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SEC chairmanship: Stakeholders disagree over call for Udoma’s resignation

Operators and stakeholders in the nation’s capital market have disagreed over the recent call by the Senate Committee on Capital Market for the resignation of Senator Udo Udoma from his position as the Chairman of the Securities and Exchange Commission (SEC).

Udoma

Shareholders and capital market operators, who spoke to Vanguard, differ in their opinions on the issue. While some supported the call for Udoma’s resignation as SEC’s Chairman on the ground that his position in SEC contradicts the principle of good corporate governance, others said his appointment is in line with the laws, and hence, no reason for him to resign.

“Senator Udoma is a major player in the corporate world, even before his appointment as SEC Chairman, so it will not be appropriate for him to occupy the position of Chairman of UAC Plc of which the Commission regulates”, said Mr. Adebayo Adeleke, General Secretary of Independent Shareholders Association of Nigeria (ISAN).

“So what happens if UACN runs foul of the rules of the game, will he not be part of the judges that will look into the case, either directly or indirectly? So, these are some of the reasons why he should resign in the interest of promoting good governance. I don’t think it is reasonable for him to be at the helms of affairs in the Commission that regulates the company where he is the Chairman, even when the law does not categorically state so. But, morally and to promote good corporate governance, he should resign.”

“When there were agitations in the case of the Director General of Nigerian Stock Exchange (NSE) occupying the position of Chairman of Transcorp Plc, even though the law did not prohibit her, she looked at it critically and morally and threw in the towel by resigning as Chairman of Transcorp.” Adeleke said.

“Senator Udo Udoma should immediately resign. His defence that the Senate Committee knew he was in the Board of some quoted companies before approving his nomination for the position is not acceptable,” said Chief Aderemi Adeleke, Chairman of Ibadan Zonal Shareholders Association of Nigeria (ISAN).

“He should note that he was just Board member of those quoted companies and not the Chairman of those companies. Now that he has been made Chairman of a quoted company, he should resign. I am appealing to the Minister of Finance to relieve him of his position as SEC Chairman because he can’t be a judge in a case against him as there are bound to be conflict of interests when both SEC and UACN clash,” he concluded.

On his part, Mr. Fabian Ajogwu, Managing Partner, Kenna & Associates and Senior Law Lecturer, Lagos Business School, Pan African University, also supported the call for Udoma’s resignation, noting that his being on the Board of SEC and quoted companies will negatively affect the image of SEC.

“Mr. Udoma’s response to the issue is that he has a conflict of roles and not a conflict of interest. I think, at best, it is brilliant semantics, which really makes no difference because roles in themselves create the interest. My view is that there would never be a conflict of interest without roles, it is only from your roles that your interest arises.

“You only have an interest by virtue of your roles. Your role as a father and as a teacher of your child creates a conflict that you are not able to deal with. So, conflict of interest does not exist in a vacuum. I concur with the position of the Chairman of the Senate Committee on Capital Market, that this is an obvious conflict of interest that does no good to the institution of the Commission, because it is all over the newspapers.

“I also believe that if you are chairman of an organisation as a regulator, you should not be the chairman of the organisation that you regulate, for instance, if UAC or Prestige Assurance, for instance, is under investigation of the SEC, it is difficult to extricate yourself, even if you exclude yourself to say that your presence is not there, or if you call the investigators and say, “you know what, you know my stand in life, I do not meddle, do your work, sanction them if they are guilty,” it still makes no difference, because your presence speaks more than words.

“”I just believe that it will serve the greater good to avoid that kind of conflict of role of interest. I think it will strengthen the institution more to not be in that kind of conflict. It will strengthen SEC more that the leader of the Board of SEC is not the leader of the Board of a company that SEC should investigate or regulate.”

Mr. David Adonri, Managing Director, Lambeth Trust and Investment Company Plc, however kicked against calls for Udoma’s resignation, stating that his actions are proper and in line with the provisions of the Investment and Securities Act (ISA).

He said, “The Nigerian Capital Market is regulated under the provisions of the Investment and Securities Act of 2007.
“Section 3(1a) makes provision for appointment of a part time Chairman for the Board of the Commission. The full time members of the Board are the Director General/CEO and three Commissioners.

“Section 5(4) fixes the tenure of the Chairman to a single term of four years; the DG is two terms of five years and other full time Commissioners are two terms of 4 years.

“Under Section 6, only the DG/CEO and the full time Commissioners are prohibited from holding any other office or Board position except appointed by virtue of their offices to any Board or Agency of government or any international organization to which the Commission is member or affiliated.

“Under Section 11, (1) A member of the Board of the Commission who is directly or indirectly interested in (a) the affairs of any company or enterprise being deliberated upon by the Board of the Commission; or (b) any contract made or proposed to be made by the Board of the Commission shall, as soon as possible after relevant facts have come to his knowledge, disclose the nature of his interest to the Commission at the meeting of the Board.

“(2) A disclosure made under sub section (1) of this Section be recorded in the minutes of the meeting of the Board of the Commission and the member after the disclosure shall: (a) not participate or continue to participate in any deliberation or decision of the Board of the Commission with regard to the subject_matter in respect of which his interest is so disclosed and “(b) be excluded for the purpose of constituting a quorum of the Board of the Commission from any deliberation or decision on the subject_matter.

“”Save for Section 12 which states that ”The members of the Board of the Commission shall subscribe to, and be bound by a code of ethics to be approved by the Minister”, details of which the public is not privy to, Senator Udoma Udo Udoma has not contravened any Section of the law of the Nigerian Capital Market by holding Board positions in any company whether Private or Public Limited Liability. The provisions of the law have already prescribed under Section 11 how conflict of interest should be dealt with.”

Mr. Boniface Okezie, Chairman of Progressive Shareholders Association of Nigeria (PSAN) is also of the view that Udoma’s appointment as UACN Chairman will not lead to any conflict of interest.

According to him, “I don’t think there will be any conflict of interest, after all he has  not influenced anything in Linkage Assurance Plc where he is on the Board. Shareholders’ money had been trapped since All States Trust Bank closed shop and Udoma has not used his position to get out the shareholders money from the Nigeria Deposit Insurance Corporation (NDIC). The same goes for Okereke _ DG of the NSE, she never used her position as the DG of the NSE to influence the price of Transcorp in the secondary market.

“I am proposing that the existing law, i.e, ISA should be amended so that people appointed to the top position in the Commission be made to know exactly what qualifies them to occupy a particular position. It is because of the deficiency of the ISA that is why the Senate Committee on Capital Market is calling for Udoma’s resignation.”

Last week, in response to the call for his resignation by the Senate Committee on capital market, Senate Udoma issued an advertorial in which he said that his chairmanship of SEC does not constitute a conflict of interest. He noted that Section 11 of the ISA only requires him to declare any perceived conflict of interest.

In his defence, he said, “having carefully examined the provisions of the Investment and Securities Act, it was clear to me that the appointment was not inconsistent with my existing board appointments. What Section 11 of the Act required me to do was to declare them and not participate in any decision involving any of them”

To further justify his position, he noted that it’s not unusual for the chairman of the SEC to sit on the board of public quoted companies, as it was the case with his predecessor.

Taking the issues raised one after another, Mr. Udoma noted that the issue of conflict of duties raised by his colleague is baseless. “When I was initially informed that I was being considered for appointment as the part_time chairman of the Securities and Exchange Commission, I asked for time. One of the things I needed time to examine was whether the appointment would be consistent with my other commitments.” he said.

Besides, he pointed out; he had submitted his curriculum vitae to the Senate Committee that screened him, which contains details of his board appointments in other quoted companies. “Having accepted the offer, my name was sent to the Senate and I was screened, and cleared by the Capital Market Committee, headed by the same Senator Ganiyu Solomon,” he stated, adding that he was therefore surprised by the latter’s claim of ignorance of these previous appointments.

In addition, Mr. Udoma said his chairmanship of SEC is not out of line with international best practices. “I must confess that prior to this controversy; I had checked the international practice with regard to a part_time member of the Securities Regulator serving on boards of quoted companies. I have just come from Malaysia, and in discussions with the chairman of their Securities Commission I raised the issue. It has also been confirmed to me that in many other countries, such as Thailand, the part_time members also serve on the boards of quoted companies.”


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