CAPITAL MARKET PROBE: NSE spent N1.3bn on travel expenses in 2009, Oteh alleges
On May 8, 2012 · In News

*Says N37m was used to buy a yatch
* N186m spent on 165 Rolex wrist watches

BY EMMAN  OVUAKPORIE

ABUJA – DIRECTOR General of the Securities Exchange Commission, SEC, Ms. Arunma Oteh, has alleged that the Nigerian Stock Exchange, NSE, spent N1.3 billion on travel expenses alone in 2009.

Speaking at the on-going public hearing on near collapse of the Capital Market being conducted by the House of Representatives ad-hoc committee, yesterday, Oteh said: ”One of the notable fraudulent transactions include the reclassification of N1.3 billion originally expended on business travels.”

The Oteh explained that N953 million was reclassified under “Software Upgrade” and subsequently expended as against being capitalised, adding: “There were other cases of such unethical accounting practices. Given the foregoing, it was important to me that we engage the NSE to address these weaknesses. Unfortunately the former CEO of the NSE did not attend most of the meetings we scheduled.”

She also alleged: ”It was also brought to our attention that there were incidences of financial skimming, misappropriation, false accounting, misrepresentation, and questionable transactions. For instance, the NSE bought a yacht for N37 million and wrote down the book value within one year by recognising it in the books as a gift presented during its 2008 Long Service Award, yet there are no records of the beneficiary.

Rolex watches as gifts
Oteh stressed further that”the Exchange also spent N186 million on 165 Rolex wrist watches as gifts for awardees of which only 73 were actually presented to the awardees.

The outstanding 92 Rolex watches valued at N99.5 million remain unaccounted for. These were the kinds of financial imprudence that were perpetrated at the NSE. These transactions were routed through companies owned by some senior officers of the Exchange.

Capital market shoddy performance
On the shoddy performance of the Capital Market, the DG noted: ”The total market capitalisation of equities listed on the Nigerian Stock Exchange declined from N12..6 trillion at the end of March 2008 to a bottom of  N3.99 trillion in February of 2009.

Also significant to highlight is that at the peak, banking sector stock made up more than 60 per cent of market cap, essentially implying that where the banking sector went, the stock market would go.

“By January 2010, when I arrived, market cap had risen to N4.99 trillion. However, investor apathy remained for a number of reasons including the problems at the Nigerian Stock Exchange, insufficient attention to market abuses that had been prevalent from 2006 to 2009, margin loan overhang, unresolved banking challenges. These concerns were accentuated by the findings of the Central Bank/NDIC/SEC audit of the banks which were released in August 2009.

“One of these findings was that some key problems with the banks came from their activities in the capital markets.”

View the original article here

LEAVE A REPLY

Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.