The Securities and Exchange Commission in a press release made public on August 9, 2010 gave further updates on its efforts to address issues arising from the removal of the NSE top hierarchy.
Independent Investigation
The Securities and Exchange Commission has appointed, jointly, the law firm Aluko & Oyebode and the accounting firm KPMG, to investigate the allegations of financial mismanagement at the Nigeria Stock Exchange. Aluko & Oyebode provides specialized legal services to a diversified client base. KPMG is the Nigerian member firm of KPMG International a full service professional services firm, whose forensic practice provides specialized investigative services for the conduct of investigations and inquiries.
The Independent Investigators commenced work on Thursday 5th August 2010, by securing data and document sources. Given the broad allegations, the Independent Investigators have gathered a multi disciplinary team of lawyers, accountants, auditors, stockbrokers, and investigators. They will be documenting the allegations with respect to three broad areas that relate to Governance, Management, and Malfeasance. On the Governance allegations, the Independent Investigation will examine the oversight provided by the Council of the Exchange. On the Management allegations, the Independent Investigation will examine the allegations of financial mismanagement level against the Exchange. On the Malfeasance track, the Independent Investigation will examine the allegations related to mismanagement and maladministration by staff and beneficiaries of the Nigerian Stock Exchange.
The Independent Investigators will adopt procedures as necessary for the expedient and proper conduct of the investigation, including conducting interviews, reviewing all relevant records and documents, and consulting as appropriate. The processes will include, but will not be limited to reviewing the financial management processes and the methodology for expenditure, reviewing the procurement processes to identify deviations from applicable policy, reviewing the robustness of controls and benchmarking these procedures. For the financial years 2007, 2008, and 2009, the Independent Investigators will undertake detailed verification to determine whether there were any irregularities. Any irregularities identified will be documented and the possibility of collusion among the various parties will be explored.
Status on recruitment of New Director General
The Commission had previously asked the NSE to develop and implement a credible and transparent succession plan and while the NSE had made significant progress, it had unfortunately not completed the process by the deadline of 31st of July approved by the Commission despite an extension of the deadline. A key element of this succession plan was the selection and appointment of a New Chief Executive Officer (Director General) for the Exchange. In the process prescribed by the Commission, the Exchange, through a credible and transparent process was to source candidates through open advertisement, conduct a screening process and assessment center, conduct panel interviews, and send the three topmost candidate to the Commission for screening. Only after they have been screened and cleared by the Commission, could the Exchange go ahead and extend an offer to the selected candidate.
The Commission is certain that this process can be concluded quickly. The Exchange has contracted Accenture to facilitate the selection exercise. Accenture has confirmed that nine hundred and forty-four (944) candidates applied for the four positions including that of Chief Executive Officer of the Exchange. One hundred and thirty one (131) applied for the post of Chief Executive Officer and the rest applied for the positions of Executive Director (Listings), Executive Director (IT and market Operations), and Executive Director (Strategy, and Business Developments).
The Commission has encouraged the Exchange to conclude the process of selecting and appointing a new management team. The Interim Administrator, Mr. Emmanuel Ikazoboh will fill the role of Chief Executive Officer until the conclusion of the recruitment and assumption of duty of the substantive new Chief Executive Officer of the Exchange. By the very nature of the interim role, he will be ineligible to compete or vie for the position of the Chief Executive Officer of the Exchange.
Given the critical period of transition that the Exchange was facing and the ongoing litigation that had embroiled the Council of the Exchange, the SEC determined that it would be imprudent to leave the Council without a designated leader. The SEC appointed Mr. Ballama Manu as the Interim Head of the Council, to steer the Council and Exchange through this critical period of uncertainty. He will immediately focus on getting the succession plan back on track to ensure the timely appointment of a new Chief Executive Officer.