Threatens to arrest NSE director-general
Investors growing cold feet over bombings, says Oteh
THE House of Representatives Committee on Capital Market yesterday threatened to order the arrest of Director-General, Nigerian Stock Exchange (NSE), Oscar Onyema, over alleged contempt of parliament.
The threat came as the committee began a two-week open investigation into the causes of failure of the Nigerian capital market.
Members of the committee expressed displeasure over Onyema’s absence at the public hearing that is meant “to examine the causes of the financial and regulatory crisis that has gripped this country’s capital market,” with a view to taking steps to restore public confidence in the market.
The panel’s members were incensed by a letter Onyema reportedly wrote to them stating that the committee had no oversight powers over the NSE.
In his ruling, chairman of the committee, Herman Hembe, said should Onyema fail to come before the panel today, it would issue a warrant of arrest to compel the NSE chief’s appearance at the probe.
The committee asked Onyema to appear with a proof of his academic qualifications, including proof of participation in the National Youth Service Corps (NYSC) scheme.
Meanwhile, Director-General, Securities and Exchange Commission (SEC), Arunmah Oteh, has identified the security challenges presented by the Boko Haram sect as a major setback in the effort to rebuild confidence in the capital market.
In a speech at the public hearing, Oteh said: “The spate of bombings by the Boko Haram sect has led to an increase in the perception of insecurity in some parts of Nigeria with the consequent negative impact on the market.”
Hembe noted that “the Nigerian market has seen over N20 trillion in wealth evaporate. Funds set aside for retirement along with life savings have been swept away as the market declined over the years”.
Listing some of the factors he deemed responsible for the capital market meltdown, Hembe said “the general consensus is that the crisis was avoidable and its root causes can be found in the following:
• Widespread failures in regulatory oversight, including the failure to stem the tide of unregulated margin loans administration;
• dramatic breakdowns in corporate governance, including too many financial firms acting recklessly and taking on too much risk;
• an explosive mix of excessive borrowing and risks by households; and
• unregulated ‘hot’ money.
On the scope of the probe, Hembe said: “We would look into organisation structural issues of both the NSE and SEC, funding issues, procedures and approval practices that impacted on the actions that took place and may still exist, review of acts of parliament where necessary, realities of stock-broking business in Nigeria, and use of waivers.”
Oteh also blamed the increasing woes in the capital market on apathy among local investors.
“Given the losses suffered by shareholders from the market crisis in 2008, many local investors became hesitant to return to the market,” she declared.
The SEC chief informed the panel that the commission had concluded arrangements to boost the confidence of investors through “the establishment of an Investment Protection Trust Fund as required by the Investments and Securities Act.”
