IT started as a local problem; now its gone global. Worried by the crisis of confidence, which broke out between the Securities and Exchange Commission (SEC) and the House of Representatives Committee on Capital Market over allegation of corruption, foreign investors trading on the Nigerian Stock Exchange (NSE) have threatened to dump their shares from the market.
A highly-placed source who spoke with The Guardian yesterday claimed the NSE management was under pressure from investors outside the country seeking detailed explanation on the ongoing allegations and counter-allegations of corruption between the SEC and the House panel.
The source explained that most of the investors "are concerned and deeply worried about the unfolding development in our market."
Calling for restraint and amicable resolution of the face-off, the source said "Nigeria stands to lose tremendously if the situation is allowed to degenerate to the extent of discouraging foreign investors in our market."
Indeed, the foreign investors were said to have demanded a multi-faceted talks with the Nigerian government, the regulatory body, SEC, and the NSE.
Meanwhile, the bribery allegations leveled against the Herman Hembe-led House Committee on Capital Markets took a new dimension as The Guardian learnt that contrary to the lawmaker's claims, it was his committee that allegedly "approached the SEC on February 29, 2012 through a consultant - Messrs Note Worth Consultants - for financial assistance" towards the public hearing.
According to sources, "the consultant visited the SEC in the company of one Olufemi Ogunsanya, Clerk of Hembe's Capital Market Committee with a "shopping list" detailing a large number of "specific areas" for which the SEC's support was being sought by the House Committee. Given that the SEC believed that the hearing was indeed in the interest of the public and investors as expressed in a letter through which the Commission was formally informed of the Hearing, the request was subjected to SEC's decision making procedure which culminated in the Board's consideration for N30 million."
Foreign Portfolio Investment (FPI) accounts for over 80 per cent of total purchases (inflows) in the Nigerian market, driven primarily by investments from the United Kingdom (UK) and the United States (U.S.) as well as from Hong Kong, Luxemburg, South Africa and Germany, among others.
Recently, the NSE explained that for the year ended December 31, 2011, "total sales (outflows) during the year were estimated at N334.64 billion ($2.20 billion), bringing net flows to roughly N177.08 billion ($1.17 billion), a 3.53 per cent increase from the previous year's N171.04 billion ($1.15 billion)".
The source stated that while the public hearing "is timely, it should be handled with care in the interest of the market and the general economy".
The public hearing by the House of Representatives Committee on Capital Market took a dramatic twist last Thursday when Director-General, SEC, Arunma Oteh, accused the former Chairman of the committee, Herman Hembe, of alleged corruption.
In turn, Hembe, whose panel has been eased out from the probe, accused the SEC chief of trying to influence the work of the committee by approving N30 million for its activities.
Meanwhile, Chief Executive Officer, NSE, Oscar Onyema, has assured both local and foreign investors that "there is no cause for alarm as the Exchange is working out modalities to ensure that the Market rebounds soon."
Onyema was summoned before the probe panel last Wednesday.
The bribery scandal has overshadowed on-going attempt by the House of Representatives to probe the Capital Market meltdown.
The scandal claimed its first set of casualties on Tuesday as the Lower Chamber of the National Assembly asked its Committee on the Capital Market to step off the investigation, opting instead to set up an ad hoc panel to do the job.
Also on Tuesday, Hembe, denied the bribery allegation levelled against his panel by Oteh and personally withdrew from the investigation.
Hembe also told his colleagues that he planned to go to court in order to clear his name over the bribery allegation.
Following this allegation and others dogging trailing the National Assembly probes of the capital market operations and the Pension Reforms Task Team, and Nigeria's expectations to see all culpable individuals prosecuted on a raft of corruption-related charges, the Independent Corrupt Practices and other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC) have pledged that they would rather wait for the probes to be concluded before they take any action.
The House on Tuesday directed its committee on Ethics and Privileges to investigate the allegations that the Hembe-led Capital Market Committee demanded the sum of N44 million to fund its public hearing.
The Ethics Committee was asked to conclude its investigation within 14 days and submit report to the House for appropriate decision.
The eight-member ad hoc committee is headed by Ibrahim El-Sudi. Other members of the ad hoc committee are Toby Okechukwu, Yakubu Dogara, Bimbo Daramola, Ini Udoka, Buba Jibril, Usman Adamu Mohammed and Rose Okoh.
Speaker of the House, Aminu Tambuwal, said: "The ad hoc Committee just constituted will commence the investigative hearing based on the earlier resolution of the House de novo (afresh) and for the benefit of Nigeria and Nigerians."
In withdrawing from the investigation, Hembe claimed that contrary to the allegation by Otteh, it was the SEC, which attempted to bribe the committee with some N30 million which Hembe said he resisted.
But the SEC had since alleged that the memo was "stolen" from the commission "at night''.
The Guardian