Wednesday, August 11, 2010

Kissing and Making up

As with a lover who is eventually forgiven for transgressions real or imagined, I spent last week flying all over the place on British Airways. I had previously sworn never to fly on BA following a rather dramatic serious of miscalculations in Nigeria in 2009. On my most recent trip to Africa, I committed several (more) very blonde-headed blunders with my booked flights. BA was there to save the day. They even upgraded me on one leg of my journey….how can I stay mad after sparkling wine followed by a delicious cheese plate before being served a full lunch, all on a flight that only lasted 1.5 hours?? My layover with BA in Joburg was tolerable but I was scolded once I got back to California for not purchasing a vuvuzela!! Where was my head?

During my visit last week to Southern Africa, I read in the paper that the Director General (DG) of the Nigerian Stock Exchange (NSE), Professor Ndi Okereke-Onyiu-ke, had been sacked for financial misappropriation. This was fascinating in and of itself, but equally because the African Stock Exchange Association meeting was just held in Abuja, Nigeria and the DG was visible everywhere.

There had been an ongoing dispute between the NSE President, Alhaji Aliko Dangote and the madam DG. The election of Mr. Dangote was nullified by a court (the details of this I do not have) and he responded with a petition to the SEC of Nigeria claiming that the madam DG had misappropriated NSE funds bringing the exchange to near bankruptcy. Mr. Dangote stepped down as NSE President in to the position of Vice-President pending the resolution of the various suits.

The SEC of Nigeria appointed an interim CEO of the exchange. It also appointed a law firm and accounting firm, KPMG, to investigate the allegations of financial mismanagement at the NSE. The investigations will focus on the oversight of the NSE by the Council of the Exchange.

In a related matter, the SEC of Nigeria announced on 10 August that it will arraign 260 persons and entities connected with a price manipulation and insider dealing on the NSE. The SEC will bring the matter before the Investment and Securities Tribunal (IST). I do not know much about theat tribunal but will try to learn more and share it here.

The madam DG is contesting the allegations against her. She was set to retire in December of this year.

It is all very interesting but I am not really sure what we learn from all of this. It seems to me that the function of an SEC in Africa is very different than its counterpart on the more established exchanges. The SEC in Africa is almost like an appendage that works infrequently but does a great deal of damage when it is put to use. This is not a criticism of African exchanges. Rather it is scepticism at the donor’s insistence on this appearance of governance without real governance. Simply establishing an SEC does very little and it might in fact encourage a kind of malfeasance.

I am increasingly of the opinion that exchanges should do all of their own policing in many African countries. At least exchanges have a self-preservation motivation. I will think a bit more about this.

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