From 9 November, Nigeria’s Securities and Exchange Commission is to call stockbrokers and other market participants before its Administrative Proceedings Committee (APC). This is part of joint investigations into the financial sector, which have already led to the firing of chief executives and top management of 8 banks for recklessness and lack of governance, and a Naira 620 billion (US$4.1 bln) bailout programme.
The SEC is to “invite some capital market operators to its APC hearing, to explain their roles in unwholesome practices in the market”, according to SEC’s Head of Media, Lanre Oloyi. “At the end of the hearing, the Commission would impose appropriate sanctions on erring operators found to have engaged in acts that have brought disrepute and erosion of investors’ confidence to the capital market.”
The hearings follow a report submitted by SEC investigators into transactions including those of the bailed out banks. The SEC, the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) formed a joint investigating team.
Troubled banks include Oceanic Bank International, Afribank Nigeria, Union Bank of Nigeria, Finbank and Intercontinental Bank, bailed out with N420 billion, after their executive management teams were sacked on 14 August. The non-performing loans book has been found to be more than the initial N747 billion. Chief executives were also replaced on 2 October at Bank PHB, Spring Bank and Equatorial Trust Bank and they received a N200 billion injection. Unity Bank and Wema Bank were ordered to recapitalize by June 2010.
The CBN released the list of debtors. These included capital market operators, many accused of using borrowed funds to manipulate share prices on behalf of the various banks, including borrowing to buy up the banks’ shares, ensuring steady price appreciation. Peter Ololo, chief executive of Falcon Securities Ltd is alleged to owe the five banks about N88 bln and Bank PHB N201.266 bln. Banks also used their capital market subsidiaries to borrow money, include Platinum Capital (owing N11 bln), PHB Assets Management (N6.5 bln), Wema Securities & Finance (N6.1 bln) and Wema Assets Management, (N8.1 bln).
The equity price crash since March 2008 has led to huge non-performing loans. The arbitrary pricing of equities that resulted from the manipulation disturbed investors and wrecked confidence, compounding Nigeria’s crash.
Based on reports by This Day, Daily Independent and Daily Champion newspapers.