altThe appointment of Aliko Dangote as the 17th President of the Nigerian Stock Exchange after months of controversies, accusations and speculations, comes as a shock and huge disappointment to all that wished for the enthronement of an enduring business ethics and corporate governance in the Nigeria capital market.

Dangote, who, until his election, was the First Vice President of the NSE, emerged the President, following his appointment by the NSE Council members in Lagos by unanimous acclamation.

Prior to the AGM, there was heavy tension, as the capital market community was inundated with conflicting reports about the conduct of AGM. There were speculations that the AGM and elections would not hold, following controversies surrounding Dangote’s alleged involvement in the manipulation of African Petroleum’s Plc share price.

Different parties had called for the resignation of Dangote from the Council of the NSE, while other groups had gone to court, praying the court to stop the conduct of the elections.

Just a few months ago, in April 2009 to be precise, there were strident calls for Dangote to resign as vice chairman of the Nigerian Stock Exchange (NSE) following the murk and dirt that arose from the bitter rivalry between Nigeria`s richest oligarchs; Aliko Dangote and Femi Otedola.

It was felt that Dangote should resign his post as vice chairman of the Nigerian Stock Exchange (NSE) over perceived conflict of interests in the financial saga that saw the SEC suspend and fine Nova Finances Securities owned by Eugene Anenih, a Dangote proxy.

The reason of the nasty money feud between Mr. Femi Otedola and Alhaji Aliko Dangote lie somewhere between the very origins of their stupendous wealth, the very nature of their merchandise and the peculiar rules of engagement in the jungle of primitive accumulation of wealth in which they navigate.

Their feud threatened to drown some major banks and obliterate whatever is left of the Nigerian Stock Exchange (NSE) and the Securities and Exchange Commission (SEC).

The stupendous wealth ascribed to these men was one of the predictable legacies of the Obasanjo presidency and its Yar’Adua aftermath. Through the manipulation of state power, Obasanjo either created or fed a carefully selected oligarchy of mega rich Nigerians.

Through a flawed privatisation exercise, carefully chosen national assets were sold to these cronies while lucrative licences, monopolies and concessions for telecommunications, petroleum products imports, and essential daily need items were generously handed out to a few individuals, much like the Russian Oligarchs.

Pressured to resign

Dangote, the billionaire businessman and Vice President of the Council of the Nigeria Stock Exchange, came under intense pressure to resign from the council before the Annual General Meeting of the NSE.

The Committee in calling dangote to resign, took into consideration Dangote's status, image and position in the country and felt it would be better to appeal to him to resign rather wait till August during the AGM when the council might vote on his eligibility to become the president of the NSE on moral and ethical grounds.

The council took the decision as a result of the market's perception of Dangote's alleged role in the price manipulation of African Petroleum Plc's shares early in the year.

What was the accusation against Dangote?

In a glaring case of Insider trading – a crime all over the world, The SEC suspended Nova Finance Securities last Thursday March 26, 2009 after investigations uncovered unethical practices. The SEC investigation triggered another investigation into Afribank Registrars; accused of aiding and abetting the unethical practices by Nova Finance Securities.

Afribank Registrars - who are registrar to AP plc – confirmed that the SEC'S complaint rests on the failure of Afribank Registrars' internal control mechanism to detect or prevent the dubious transactions by Nova Finance Securities and that its records were falsified to cover up the illegal transactions.

The suspension and fine of Nova Finances & Securities may not be evidence of the guilt of Afribank Registrars but it provides the clearest evidence of the complicity of the group of Dangote consortium partners in masterminding the fraud.

After several months of denial, the suspension of Nova Finances is a very sad illustration of the way business is done in Nigeria and the mindless audacity of some people in authority like Dangote.

Curiously, Dangote did not sever all his ties to Nova. In fact during the period under review, Dangote and Nova with the assistance of Afribank Registrars fraudulently swapped a total volume of five hundred thousand units of irredeemable non-cumulative convertible preference shares in ten different transactions, which were admitted to the daily official loss of the Nigerian Stock Exchange. The ensuing panic and loss of share value created a scary scenario for AP investors.

The result was that shareholders lost of confidence in AP shares, leading to a massive exodus of existing shareholders, who hurriedly offloaded their AP shares and precipitating a sharp decline in its price.

This was a serious case of unethical practices, ie insider dealing and cross-share trading, “Nova and Aliko were just crossing shares between themselves, there were no money exchanged; rather they were even losing money by paying commissions for the swaps”.

The management of AP accused Nova Finance and Securities Ltd. and Alhaji Aliko Dangote of unethical manipulation of AP shares. This, the company claimed, had led to a decline in value of its shares. It is imperative to note that this type of negative stories is partly why many Nigerians have lost confidence in the stock market.

In the United States, Martha Stewart dipped her hand in the Cookie jar of insider trading, and the laws caught up with her, despite her riches and affiliations with the top echelons of the political class of the United  States. As soon as she was indicted, her fellow big fishes abandoned her and left the law to take its cause against Stewart.

In a demonstration of the dictates of a country that not just mouths Rule of Law but practices it, Stewart paid the ultimate penalty for the crime after the verdict was handed over by the jury: Jail term for months.

But in the drama of this Dangote and Otedola insider trading mess, the big fish, Dangote can never go to jail for insider trading that he was accused of. He is a big fish, and big fishes never go to jail in Nigeria no matter what happens.

It took the vigilance of the management of African Petroleum (AP) Plc to spot and blow the whistle on the finagling with the price of the company's shares on the Nigerian Stock Exchange. But by the time it raised the alarm through advertorials in the print media in March, the company's estimated 160,000 shareholders had lost about N240 billion in the value of their stocks.


The manipulation of the share price occurred over an eight-week period this year through cross deals that were camouflaged as active trading but with the sinister motive of diluting the value of the stock.

This was one more instance of the glaring inadequacies of both the Exchange and SEC. Since March last year when the Nigerian capital market fell into a coma, accusing fingers have been pointed at the operators of the Exchange and its SEC monitors for their failure to detect and promptly deal with the range of factors that eventually precipitated the crash.

Share price manipulation is no longer news in the Nigerian capital market.  But the African Petroleum (AP) Plc share price manipulation scam simply made waves not only because it was manipulated downward in a rather clumsy plot executed clumsily but for the name of one of those at the centre of the storm. Aliko Dangote is not only a golden fish in the stormy waters of Nigerian commerce and industry, but a big name in the global business community.

Anenih had earlier told the NSE that Dangote gave him a verbal order on telephone to carry out the transactions. He recanted that claim when Dangote's representative confronted him at the hearing organized by SEC; he then recanted and confessed that he acted alone.  Would we therefore conclude that Anenih had stolen Dangote's shares in AP and sold them for personal gains?

The nation's stock- broking community is replete with big names that ended up soiling their hands by stealing some peanuts.  A former managing director of the defunct Allied Bank went to jail for a similar offence.  Scores of smaller stock brokers are being investigated by the regulators on a weekly basis for similar crimes.

Some would argue that Dangote had been exonerated by the Authorities from these charges?

In exonerating Dangote, The SEC, like the NSE behaved like a typical Nigerian capital market judge.  They ignored the overwhelming circumstantial evidence in the scam since the suspect offered to bear the torture stake alone.  By recanting his earlier statement that he acted on the orders of Dangote, Anenih had admitted, rather strangely, that he operated a one-man riot squad in a transaction that brought him no monetary gains.  He cuts the image of a despot who takes delight in seeing others suffer - which is what he has done to the shareholders of AP.

Despite the fact that Anenih recanted his earlier claims that he was ordered on telephone to carry out the transaction, the regulators could still have gone beyond the surface by subpoenaing all the telephone networks used by the suspect to provide the transcripts of his conversations for the period for careful examination.

Besides, no one cared to find out why a stock- broking firm thoroughly battered by the inclement business weather in the capital market would pay regulatory fees running into millions for transactions that do not benefit the outfit.

The fact remains that one man cannot single-handedly conjure the depreciation of a company's market capitalization by a whopping N260 billion and get away with a paltry fine of less than N1million. Anenih, the managing director of Nova Finance and Securities Limited simply put his head on the chopping board by claiming that he acted alone in one of the capital market's epoch-making scandals.

Rather than SEC jumping to the premature conclusion that they have a self-confessed sinner in their net, the motive behind the AP scam far outweighs Anenih's crocodile tears or the kid-glove treatment that the regulators meted out to him.  His head should have been chopped off to deter feeble-minded scammers like him in the future. Does that remind you of Mohammed Yusuf, the Boko Haram leader that suffered extra-judicial killing at the hands of the Nigerian police?

Like Jerry Uwah noted in the Leadership Newspaper, Ndi Okereke-Onyiuke, the director-general of the NSE, once simulated the hypothetical scenario of two brothers - a lawyer and a construction labourer - who engaged some land speculators in a scuffle.  The lawyer delivered a fatal blow on one of the speculators.  The police were called in. Before the arrival of the police, the family of the suspects hurriedly held a meeting and persuaded the construction labourer to accept responsibility for the crime of the lawyer because the lawyer would be in a better position to defend his unskilled brother. That probably is the fate of Eugene Anenih.

No lesson learnt

Dangote was accused of corruption. It was alleged by a news media that Farida Waziri collected N50 million from Dangote in April 2009 so as to soft pedal on the probe of his alleged fraudulent activities and economic sabotage.

Corruption in Nigerian has produced membership in the cult of looting and stealing. It is like having a mafia empire of corrupt leaders with friends and cronies in it. That is why for decades, Nigeria has never been successful in fighting this crime. The big fishes would never be embarrassed in Nigeria.

Nigeria should be talking of restoring public confidence in the Capital Market, the need to rebuild public trust. The current economic downturn is ultimately a crisis of governance. It is a result – at least in part – of the failure of directors to manage risks effectively, a failure of shareholders in understanding their investments, and failure of regulators to adequately govern the environment in which this was happening.

Bad governance was at the heart of the financial crisis and good governance will be at the heart of its solution. The Global economic downturn that sent shockwaves throughout the world demonstrates the importance of sound corporate governance.

Maintaining investor confidence is going to be essential in driving the recovery – and good corporate governance appears to be the key to doing this. It is therefore possible that we will see the strongest initial recoveries from countries that have already established robust corporate governance frameworks, with accountability to their shareholders central to their governance frameworks. Good governance is the key to both the survival of companies and to their ability to attract investors.

It is interesting to note that the Director-General of the NSE, Professor Ndi Okereke-Onyiuke, said Dangote was appointed based on a unanimous acclamation by the Council members immediately after the conclusion of its Annual General Meeting (AGM). For the second time in the history of the NSE, the president did not emerge through voting. He emerged after a unanimous acclamation by the entire members of the Council.”

Hypocritically, Dangote, in his acceptance speech, said he will focus on Transparency and improved governance of the market; in the next three years. “This will be accomplished by ensuring that we have a more open and fair market, improving the disclosure standards, forging a closer and better collaboration with other regulators particularly SEC (while still protecting  the independence of the NSE). He promised to update our corporate governance rules not only for our listed companies but also for operators and the Council itself.

The allegation of the manipulation of share prices and insider trading against Dangote should not have been allowed to suffer the usual Nigerian fate of abandonment.

On the Vanguard online that carried the news of Dangote’s appointment, there is one single comment: "Nigeria will never learn".

Daniel Elombah Publishes


[email protected]

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