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Even
the coolest folks in the financial world sometimes lose their
composure. Arunma Oteh, director general of the Securities and Exchange
Commission (SEC) lost hers two Fridays ago when a reporter called for
her response on her agency’s efforts to cleanse the capital market.

Ms. Oteh, a public servant, was more interested in
how the reporter obtained her phone number than answering questions
about the agency that recently removed the Nigerian Stock Exchange
director general, Ndidi Okereke-Onyuike.

“I am telling you that I do not respond to calls
from people I don’t know and you are asking me when I would respond to
your text. This is invasion of privacy, even for security reason. It is
just not right. We have totally lost our culture in this country. You
just call somebody who does not know you and you expect a response,”
she said.

Ironically, the enquiry was supposed to highlight
the new bite that Ms Oteh has brought into the office especially as SEC
has been docile and nearly visionless for several years. But, six hours
later, perhaps after some reflective moments, her assistant called
apologising for his principal’s action and responded to the enquiries.

On August 5, when SEC removed Mrs. Okereke-Onyiuke
and suspended the president of the council, Aliko Dangote, quite a lot
of market operators and financial analysts applauded the move as one
that was long overdue. It came after initial opposition to the
appointment of Arunma Oteh as SEC director general on December 11,
2009. Some groups had taken the Federal Government to court for
appointing Oteh who they claimed does not have enough experience in
capital market which they considered requisite for the head of the
regulatory institution.

Profile

But Ms Oteh has over 16 years of capital market
experience including being the Vice-President (Corporate Management
Services) of the African Development Bank Group (AfDB). The portfolio
includes responsibility for overseeing the Language Services Unit, the
General Services and Procurement Department, the Human Resources
Management Department, and the Information Management and Methods
Department. She was appointed as part of a programme of institutional
reforms that are taking place within the Bank.

Previously, she was the Bank’s Group Treasurer for
five years in addition to working variously as Division Manager
Investments and Trading Room and Senior Investment Officer/Senior
Capital Markets Officer from 1993 to 1997.

Prior to joining the AfDB, she worked in corporate
finance, consulting, teaching and research for several institutions,
including the Harvard Institute for International Development, United
States, and Centre Point Investments Limited, a Lagos based
stockbroking and investment firm.

In the struggle against corruption, Oteh is known
to be an advocate of action not only at institutional and governmental
level, but also on the personal level. “We can only win the fight
against corruption if each and every one of us has zero-tolerance for
it. Each of us is a potential taker or a giver, and we need the courage
to say no,” she was quoted as saying in 2008 about her functions at the
AfDB.

It is this conviction that she has brought into
SEC, as her actions in the last few months have shown. Apart from the
intervention at the NSE, the commission has also concluded moves to
sanction about 260 stockbroking firms alleged to be involved in
unethical practices. An indication of her focus came last May in Abuja
at the International Conference on Good Governance and Regulatory
Leadership. In her keynote address, she observed that government’s
macroeconomic policies will come to naught if financial institutions
are not well governed. “Financial institutions which are poorly
governed pose a risk to themselves and also to others and could pull
down financial markets. Recent experience in the Nigerian financial
market attests to this fact.” She said capital markets and its
operators need to engender good corporate governance through their
disclosure, reporting and transparency requirements.

As part of moves to determine the true state of
affairs, SEC in April engaged a team from the US Securities and
Exchange Commission which compiled a confidential report detailing lax
oversight at the Nigerian Stock Exchange and the financial regulators.
The report detailed cases of bribery inside the Stock Exchange,
dysfunctional enforcement, “complicated and entrenched governance
problems”, “clear instances of insider trading and market manipulation
that resulted in no action”, and “woefully inadequate” surveillance, a
clear indictment of the NSE authorities. This prompted SEC to direct
the council to implement a clear succession plan and for the DG to
handover to a successor by June. But, a source at SEC said, “Remember
we had given the NSE till 30 June to complete this process. They
slipped, and asked for an extension till the end of July.”

Wielding the big stick

It was the failure of the NSE to carry out these
that prompted the SEC move, with Oteh revealing that the exchange has
not submitted its audited financial statement for 2009, a clear
violation of the SEC reporting rules. “The allegations regarding the
leadership and membership of the council of the exchange against the
NSE are very grave and that is why in our opinion, the SEC has decided
to take this step in exercising its powers under the Investment and
Securities and other applicable regulation.” This view was corroborated
by a senior stockbroker who spoke off record saying that the NSE
council which was supposed to call the NSE DG to order was unable to do
it.

Ope Banwo, a lawyer said the fact that two
principal officers of the stock exchange were heads of quoted companies
already showed that there was no transparency. “I think that beyond the
personalities recently removed, the public policy on the management of
the stock exchange should be formally changed to reflect the need for
transparency.”

“SEC is a responsible regulator. We cannot just
fold our hands and watch things go wrong,” said Lanre Oloyi, the
spokesperson for SEC in defence of its action. Mr. Oloyi said the
commission’s action was in line with its mandate to protect investors
and sustain confidence in the market.

To Mr. Banwo, SEC’s move was expected before now.
“The way Ndi conducted the listing and sales of shares in Transcorp
alone is enough for her to be removed if not prosecuted for misleading
the public. Yet, she continued to run the exchange for months after the
transcorp debacle.” He said the suspended president of the NSE council
had disobeyed the order of a competent court. “How do you even begin to
defend a man who was contemptuous of court orders on him before the
sack? It will be interesting if he willow expect the same court whose
previous orders he held in contempt to help him.”

He added that SEC as a responsible regulator must
be seen to have given the two individuals fair hearing.”I think the SEC
complied with the relevant provisions of the law and also afforded them
reasonable fair hearing. If they want to challenge that in court, I
believe that’s their right and we wait to see what the court has to say
on the points raised by Ndi.”

The SEC source explained that the former NSE DG
was given every opportunity to explain all allegations of infractions
levelled against her. “There is a clear provision in the ISA for giving
fair hearing and we did that with the DG and gave her an opportunity to
respond to allegations that have been leveled against her. We took that
response into consideration before the decision by SEC to remove her,”
the source added.

If Oteh continues in her strides, maybe there’s hope for Nigeria’s capital market eventually.