconsistency in Nigeria’s regulatory environment, as there is too much uncertainty in the financial market and it is not good for the image of the sector. Only the president has the right to assign a new acting DG and so why is there a breach of protocol?”
Two other analysts familiar with the issue expressed concern about the damage such an action could have on the Nigerian capital markets due to the appearance of state capture by a firm and inability of an independent regulator to conduct investigations on a firm it regulates.
It is in that light they viewed the allegation of interference by the Minister of Finance on the probe of Oando Plc by the Securities and Exchange Commission (SEC) as worrying.
“Without prejudice to authenticity of the allegation against the former SEC DG Gwarzo, I feel the timing of the suspension raises questions about the real intentions of the minister and I hope the appointment of the new DG will not interfere with the ongoing audit of the Oando firm.” one of the analysts who preferred to be anonymous due to the sensitivity of the case said.
“The minister is acting under delegated authority. The president should be encouraged to resolve the issue of the suspended DG but if the issue cannot be resolved, a new DG should be appointed who will be confirmed by the senate so when assigned to head the commission, he or she will no longer be subjected to any change,” Johnson Chukwu, MD of Cowry Asset said.
The minister of finance suspended Mounir Gwarzo, the former DG of SEC, based on the allegations that he did not follow public service rules. The suspension letter also stated that he collected the sum of N104.8 million as Severance Package against the advice of the then Acting Head of Legal Department, allegation of being a Director of Medusa Investment Limited, alleged Directorship of Outbound Limited and general procedures on procurement process in SEC.
His suspension as the head of the commission was however seen as unlawful, corrupt and against the public service rules by some activists.
The minister of finance had insisted that the suspension of former SEC DG was in order to build the level of confidence in the capital market; she said this in a joint hearing by the House of Representatives to probe into the circumstances that led to the suspension of the DG.
The finance minister was of the opinion that Gwarzo was suspended in accordance with the Public Service Rules (PSRs) 03405 and 03406.
Gwarzo denied the allegations based on the fact that the alleged severance package was his entitlement while he served as the Executive Commissioner (Operations) of SEC which was duly authorized by law and the requisite resolution of the Board of the Commission and on the issue of the ownership on the companies, he relieved his duties as the owner once he resumed office as the executive commission and director of SEC.
He however revealed in a statement that the whole controversy started when SEC received a petition from Ansbury Investment Inc and Alhaji Dahiru Mangal, on May 2 and May 4 2017 regarding Oando Plc. SEC reviewed the petitions and constituted a technical committee to examine the allegations. The Technical Committee submitted its report to the standing Corporate Governance Committee of the SEC. On 5 October 2017, the standing committee reviewed the report of the Technical Committee and recommended a forensic audit of the activities of Oando Plc.
This led to the technical suspension of the stock of the oil firm.
The NSE however, on Wednesday 11 April lifted the technical suspension placed on the shares of Oando Plc, following a directive from the Securities and Exchange Commission.
The bourse said it had to suspend trading in the company’s shares the same day after SEC rescinded its earlier decision to lift the suspension but however lifted it again by Thursday, April 12. The Exchange explained that they reinstated the technical suspension based on a new directive from SEC. This threw the financial market into chaos.
“The forensic Oando audit should be completed and whatever is seen as a result should be tackled,” Bismarck concluded.
Meanwhile, groups under the aegis of the Proactive Shareholders Association of Nigeria (PROSAN), Trusted Shareholders Association of Nigeria (TSAN), and the Oando Shareholders Solidarity Group (OSSG), vowed to resist any attempt to frustrate the on-going forensic audit of the company, now in its third week.
Oando shares rose 9.27 percent on Tuesday 17 2018, to close trading at N8.25 per share, extending gains since the suspension was lifted on April 11.
ENDURANCE OKAFOR
