Arunma Oteh vs. The House

With globalization, banking turned into a Ponzi scheme. Like any other Ponzi scheme, bankers were the predators and investors the victims. And in favor of the predators government rigged the game. Moving risks from those who knew how to assess risks to those who didn’t helped banks enlarge their appetite for risk while making it difficult for creditors and regulators to monitor their risk levels.

Millions of inexperienced investors — men and women — used to the safety of bank Certificate of Deposits (CDs) were given one-way ticket to financial disasters. So lured into highly leveraged mortgage-backed securities, collateralized debt obligations, and credit default swaps they never knew they were stepping in front of a high speed train.

With deregulation clipping regulators’ wings, insider trading blossomed and balance sheets turned into window dressing. And growing revenues on paper meant constantly inventing accounting gimmicks. Meeting analysts’ and public expectations required cooking the books (inflating income and hiding expenses). In this game of accounting deception, books were so cooked and cooked and cooked until the pot ran out of water.

Fully understanding how it all happened, one should imagine a casino full of gamblers betting on a roulette wheel. Spin after spin, the ball landed on a red-colored number. With the gamblers always betting on red numbers winning, sheers grew louder, making them to begin ignoring the fact that the wheel had just as many black numbers as it has red. Believing they had finally entered an incredible new world where the roulette ball only landed on red numbers, they had to bet everything on that spin of the wheel, but lost it all. Lost were hard-earned savings and borrowed money too.

That was what happened on October 9, 2008. That day, gamblers all over the world ran out of luck. Triggered by a complex interplay of valuation and liquidity problems on Wall Street, trillions of dollars were instantly lost into the dark corners of the financial markets. Turning into a global financial fiasco, accelerated institutional and corporate solvencies gave way to widespread savings-and-loan meltdown. When the tsunami was over, trillions of dollars were wiped out across the world.

Stopping the sweeping crisis saw government after government emptying national treasuries, injecting direct cash into banks. And with the hope to spur banks to restart financing domestic loans, unprecedented bailouts in history were rolled out. Removing their toxic assets, it was also believed would reduce the volatility of banks’ stocks in the markets. In the meantime, tightening up all the gaps, including reintroducing stringent regulation came to be seen as the only way to restore hope to the financial system.

While Nigeria wasn’t the epicenter of the global financial tsunami, leaving some forces still intact has prolonged the negative effects on the restoration of the country’s financial system; especially with the same people behind the problem determined not to allow a reform that could open up their scheme to the Nigerian public.

Frustrated by the inability of the market to recover, former President Yar’Adua then took it upon himself to find someone who could turn around the country’s capital market. He looked for a broad-based peak-performer, someone with the kind of knowledge, experience, and willpower to undertake the inevitable turnaround surgery of the country’s comatose equity market. After the long and tiring search, Arunma Oteh — with stellar academic accomplishments and second-to-none world-class work experience, including first class in computer science at UNN, a best graduating MBA at Harvard Business School, and a distinguished career as the vice president of ADB — she had no competitor for the job.

Fired by such immense trust and the freehand to quickly turn things around, the no-nonsense Oteh, did not waste any time upon assuming office as the capital market’s surgeon-general to begin operation on the long overdue restoration of the ailing Nigerian Stock Exchange. Soon, Mrs. Ndi Okereke-Onyiuke was sent packing because of alleged gross professional misconduct and financial mismanagement. That was followed by ordering full forensic investigation into the country’s stock market by both Aluko & Oyebode a leading law firm, and KPMG a leading accounting firm, to ascertain the depth of damage. But as soon as the report was ready a court order blocked its release to the public. From then on, the battle line was drawn.

Yes Mrs. Ndi Onyiuke Okereke succeeded in using the court to clip her wing, but that was only temporary, since she was already fine-tuning ways to bypass that court. Heading for Investment and Security Tribunal to charge 260 individuals and entities for market abuses and fraud showed her superiority in the battlefield.

With so many feathers ruffled, recently the battlefield shifted to our National Assembly, where her arch-enemies seemed to be ready to rely on their many friends. Deceived by her soft looks, some political teenagers, led by Herman Hembe, the Capital Market and Institutions Committee chairman, seemed not to care that before them was an iron-lady on a mission to sanitize the fraud-ridden capital market. And soon they met their Waterloo.

Inviting her without the former SEC and NSE chiefs in charge during the 2008 and 2009 was the beginning of the impending collision. It was a demonstration that the committee’s hidden agenda wasn’t actually getting to the bottom of the problem. Or how could a committee wanting to get to the root of the problem not have demanded the vacation of Mrs. Okereke-Onyiuke’s court order that blocked the report of the forensic investigation being made public? Confirming their real intentions was their disinterest in either paying full attention to the presentation by SEC management or wanting it transmitted live.

That the Committee went as far as obtaining some internal memos of SEC without formal clearance and without applying FOI Act procedures unknown to the committee itself has gone from even witch-hunting to a criminal offence. Wire-tapping is such a serious criminal offence that a sitting US President Richard Nixon was disgraced out of office for doing so on his opponent. It now boils down to investigating who leaked these sensitive internal memos. Being a serious national security issue, it raises national concerns, requiring urgent intervention of SSS, NPF, NSA, and the Code of Conduct Bureau.

With everything going as planned, the committee thought that it could easily blackmail her and get away with it. But she calmly waited for the right time to give it back to them. When the right time came, when the committee had made enough noise to have drawn the full attention of Nigerians to the probe, the nuclear bomb in her arsenal was released.

She informed Nigerians that not only was the committee chairman incompetent to probe her SEC, but also corrupt as he demanded from SEC N44 million. She went further to wonder the kind of committee Hembe was chairing if he could not even understand the very basic functions of SEC as a regulator, especially given his poorly articulated questions, including asking SEC why didn’t it “guarantee” investors’ funds in the nationalized banks the same way CBN and NDIC provided guarantees for depositors in these banks! From offensive to defensive, soon the entire committee members became as disoriented and apprehensive as their senders.

This episode should make patriotic Nigerians to now demand: For how long should this battle against such good-intentioned Nigerian go on? For someone who since assuming office in January 2010 has led a series of reforms to restore market integrity and revive investors’ confidence is it how to encourage her? Wouldn’t harassments like this scare our best brains from participating in the country’s development?

Time to change this attitude is now. And that should begin with the House extendin

g a hand of goodwill to her. This should include an apology to her for the emotional torture she went through. Our ladies should be shown the highest respect they deserve.