Thursday 10 September 2009

Nigeria: Between regulatory sanction and redress

A clash of egos

I have quietly but studiously observed stock market and banking events in Nigeria over the past few months exercising considerable restraint, avoiding comment for as long as I can.

However, what I write about today requires commentary and should elicit serious concern within the business community in Nigeria and other commercial interests that do business in Nigeria.

There has been an enduring tussle [1] between business moguls Aliko Dangote and Femi Otedola which resulted in a number of suits, allegations and investigations. One can view this as a clash of egos where the consequences would be grave on the bystanders.

Of proxies and manipulation

Aliko Dangote had allegedly employed a proxy Nova Finance & Securities Limited and its principal Eugene Anenih to manipulate illegally the shares of African Petroleum Plc of which Femi Otedola is the majority shareholder.

The allegation was reported to the Nigerian Security and Exchange Commission (SEC) that found against the proxy and exculpated Aliko Dangote.

In their findings and judgement, Nova Securities was barred for one year from capital market activities and fined; the principal was barred for five years, fined and referred to the Economic and Financial Crimes Commission (EFCC).

This all seemed above board, but the alleged proxy took his case to the Investments and Securities Tribunal where the aggrieved as a result of SEC sanctions can seek redress.

Redress addresses and acquits

What is so worrisome as reported by Next Newspapers [2] is that the tribunal found completely in favour of the proxy plaintiff and it makes one wonder how the SEC could have gotten it so spectacularly wrong that all its sanctions might well be reversed and they might also have to pay a hefty compensation for the loss of business and besmirching of the name of the proxy.

The job of regulation is definitely not an easy one, it is almost forgivable if the SEC was caught napping on the job, but to have engaged and investigated a case and reached conclusions that found no support whatsoever in the redress process leaves much to be desired in many ways as well too many questions in the minds of the many who rely of such organisations to ensure markets operate fairly, honestly, reputably and efficiently without let or hindrance but useful oversight.

I do not know if Mr Anenih is the son of some bigwig in Nigerian politics, though that is beside the point in usually patronage-driven Ngeria; but I would proffer that he probably got caught up in a skirmish between titans and literally had his head bitten off.

The need for confidence

Interestingly, this matter has been resolved at the first rung of redress at the tribunal before it got to vegetate in the justice system where the winners are usually those with the best advocates and the means to retain them.

In all, one then wonders if the SEC is well awake to its responsibilities in being vigilant and is verifiably no respecter of persons in their investigations where the supposed proxy looks like the scapegoat. Further activity needs to be executed in determining if the share slide of African Petroleum between February and March 2009 was a result of routine market movements or the deliberate activities of a miscreant who has gotten away with a killing.

Nigeria cannot afford to have its banking and market activities in flux where regulation, investigation and sanction when subject to objective scrutiny is found to have no basis in due process and justice.

It would not remiss to require that all regulatory agencies work hard to build confidence in their activities such that the business community can boldly engage the markets and commerce for legitimate ends.


[1] Duel of the Oligarchs,Otedola Vs Dangote & the winner is….. - news

[2] AP shares: "you did no wrong" tribunal tells Nova securities |

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