Capital Market probe bribe scandal: How SEC cavorted House Committee

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Code of Conduct Bureau

It has just emerged that the Securities and   Exchange Commission (SEC) offered to bankroll the on-going public hearing on the Nigeria Capital Market with a  prepared budget of N30,418,800.

The amount was already presented for approval from the Finance Department of the Commission and sent for approval by the Director-General, Ms Arunma Oteh.

A secret memo released in Abuja indicated that  SEC initiated the move to sponsor the controversial public hearing with a N30.4m budget, pleading that they willingly wanted to lend a helping hand to help the Commission in the hearing.

Herman Hembe, the Chairman of the Commission stepped down on Tuesday following allegation by SEC Secretary General Oteh that the Committee requested for a sum of N44million prior to the commencement of the hearing.

The emerging memos from  SEC  to the House Committee now  provide more insight into how the deal was initiated and  struck.

A memo issued on  March 9, which emanated from the office of the Senior Supervisor (CA) in Securities Exchange Commission, Hassan Mamman, and forward to the Director General  of SEC,  Arunma Oteh reads:

“RE-PUBLIC HEARING ON THE NIGERIAN CAPITAL MARKET 

“Please, recall that the commission received a letter of invitation from the leadership of the House of Representatives Committee on Capital Market inviting the management of the commission to a public hearing on the Nigerian Capital Market slated for March 13 – 30, 2012.

“The leadership of the Committee had also earlier advertised the hearing in some national dailies in which other stakeholders were also invited alongside the commission to the three-week long event.

“The department had suggested to the management the need to support this great effort of the National Assembly to finding a lasting solution to the challenges facing the Nigerian Capital Market.

We were then mandated to approach the committee with a view to finding out the areas where such support is required.

“The committee welcomed this development and accordingly forwarded a budget estimate for the public hearing (see attached).

“In view of the above and in pursuit of the commission’s statutory responsibilities to the Nigeria Capital Market and in furtherance of our mutual relationship with the National Assembly as major stakeholders in the capital market, we hereby recommended the sponsorship of two items only from their budget as follows:

•1, (C) Live Coverage: 

N26, 203,800 

•2, Secretariat needs: 

N4, 215,000 

Total: N30, 418,800 

SEC Director General, Arunma Oteh

“Submitted for Management’s consideration and approval of N30,418,800 only being part sponsorship of the upcoming public hearing by the House of Representatives Committee on Capital Market and Institutions to identify the manifest causes of the near collapse of the Nigerian Capital Market”.

In an earlier memo issued March 1 this year, Mamman sought the permission of Ms. Oteh, to open discussion with the committee on how it could partially sponsor the public hearing

 “RE-PUBLIC HEARING ON THE NIGERIAN CAPITAL MARKET

The memo also reads: “The commission is in receipt of a letter of invitation from the leadership of the House of Representatives Committee on Capital Market inviting the management of the commission to a public hearing on the Nigerian Capital Market slated for March 13 – 30, 2012.

“Before then, a paid advertisement by the committee was sighted in some national dailies in which other stakeholders were also invited alongside the commission to the three-week events.

“In view of the commission’s role as the apex regulator of the Nigerian Capital Market and in consideration of the existing cordial relationship cultivated over the years between it and the House of Representatives Committee on Capital Market, we find it appropriate for the management to assist the committee by co-sponsoring this three weeks long event.

“It is our considered opinion that doing this will be of immense benefit to the nation’s Capital Market by further creating a more conducive atmosphere to finding lasting solutions to the challenges facing the Nigerian Capital Market.

“If the above suggestion is acceptable to management, the committee may be approached on your directives, to find out the possible areas for the support.

“Submitted for your consideration and further directives.”

Investigation showed that the SEC had responded to a February 28, invitation letter to its director-general by the committee.

The letter signed by the Clerk of the Committee, Mr. Femi T. Ogunsanya, reads in part: “In accordance with Sections 62, 88 and 89 of the Constitution and Order XIV, No 8 and 9 of the House of Representatives Standing Orders (2011) the House Committee on Capital Market and other institutions have been mandated by the House of Representatives Resolution (HR.103/2011) of votes and Proceedings of Wednesday, 14th December, 2011 to conduct a three-week public hearing to identify the manifest causes of the market’s near collapse with a view to funding lasting solution.

“By extension of the above, the committee therefore resolved to invite the public, and all stakeholders in the financial/stock market sector to the three-week public hearing commencing from Tuesday 13th to Friday 30th March, accordingly.

“On this note, I am directed to invite you to be part of the proceedings. You are also expected to submit 30 hard copies and two soft copies of memoranda to the Clerk/Committee Secretariat on or before 12th March, 2012 in Committee Room 19. 2nd Floor, White House, House of Representatives Wing, National Assembly Complex, Abuja.

“You are also expected to attend and take this Public Hearing serious as a core regulator of the Market.

“As we partner to bring lasting solution to the Capital Market’s near collapse, please accept the Committee’s best regards to your esteem office.”

The Committee at the SEC’s instace, later sent a N35,719,490 bill needed for the hearing and how it would spend the money, to SEC.

The breakdown is as follows: PUBLIC HEARNG: (1) Publicity—(a) Advert in Newspapers) Business News(N1,001,000); Daily Trust(N1,001,920); Punch(N998,800); Vanguard(N1,001,960);  and Tribune(N1,601,560). Sub-total= N5, 605, 240.

1(b) Advert in television stations: Channels (N745, 250.00); AIT (N715, 200.00); and NTA (N785, 000). Sub-total= N2, 245, 450.

1( c) Live coverage: Channels (1hr)—N4,550,000; AIT(2 hrs) –N12, 993,800; and NTA(3hrs)—N8,660,000. Sub-total= N26, 203, 800.

B. Secretariat Needs: (a) Official reporters(N500,000); (b) Technical crew(N300,000); (c) Postal Services(N350,000); (d)Stationery( N250,000); (e) Cards N15,000; and (f) N250,000.