SEC, Udo Udoma & Corporate Governance - Fact File 1802

SEC, UDO UDOMA & CORPORATE
GOVERNANCE
The Fact Files:
The case for executing a higher standard of Corporate Governance in the Nigerian
Capital Market.
….taking a defining stand in the pursuit of a more focused attention to

Investor Protection and Advocacy; and the merit of Persistence in the
Pursuit of a Paradigm Shift in our regulatory environment post 14/08.
ISSN 1597 - 8842 Vol. 1 No. 26
www.proshareng.com
February 18, 2010, Lagos, Nigeria

SEC, Udo Udoma & The Corporate Governance Challenge – Fact File 2010
Regulators, Reporting and Resolutions

January 06, 2010; 0558 hrs, Omole, Lagos, Nigeria
“There are very few men – and they are the exceptions – who are able to
think and feel beyond the present moment" - Carl von Clausewitz, 1780-1831
The New Year started on a rather negative note for the country and the financial
services sector regrettably. Just as we were coming to terms and preparing
ourselves for the Mutallab effect, the screaming headlines was all about last years
events in and about the banking sector –a well worn news cycle that does nothing
more than irritate the senses.
The epistle of negativity went one notch up with recycled facts – nothing to
inspire hope and expectation – thus forcing us at Proshare to take a decision, nay
resolution, on how we will approach the subject of negative news in the jubilee
year as part of the market recovery strategy.
Balancing facts, fiction and outright negativity should not be such a difficult or
delicate task. It has to do with motives and ethics. For us therefore, it was an
easy decision. We had resolved not to fall into the news cycle trap by refraining
from going along with the FSF rule – Frauds, Scandals and financial mishaps –
news cycles that appeal to the human nature but leaves it unable to move
forward; drowned in a an air of fear, suspicion and hopelessness.
Our resolve this year is to focus on developmental issues and an articulation of

the way out of the quagmire we dug for ourselves. It is not about blames but a
critical affront on the logic that those in leadership are always right. Well, they
are not and they continue to re-enforce this notion with the conduct thus far.
Yet, we remain respectful to constituted authority and systems with an eye on

providing the feedback needed for their review. This we hope to do through
formal channels and not necessarily on the web; where we have the opportunity
to do so. Today offers us an opportunity to define that agenda and approach.
CBN and Mass Sack in Banks – Myths and Realities
It's probably a serious reporting error that has been committed here by all news
media (including this site) on the reporting of the memo from the CBN on the
reduction in staff costs and other matters.
We however take solace in our position as espoused in The Nightmare before

Christmas Blog post (http://proshareng.com/blog/?p=112) where we stated that
“… for the entire furore about the sack of bank workers, and for all the headline
grabbing threat about what such an action will create; it has now become
apparent to the market that not taking these actions represents a much bigger
threat to banks and bankers. The evidence just does not support a retention
of the status-quo; period.”
Yet, the press release yesterday from the CBN Head of Corporate Affairs (note –
not communications) does not extend this argument but raises issues requiring
further clarification.
The press release stated that “The Central Bank of Nigeria has noted with
dismay, several untrue reports in the media alleging that the Central Bank of
Nigeria ordered the mass sack of Deposit Money Banks’ staff and rationalization
of their branches. We wish to reiterate categorically that the Central Bank of
Nigeria has never directed commercial banks to sack staff or rationalize
ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 2

branches as reported. Banks are private enterprises and the decision to engage
or disengage staff is best left to the management and boards of the
institution. These decisions are taken on the basis of business imperatives.”
On the face of it, this looks like a strongly worded statement but it only reveals a
lack of understanding of the communications imperative needed during a change
management program as the CBN has embarked upon; one that should show
empathy and resolution rather than authority and power.
M.M. Abdullahi appears to mean well in his actions but he needs to take a leaf
from global examples on how to handle a difficult subject such as he sought to do
– his role goes beyond issuing rebuttals and must actually be involved in ‘selling’
the facts and raison d’etre. This he can do by providing clarity to the market and
defending the actions of the banks under its supervision for taking an inevitable
course of action arising from the consequence of regulation.
Let us state the facts as known before attempting to deconstruct the statements
made above by the CBN.
According to sources, the CBN had written a memo to Intercontinental Bank Plc in
October 2009 based on the review of returns and commentaries received on the
banks operations, through the supervisory officer on the need for the bank to do
something about its huge outflows in the light of its realities. For all intent, this
may or may not have had to pass through the CBN leadership as it ought to be a
routine response to a single bank (though the language suggested a plural focus).
This memo, for some reason, found its way into the media who reported it on
Friday November 27, 2009 thus – ‘A memo from the CBN to the banks last
month, obtained by our correspondent on Thursday, said the banks
should immediately submit action plans for branch and staff
rationalisation in order to “utilise some hidden economies of scale in
their operations’. This is not the only directive contained in the
publication; The CBN also directed them (the banks) to comply with its
directive in the special examination report by increasing total provision
for loans and other known losses by the end of September 2009 and
publish the full result not later than October 31.” – Punch
http://www.proshareng.com/news/singleNews.php?id=8107
Interestingly, it was M.M. Abdullahi that had done the right thing to immediately
move to douse the linkage of such an action to the CBN, albeit; without providing
a response to the alleged memo. This was reported in the Compass newspaper
(http://www.compassnews.net/Ng/index.php?option=com_content&view=article&
id=35678:banking-sector-crisis-the-purge-begins&catid=113:money-
market&Itemid=711) thus “Though the apex bank argued that it did not ask the
banks to retrench their staff, it did not state what should constitute the
operational costs to be cut. According to CBN spokesman, Mr. Muhammed
Abdullahi, “CBN will not dabble into the running any bank. The issue of the staff is
a management issue and it is the duty o the managements of the banks to know
what formed the unnecessary expenses they are incurring that make their
operational costs go up. They are the one that determine what forms their
operational costs. “The expenses such as the private jets and keeping and
travelling with retinue of aides should be scaled down, not totally eradicated.
These are type of operational costs that the CBN is asking them to cut. Such
funds, could be channelled to the growth o the banks as well as the economy as a
whole. The banks will have enough funds to lend to the private sector of the
economy, especially the manufacturing sector that can develop the nation’s
economy.”
The key issues therefore are, and relating this to the press release yesterday:

1. The CBN did not and should not be blamed for the actions taken by the banks
as it was an inevitable response to the situation the management of this banks
found itself;
2. The action to shed off staff and other costs by the banks was an across the
board response by most of the banks (cleared and the Lamido Eight) and was not
therefore an indicator of a peculiar situation but a response to a glaring reality on
sustainability of operations;
3. The CBN however, as the supervisory authority over this banks, and the
institution overseeing the management of this banks cannot claim that it was not
aware of such a decision before it was taken and should in fact defend the actions
of the banks for what it was without any responsibility (perhaps only as a
consequence of the on-the-ground realities the banks were confronted with);
4. The mass purge was regrettable but inevitability.
The CBN Governor understood these feelings when he stated that “Let me make a
few clarifications, the Central Bank did not direct banks to sack workers, the
allegation is false. Banks are private companies; they take their decisions on
engagement and disengagement of workers based on business
imperatives. “If a bank has built up a high cost base because it thought it was
making money, then it discovers that it is not making as much money as it
thought it was making because the loans are bad, it has to reduce its cost base.
Now those banks took those steps themselves, some of those banks dealt with
their unions and got their signatures and signed as appropriately, I am aware
that others are still engaging the unions. I do not think it is the place of the
regulator or the government to tell the private sector banker how many
staff it requires. A bank like Oceanic Bank was spending about N4 billion a
month on salaries; Intercontinental Bank was spending over N4 billion a month
on salaries. There are non-performing loans, the banks are paying huge interests
on Inter-Bank Lines, paying interests on depositors’ funds and they have costs of
running their branches. They have to survive.”
If anyone is in doubt, a request for a copy of the memo from CBN would suffice.
However, and for the avoidance of doubt, the CBN did not formally ask the banks
to lay off workers – it was an inevitable response to the realities they faced. The
memo might not have been worded properly but the obvious action was apparent
as with any other business faced with the same issues.
Let us therefore put this matter to rest once and for all and move on to other
serious issues beyond the cycle of controversies and negative reporting.
We can start by evaluating the MPC decisions and its implications on the market
and individuals; take a serious look at the AMC issue, review and question the
CBN on its plans to sell the banks at some point; assess the success of the
transformation plans of the banks new managements and not lose focus on the
existing banks and goings-on in respect of credits to the businesses, resolution of
the letters of credit position, and other matters that indicate hope rather than
despair.
The New Year must be approached from a very different engagement point and
we intend to seriously focus on that in our due-to-be-released NCM 2010 report.
Lance Elakamah continues serving as the ADG
The news of the imminent disengagement of Musa lance Elakamah, the Assistant
Director General of the Nigerian Stock Exchange made the rounds in the second
half of 2009 just as the NSE was gearing up to introduce its new directorates and
the plans for a ‘post-Ndi Okereke’ NSE in 2010.

The thinking then was that the NSE would proceed with its demutualization plans,
first mooted by the Abdul Razaq-led NSE in 2002 and efforts were made to
prepare the grounds for this. In pursuing that objective, reservations about
timing aside, the NSE made a couple of management changes meant to position
it to transit from an SRO to a plc; leading to staff exits and movements and an
on-going staff audit of its operational personnel.
The planned exit of the ADG was the highlight of the changes which would have
left the NSE operating on a different outlook, even as concerns were raised in the
market as to the merit of asking the obviously qualified Elakamah to proceed on
retirement before his retirement age – two years away. We observed that the
ADG is still in office and unconfirmed sources indicate that the NSE has extended
his tenure for or/and up to the time ‘certain issues’ are resolved.
What we find curious in this development is the non-communication of this with

the market. The news media has not picked on this curiously and this begs the
question – what could be a bigger news coming from the NSE in the early days of
the year than this obvious shift from expectation. For the avoidance of doubt, we
welcome the retention of the ADG principally because we believe that the NSE
needs some stability at this time while it resolves the plans for the significant
changes that are to come.
It is hoped that this issue and others related to the demutualization of the NSE,
dematerialisation project by the CSCS and the change in ownership of the CSCS,
the plans for the recovery of the market, the private placement program being
undertaken by the NSE, our role and plans for the ASEA presidency, the
succession program in place for the NSE and the general deliverables of the
council and management of the NSE in 2010 will be addressed by the DG, NSE at
its planned New Year briefing scheduled for tomorrow.
Further, it would be nice if the NSE can comment on the implications of the dual
chairmanship of the SEC and UACN plc by Senator Udo Udoma. The internal
cohesion of the exchange and the resolution of its leadership issues are
considered critical to our recovery plans in 2010.
UACN Names Udo Udoma, SEC Chairman as its Board Chairman
Thisday Newspapers’ Davidson Iriekpen reported this story in today’s edition and
a cursory look at the news revealed that at no point was reference made to the
fact that the seasoned lawyer and administrator, Senator Udoma Udo Udoma
served or remains the CHAIRMAN of the SECURITIES & EXCHANGE COMMISSION.
According to the reports, Senator Udoma Udo Udoma assumed the office of the
chairman of the Board of Directors of UAC of Nigeria Plc on January 2, replacing
Lt. Gen. Mohammed Inuwa Wushishi (rtd), who retired from office on January 1
having attained the age of 70.
The country’s largest conglomerate also announced the elevation of Managing

Directors of two of its subsidiaries – Abdul Akhor Bello of UACN Property
Development Company (UPDC) Plc and Joseph Ibrahim Dada of the Grand
Cereals and Oil Mills Limited (GCOML) – to its Board as Executive Directors, while
former Director-General of the Securities and Exchange Commission (SEC), Dr.
Suleyman Abdu Ndanusa, comes on board as non-executive director.
In describing the profile of the new chairman, the news information conveniently
left out the biggest office ever occupied by the respected senator, perhaps on
account of the realisation that it appears curious for a man to be a chairman of

the board of a company and also retains the chairmanship of the regulatory body
supervising its conduct.
Recall that we raised the need for the office of the Chairman of SEC to be
unfettered and unencumbered from any relationship that would tie it to any of the
companies he is expected to regulate upon on page 59, 62 and 63 of the report –
‘The BULL in The CHINA SHOP’ http://www.proshareng.com/reports/view.php?id=2016.
In that review, we stated that the chairman “ought to have recognised that his
current directorship of UACN Plc raises serious issues that could compromise the
perception of impartiality. It is simply not right and there must be a cogent
explanation for this, giving what we know of the man and his pedigree. We do not
have any case of wrongdoing alleged against the Chairman but we believe that
the elimination of the room for ‘unregulated relationships’ is critical to any
perception of integrity or the ability of the regulator to take actions without fear
or favour of ‘powerful’ forces that loom large over the SEC. It must be noted that
SEC has operated under excruciating circumstance that have seemingly drowned
out the considerable amount of good work done.”
Is this therefore a step forward or backwards for the organisation? The answer to
this lies in the decision/reaction expected from the Governing Board of the
Securities and Exchange Commission on this announcement by UACN Plc. This is
a direct conflict of interest/role issue we must address.
The New Year Resolution
Events in the last few months leading up to the new year have raised the ante on
the question – who guards the guardian(s)?
Even though the tiny glimmer of recovery expected appears dimmer at the start
of the year, we remain hopeful that a confluence of events will create a
momentum that should help us stop the bleeding and provide a platform to build
upon. Yet, until we stop running the economy through the media; agree a
consensus-led intervention by the regulatory agencies and operators, we feel this
expectation may be a rogue illusion, since it is skewed by a slightly odd bounce in
the heightened political risk now associated with the country.
My take on what's happening goes like this: the political risk we have brought
upon ourselves is needless and creates a gap in the execution of developmental
policies and stable management of the economy, the general living conditions of
the people are worsening and the confidence levels continue to wane both locally
and internationally, businesses are choosing to save rather than spend; banks are
refusing or unable to provide new finance to businesses: and the very weakest
banks and businesses are being kept on life support – the consequence of which
does not suggest we have a financial-economic tie-in on the recovery plans.
I would like to be wrong on this point. It would benefit the economy if I am.
My plea is that the news media can and should play a role by stopping the cycle
of negativity from all sectors through a conscious acknowledgement of the effect
it is having on our lives and psyche. Making the institutions more accountable
should be the focus in 2010 - our year of the jubilee. We can do better than bring
out the dirty linens in the public. Happy New Year!
Olufemi Awoyemi, FCA

MD/CEO Proshare Nigeria Limited

Udo Udoma & SEC – Legality, Perceptions and Sacrifice

January 12, 2010; 0627 hrs, Omole, Lagos, Nigeria
“A man does what he must.. in spite of personal consequences, in spite

of obstacles and dangers, and pressures.. and that is the basis of all
human morality”. - John F. Kennedy
Often, we find ourselves in a situation where factors, other than logic influence
the decisions we take, and this ‘grey’ area of human decision making can go
either way – often if it works out well, one is praised and celebrated, but like in
most life situations, when it turns out otherwise, we are left to rue the
alternatives open to us which we ignored/rejected at the time of making such a
decision.
I have found this to be true and I face one here as I seek to draw the markets’
attention to why it is hugely important to dimension the issues arising from the
‘conflicting status’ of holding the responsibility of a director of a quoted company
and serving as the chairman of the Securities and Exchange Commission (SEC) –
a position in which the revered Senator Udo Udoma finds himself.
Senator Udo Udoma, Chairman of SEC, Nigeria, is a well accomplished man whom
I, like so many others, hold in esteem. I have met the Senator and know a
number of people who have had dealings with him in the past; the general
consensus is that he is quite straight forward and principled, one of the best
professionals around in terms of integrity and discipline – he represents a force
for good. That is not surprising giving the antecedents that precede him and
indeed the family tradition of excellence and ethical public service.
For all this and more, I find myself in a situation where the press release by UACN
Plc published in most national newspapers on January 06, 2010 and his follow up
clarification of January 11, 2010 in the BusinessDay newspaper (reproduced -
http://www.proshareng.com/news/singleNews.php?id=8671 presented me with
quite a difficult challenge, one I am unable to ignore.
This development and the questions it raised, continued to agitate my mind as I

made to review relevant literature on the subject of his compliance with the
provisions of s11 of the ISA 1999, vis-à-vis the obvious corporate governance
imperatives required in a clime like ours, given our history of subservient
stewardship, public perception defined by our recent history of an incestuous
relationship-biased regulatory environment, and the steps needed to restore
confidence in the financial market system, nay the capital market.
These considerations proved quite unsettling when juxtaposed against the

Senators’ well-intentioned interview/response which sought to address the
concerns raised in our January 06, 2010 blog post Regulators, Reporting and
Resolutions (http://proshareng.com/blog/?p=121) where we highlighted what
appears to be the existence or implied infusion of a real or perceived conflict of
interest situation.
The import of this article/presentation therefore is to articulate the salient points

to guide an understanding of why a decision is needed in respect of the dual
positions, one that separates the two as a matter of precedence and necessary
establishment of corporate governance rules.
When it comes to how the Senator should choose or behave on this matter,
sovereignty over decision-making does not rest with citizens – capital market
stakeholders and independent analysts like me; they rarely do. It will be one in

which the Senator will have to make in the best interest of the market – a
sacrifice or sentence?
The Original Sin

The corporate communications unit of UACN Plc did a good job in making sure
that the media gave the announcement of Senator Udo Udoma an extensive
coverage.
The job was so good we could not have failed to read all the reports where we
noticed a consistent ‘omission’ across the board - the senator’s chairmanship of
SEC had been conspicuously left out of the newspaper reports. A cursory check
revealed that the ‘omission’ was from the press release.
One is left, therefore, to infer from this that those at UACN Plc knew or had
reasons to be concerned about the possible implications of such a disclosure to
take the measured step of excluding such a high profile post from the chairman’s
profile.
In our previous publication on the ‘possible conflict of interest’ situation in the

SEC Chairman’s office placed us on enquiry and prompted an immediate alert on
the issue (see ‘The BULL in The CHINA SHOP’ pages 62 to 65, August 22,
2009; http://www.proshareng.com/reports/view.php?id=2016). In this report we
had laid out issues we felt ought to be considered with regards to the Chairman’s
office at the time, viz:
1. The need to expunge the recommendation for the post of an executive
Chairman for SEC from the Adedotun Sulaiman led Committee on the
Capital Market Reforms;
2. The conflicting status apparent in the office of the SEC chairman who was
a director in UACN Plc at the time (subsequently he has confirmed that he
is equally a Director at Unilever Plc and Vice Chairman of the board
of Linkage Assurance Plc) – all quoted firms listed on the floors of the
Nigerian Stock Exchange; and
3. The irrelevance of the belated query of August 19, 2009 from SEC to the
DG of the NSE over the Transcorp Plc debt issue – which they got wrong
both in context and timing.
The issues therefore was how to determine the possible areas of the anticipated
conflict of interest scenarios and what if any, could make the declaration of
interest as done by the SEC Chairman (in compliance with the disclosure rules
and proper code of conduct best practice for boards) irrelevant because of other
factors that affect the accomplishment of the objectives of the government
agency – SEC.
A review of this possible scenarios and live cases in our recent past helped us
reach a position: the general consensus was that this was a bad precedence and
one that we needed to think in terms of institution building to resolve.
The fact must be stated though that we found nothing to suggest that Senator
Udo Udoma had anything to do with the management of information by UACN
Plc; it however raises the question of just how the dual positions begin to create
and establish a pattern of behaviour that goes to the very heart of the concerns.
Legality and the Capital Market Reforms

A visit to the United States Securities & Exchange Commission will find you face-
to-face with a very large, framed quote prominently displayed outside the
Chairman's Office. It's a 1937 quote from a former Chairman (and later Supreme
Court Justice) William O. Douglas and it is headlined - "We are the investor's
advocate."

World over, the SEC (and varying forms of it) remains the only federal
government agency dedicated to looking out for investors. The role of this
institution has over the years become more pronounced for its failings rather than
its successes. When things go on well enough, we take it for granted. When
markets go into a tailspin as we have it, the role of SEC as the investors advocate
comes into question.
Indeed, there has been no time in history that investors have been more in need
of an advocate than today. Such an advocate therefore must not just be
scrupulously clean, but be seen to be indeed independent and devoid of any real
or perceived doubts on his/her standing.
Nigerians have risen up and humiliated their political class over its handling of the
financial crisis, and particularly of the level of impairment evident in the
regulators ability to rise above the numerous incestuous relationships they
cluttered themselves with (one in which Sanusi Lamido Sanusi, the Central Bank
of Nigeria governor alluded to and which encouraged him to take steps to
separate himself from ownership/directorship situations that could present a real
or perceived conflicting status for him in the discharge of his function).
Having said that, Nigerians have come to accept and see nothing terribly unusual
about their sense of powerlessness and alienation from the responsibility
imperative of regulators, which it has been proven brought us to this rot.
Moving on from here would require more than compliance with existing rules – it
requires setting new standards beyond rules to help us untangle roles and
relationships.
Senator Udo Udoma is correct in his submission that “Section 11 of the

Investment and Security Act (ISA) requires members of the board of SEC, who
largely hold down part-time roles, and who have direct and indirect interest in the
affairs of any quoted companies, to declare such interest and to excuse
themselves when the board is deliberating on matters affecting such companies. I
disclosed all my interests before I was appointed as chairman of SEC and asked
the authorities if this posed a problem and they said no.”
By way of background, Senator Udo Udoma ‘had been on the board of UACN for
10 years before he was approached to chair the SEC’. He has also explained that
since becoming chairman of SEC, he has turned down invitations to the board of
many publicly quoted companies.
This is good but not sufficient to resolve the larger issue facing the sovereign and
we will explore this in greater detail.
Conflict of Interest – Laying out the Arguments

Conflict of interest is difficult to define, yet it often appears obvious to many
people who think they know it when they see it. If ever there is an issue that
captures this sentiment, this one scenario with the Senator does.
The legal definition of conflict of interest, usually set out in state laws governing
non-profit corporations, is very specific and covers relatively few situations. Most
conflicts fall into a ‘grey area’ where ethics and public perception are more
relevant than statutes or precedents.
For our purpose, conflict of interest will be placed in the background to raise the
much informed argument about the ‘conflict of roles’ (explained in detail later in
the article) which arises whenever the personal or professional responsibilities of

a quoted company board member are or appear to be potentially at odds with

the best interests and objectives of the Securities and Exchange Commission.
We looked at such possible areas of conflict (in roles/interest) and narrowed it

down to the following ‘cultural’ issues, viz:
CONFLICT BY ASSOCIATION: The SEC Chairman is not involved in day-to-

day enforcement and oversight issues and need not be present or involved in
disciplinary review sessions but the mere fact the those who are in charge
are aware of his involvement in those firms where he has declared interest,
places them in a difficult position. Experience has shown that when placed in
such positions, the tendency is to be influenced by that consideration in
arriving at a conclusion.
CONFLICT ARISING FROM RELATIONSHIP WITH BOARD MEMBERS:
The likelihood of possible issues in business, commerce and politics, from
either the SEC board or any of the companies for which the Chairman is
serving as a director, may impact on perception of his role, person and
indeed the SEC as an institution, even if the matter does not come to the
board of SEC for discussions. The public and individuals involved will bring
into the equation his elevated position as the SEC Chairman.
CONFLICT ARISING FROM PROFESSIONAL RESPONSIBILITY: Should
UACN, Unilever or Linkage Assurance Plc be involved in a Cadbury Plc type
situation, or on matters related to the (mis)conduct of one or several officers
of the company, the SEC chairman becomes vulnerable to legal challenges
and public misunderstanding.
CONFLICT ARISING FROM PRECEDENCE: SEC has had its fair share of
criticism – ranging from the role of NSE and CBN in its affairs up till and
including the tenure of Senator Udo Udoma, and this continues and does not
look to abate any time soon giving what transpired during the confirmation
hearings for Ms. Aruma Oteh, where a goodwill deficit perception defines the
market. Under this scenario, recovery will be relative to the risk identified or
involved.
The Public Perception

Importantly, and in an ideal world, Senator Udo Udoma should not have any
eyebrows raised concerning this responsibility. This however is Nigeria where
scepticism and distrust of constituted authority and government agencies is
heightened by glimpses of possible conflicting circumstances which continues to
widen the gap in public confidence in the regulators, and by extension the
market.
The loss of public confidence is not strengthened simply by the honourable act of
declaring one’s interests upfront, as required by law.
This is necessary but not sufficient under this circumstance. Stakeholders in the
market will see the evidence of multiple interests in these dual positions as
one of which could possibly corrupt the motivation for an act in the other, mainly
through a perception – it does not have to be real.
This has much more credence given the powers available to the office of the
Chairman, SEC – the investors advocate. The SEC chairman is thus entrusted
with some impartiality for which a modicum of unencumbered relationships is
essential.
Just as the esteemed SEC Chairman explained in his clarification comment, the
existence of or the possibility of such scenarios – of a conflict of interest/role
circumstance may not, in and of itself, be evidence of wrongdoing.

In fact, for many professionals, it is virtually impossible to avoid having conflicts

of interest from time to time. A conflict of interest can, however, become an
ethical matter, for example when looked at as a conflict of role. I would assume
that the legal ramifications of this would provide sufficient grounds for action and
redress.
Indeed, and with all apologies for any insinuation made in our earlier post, it is so
easy to accuse anyone of a conflict of interest in this country even where
he/she has not acted improperly. That is unfortunate but remains a recurring
attribute of our make-up – the burden public officers have to carry.
On this matter however and based on the scenarios created above, we believe
that we can easily establish a "conflict of roles" situation, i.e. where a person
with two roles—an individual who owns stock and is also a government official;
may experience situations where those two roles conflict.
The conflict can be mitigated but it does not ignore the existence. This is
the litmus test for any argument on this matter.
I cannot re-iterate enough the need to distinguish between simply having two
roles at a time – which is not illegal – and having to recognise the differing roles
that will certainly provide an incentive for improper acts in some circumstances.
This is what the public will and have often used as a yardstick to determine a
conflicting status.
The Sacrifice
Officers of SEC surely understand sacrifice. The business of being the peoples
advocate, requires a willingness to subjugate, at least temporarily, their own
priorities, beliefs, and comforts to those of another (the objective of the
organisation – creating a credible marketplace for all stakeholders).
Today, that willingness is being put to test, and a demand made for an
unprecedented step – one not driven through any measure of force or coercion.
In nearly every capital market, especially ours, heightened challenges in the

regulatory environment have tipped the balance of power towards a commitment
to investors needs, and the regulators need to understand it’s time to surrender
more of their time and ego.
Conclusion
The natural approach would have been to insist on the notion that persistence will
overcome resistance on matters such as this; believing that the force of the
argument or platforms deployed will compel action. This is an uninformed
approach which is not required and considered unconstructive.
We believe that Senator Udo Udoma is a qualified, competent and reasonable

individual to hold any of the positions described on either side of the aisle; and
possesses a superior insight into the issues raised above to inform a decision that
would shape/address our submissions. We, like others, are prepared to learn from
the choice/decision made.
While we are waiting on this, I might as well bring to your attention the growing
disquiet about stock market analysts' growing conflict of interest situations – the
roles and prominence of equity analysts (especially during the boom period) who
make buy and sell recommendations on company stocks which they trade on; as
well as investment bankers, who help provide companies loans or handle private
placements and public offers (including mergers and acquisitions), whose
discharge of responsibilities create opportunities for conflicts of interests and
roles.

These are issues which we expect an untangled SEC Chairman to be able to deal
with and help accelerate the rate of recovery of our markets by tackling head-on
the negative perception and low level of confidence in the government institution.
The legality of this office does not and should not override the larger interest of
the sovereign – even if it does not create a de facto conflict of interest situation
but has the appearance of a conflict of roles situation.
Whichever decision Senator Udo Udoma takes here should not impair my regard
and esteem for him even as I recognise the enormity of what is before him – yet
he must know that we place no burden upon him on this matter - Legacy shall
speak!

ceo@proshareng.com
Profile: Senator Udoma Udo Udoma
Mr. Udoma attended St. Catherine’s College, Oxford University, where he obtained a
Bachelors of Arts Degree (Jurisprudence) in 1976, a Bachelor of Civil Laws Degree (Law) in
1977 and a Master of Arts (Honoris Causa) in 1981.
He attended the Nigerian Law School and was called to the Nigerian Bar in 1978 as a
Barrister and solicitor of the Supreme Court of Nigeria. He was a two-time member of the
Nigerian Senate from 1999 to 2003.
Mr. Udoma had his working experience in the under listed places to mention but a few:-
Lecturer in Law – University of Lagos
Investment Analyst – Chase Merchant Bank
Consultant to the Nigerian Liquefied Natural Gas(LNG) Project
Founding Partner Udo Udoma & Belo Osagie (Barristers & Solicitors)
Appointed a member of the team set up in 1984 by The Nigerian Government to
implement the LNG Project.
Consultant – Retained on a part time basis as a consultant by Sherman and sterling.
Member of the team set up by The Federal Government to carry out a review of the
Legal Aspects of the Nigerian Privatisation and commercialization Programme in 1991.
Member of the committee set up by the Federal Government to review existing policy
on Solid minerals in 1996.
Appointed Member of the ‘Vision 2010 Committee’ that was set up the Federal
Government in 1996 to articulate a national vision.
Member, Nigeria Economic Summit Group.
Member, National Senate, Federal Republic of Nigeria 1999 – 2007.
Chairman of the Senate Appropriations Committee, 2001 -2003.
Chairman of the Senate Committee n National Planning.
Chairman, Revenue Mobilisation and Poverty Alleviation, 2003-2005.
Appointed Chief Whip of the Nigerian Senate, 2005-2007.
Chairman, Securities & Exchange Commission, 2007 to date.
Mr. Udoma has attended and presented several Papers at local and international seminars
and workshops including papers on:
Nigerian trade and investment Laws
The Legal Aspects of Privatisation and commercialization
The Juridical Aspects of Private Sale and public Offering
Winding up and striking off of Companies: Problems of Implementation.
Incentives for Gas Projects in Nigeria

He specializes in advising on Nigerian investment laws and the investment environment

generally, particularly in the petroleum, energy and natural resources sectors; advising
Nigerian and international companies on company law, corporate restructuring, mergers
and acquisitions and the raising of financing in the capital and money markets, as well as
on major construction and engineering contracts; supervising commercial litigation and
inheritance planning services.
He is a member of The Nigerian Bar Association and International Bar Association.

STREET TALKING:
Surf boards: Riding public and private sector waves
Obiora Onyeaso
January 21, 2010 11:22PMT
http://234next.com/csp/cms/sites/Next/Money/Business/5514861-183/story.csp?CSPCHD=00000001000044towksc000000pKlHt_3__waBIolfK7APiQ--
I have just finished reading a stimulating piece by Femi Awoyemi of ProShare on

the potential conflicts of interest that Senator Udo Udoma, the City grandee and
chairman of the Securities and Exchange Commission (SEC), will be exposed to in
his latest appointment as the chairman of UAC.
To calm public concerns over any ethical risks he may run, Senator Udoma, who
also sits on the boards of Nestlé and Linkage Assurance, has issued a staunch
defence on the correctness of his appointment. The last time this subject
provoked a passionate debate was over the appointment of Professor Ndi
Okereke-Onyiuke, director-general of the Nigerian Stock Exchange, as chairman
of Transnational Corporation.
The topic of bipolar commitments by board members is one that should concern
companies. The full stature of a director with alternate roles, in the public and
private sectors, cannot be attained through a technical loophole in the statutes.
Until now, the leading voices in the debate have been public interest advocates
who seek to ensure that the private interests of company directors who also
occupy positions of public or regulatory responsibility do not receive undue favour
nor interfere in the dispatch of their duties. In contrast, little is heard from the
company and shareholder perspective on the limits of partisan commentary and
regulatory participation by directors. It is high time public companies addressed
the high profile external interests of non-executive directors.
Directors, as prominent private citizens, wear several hats. The riddle lies in
disentangling their various civic and business identities from one another since
actions taken in one sphere may reverberate in others. Meleveeti Damodaran, the
widely-respected former chairman of the Securities and Exchange Board of India
(SEBI), is one of those who feel that business leaders should not be inert to their
political environment. According to him, "the complete alienation of corporate
India from the political system has been unfavourable to either parties and going
forward corporate India should substantially augment its role in the Indian
political system." If the devil is in the details, then the demon is in telling political
involvement apart from interference.
Threats to government business
Only last week, Atedo Peterside, chairman of Stanbic IBTC and director on the
boards of Cadbury (Nigeria), Nigeria Breweries and Unilever, published an open

letter to the Federal Executive Council (FEC) with recommendations for resolving
the logjam that has threatened government business since the departure of
President Yar'Adua for medical treatment in Saudi Arabia, (‘Open Letter to the
Federal Executive Council: How to Resolve this Political Impasse by Atedo
Peterside').
In the letter, the author who did not state under which identity his comments
were made was careful to absolve public officials of his acquaintance from any
foreknowledge. Remarkably, he did not dissociate fellow board members of the
public companies on whose boards he sits from its prior knowledge, neither did
he state explicitly that the views expressed do not represent those of the boards
on which he sits.
Atedo Peterside, who has a reputation for standing up for his principles when he
believes government policy is ill conceived or plain hazardous, was one of the few
senior bankers who had the courage to go public with dissenting opinion after the
Central Bank of Nigeria announced its N25 billion capitalisation agenda in 2004.
At that time, he expressly wrote in his capacity as the chief executive of an
institution of interest.
Political pronouncement
When a personality of Peterside's eminence makes pronouncements of

unmistakably political colour, it brings to sharp relief, several questions over the
limits of expression on politically sensitive issues by public company directors.
Some may argue that Peterside's letter was timely, relevant and motivated by
noble patriotic sentiments. No quarrel there. But that would be missing the point.
The point is not the content or intention but the character of such
pronouncements, which are unambiguously political, by a public company
director. The issue properly shaped is not about whether a board director should
have political interests or lend support to political campaigns but how vocal he
can be in the proclamation of such inclinations.
If we accept Atedo Peterside's letter as being in order, then we must be equally

embracing the one from Oba Otudeko of First Bank, to the Independent National
Electoral Commission (INEC) on the primaries selection process in Ogun State,
and just as receptive to a missive from Aliko Dangote of the Dangote Group to
the Kano State chapter of the Peoples Democratic Party (PDP), campaigning for a
candidate as the party's gubernatorial flag-bearer.
Sooner or later, Nigerian companies must deal squarely with this subject.
Governance codes cannot remain silent on the activities of board members who
wear both public and private sector hats. The liberty of individual discretion has
proven a weak restraint.
The writer is the managing director of a full service investor relations firm based in Lagos.
Dear reader. While we value your feedback we have to moderate them, so your comments would appear in a maximum of one hour.
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Reader Comments (2)

Udo Udoma, SEC and the Perception Gap

February 02, 2010; 2130 hrs, Omole, Lagos, Nigeria
“We must not allow ourselves to become like the system we oppose.” –
Bishop Desmond Tutu
There can be few less likely heroes for Corporate Nigeria’s progressive class than
Senator Udo Udoma, Chairman of the Securities & Exchange Commission (SEC);
who as at today, has stayed a full month unfortunately as a ‘conflicted
personality’ in the unfolding dynamics reverberating in the Nigerian Financial
system. He was a friend to all, a man with pedigree and an ally to count on in
Corporate Nigeria and the general public.
Yet, he choose to risk all for the sake of an office that needed a higher set of
standards than the laws available and the guidelines covering its operations could
have anticipated in the light of the growing challenges the market is beset with.
He did this, perhaps believing in the force of good he represents and the loyalty
shown him through the ‘silence of the grave approach’ adopted by the media and
operators; than in his otherwise sound and informed judgment on most issues;
before now.
When we responded to the January 04, 2010 press release by UACN Plc and
highlighted the ‘deliberate and obvious’ omission of his current status as the SEC
Chairman in their announcement of his chairmanship of UACN; his response was
to further draw attention to the fact that he was not only the chairman of UACN
Plc, a quoted company under his supervision as the Chairman of the apex capital
market regulatory body of the land; but a Vice Chairman of linkage Assurance Plc
and a director of Unilever Plc.
In his defense of the decision, he affirmed that he has met the criteria for
disclosure set out by the ISA and indeed had held those positions before he took
office as the SEC Chairman. If he thought that addressed the central issue of the
day; he was soon to be gob-smacked by the pronouncements from CBN, days
after.
Furthermore, the conflicted status of the SEC Chairman thus immediately placed
the newly appointed SEC Director General in a perception spot – how can she
exercise the independence required where such a glaring conflict of interest
or/and roles exist at it highest echelons?
The Perception Gap Hypothesis
The perception gap occurs when we begin to dig a bit deeper to understand
what's actually happening with the regulatory bodies hitherto expected to operate
above board and conflict. These enquiries lead us to an obvious conclusion – the
rot we currently find ourselves was a man-made creation driven by our inability
to separate personal estate from the public responsibility matrix that is so crucial
to defining, establishing and discharging a level playing field.
A culture of incestuous relationships between regulators and operators has, over

the years conspired to define access and interpretation of the market rules. These
has led to so many ‘unintended consequences’ including but not limited to:

1. Perception of injustice, no reprimand and no sanction for erring defaulters for

serious and often times, criminal acts in the market against investors;
2. A weak regulatory regime driven by the knowledge that principal officers are
conflicted or that they are unwilling to act within the best ideals of the
commission where the issues affect politically advantaged individuals; and
3. A deliberately weakened supervisory and enforcement function either due to a
‘sycophantic work culture’ or due to a ‘punitive and vindictive management
culture’.
Needless to say, and prior to now; the joke in the market was on SEC – an
institution with quality workers who are unable to discharge their professional
duties – on account of political posturing, structural inadequacies arising from
interference from the supervising ministry and the ruling class; and an inability to
claim the high moral ground on matters related to disputes and conflicts between
operators and investors on the one hand, and between regulators and operators
on the other hand.
It is common knowledge that the issue between Femi Otedola and Aliko Dangote
remains largely unresolved, - yet the market chooses to move on – to what? Ditto
the AP Plc public offer underwriting issues – a subject of a sustained media battle
without any resolution to serve as guidance for the market or comfort for
investors in the offer.
There are a few cases known in the market that has been passed to the EFCC for
which a holistic solution has arisen and even though it has its own APC system;
justice can take years in a market for which TIMELINESS ought to be a minimum
guiding principle – delayed decisions cost the prosecuting parties (investors)
more and SEC is often credited with saying that it is structurally unable to enforce
judgment it passes.
There are brokers that have made away with depositors funds, who simply closed
operations and months and years after, investors still run from one law
enforcement agency to the other because there is no one to aid them. Further,
there are brokers sanctioned by SEC who still engage in activities in the sector
because there is no system to check and enforce these decisions.
This credibility gap predates the current Chairman of SEC it must be said that
strides have been made under his leadership to set a clear path for the
commission; especially the review conducted and delivered on time. Much more
was even done during the tenure of Daisy Ekineh, who held it together during a
difficult time.
Our share support service – helping investors resolve issues that should be taken
for granted - is however constantly inundated with complaints from investors and
the public over matters that should receive the attention of SEC. For how long
must we pretend that all is well with the regulatory commission?
The expectation of a change arising from the appointment of an outsider has

been dealt a blow with the insistence of the SEC Chairman to retain his dual role
as a chairman and director of a public quoted company subject to his decision
(excusing himself from such discussions) – this robs the SEC of the value it was
meant to deliver.
The CBN Directives on Bank CEO’s as an Informal Code for Regulators
When the CBN on January 19, 2010 released it directives to banks in respect of
the tenure of CEO’s and the qualification for appointment of ex-CBN and ex-NDIC
officials into the boards of these publicly listed banks -

– it
http://www.proshareng.com/news/singleNews.php?id=8843 created a far-reaching
paradigm that Senator Udo Udoma must have missed.
The directive from CBN not only fixed a 10-year tenure for bank chief executive
officers in the country, it laid out an exit date for those who would be affected, a
disqualifying period for the CEO’s, CBN, and NDIC officials, and made changes to
both engagement contracts and provisions of the Memart.
While it can be argued that the limits of this policy ends with banks licensed by
the CBN; the wider implications of the policy was the setting up of an informal
code for regulators.
For how can one rationalize the use of this code within a limited sense and
exclude other regulators within the financial services sector – when the problem
within the sector was not confined to the banks. The problem, as defined by the
apex regulator was that a culture of incestuous relationships had been established
in fact and perception and if this was not addressed, existing rules cannot hold
those who abuse the system liable. Most importantly, the need to establish a
conscious distance between OPERATORS and REGULATORS was imperative rather
than discretionary; existing laws notwithstanding.
The Senate Committee on Capital Markets
We have passed on to the Senate Committee all the correspondence and investor
complaints on the subject of the ‘conflicted position of the SEC Chairman’; and
this has been virtually a daily affair since January 6, 2010.
So many wrote under a ‘pseudo name’ for fear of reprisals which they collectively
agree is very real on matters relating to expose of information on SEC. Not a few
even doubted our desire to furnish, publish or comment on same given the
almost media blackout that has occurred ever since. Further investigations
revealed more damning tales of ‘institutional intimidation’ either directly or
through actions taken on others with similar cases like theirs on otherwise
‘routine’ complaints on operator infractions.
Recall the SEC position on private placements, Transcorp issue, criminal actions
against brokers referred to EFCC after an investigation, unpaid refunds from
public offers, unpaid dividends by quoted companies and the poor handling of the
post-public offer obligations of quoted companies.
It must be said that no direct accusation was made with regards to the person of
the SEC Chairman, but the general impression was that no one would dare go
against a matter ‘they would rightly think he was interested in’.
This and other fundamental issues must have therefore informed the Ganiyu
Solomon-led Senate Committee on Capital Markets to invite the SEC Chairman for
a private audience to address this current and immediate ‘perception gap’ arising
from his dual role in the market.
Our sources have confirmed that he did not attend the meeting with the
committee, scheduled for today as earlier agreed.
A review by market analysts and legal practitioners of the ISA reveals that unlike
other governing boards, the SEC Board’s role goes beyond advisory –
indeed, not in a few instances have we found the words – ‘decisions are subject
to the board’ used literally and explicitly.
This action in itself lends credence to the fears expressed on having such a status
go unchecked. It has nothing to do with the person or personality but the office

and its imperative to not only be independent in fact but have the appearance of
independence – not one saddled with a perceived, potential or portent conflict of
interest or/and role image.
The announcement therefore in January 2010 of a joint commitment of the CBN,

SEC, NSE, NAICOM, PENCOM and NDIC to commit to a code of conduct for
regulatory agencies officials.
The Fallacy of the SEC Chairman’s Stand in the light of the Proposed Code
of Conduct for Regulatory Agencies Officials
Need we waste time on this subject?
Maybe not but it might just be well to re-iterate the unintelligent approach to
managing the market – by calling the proposed ‘plan’ a ‘sweeping reform’ in the
nations’ financial sector through the creation of an umbrella code of conduct for
the financial industry regulatory agencies spearheaded by the Central Bank of
Nigeria (CBN), Securities and Exchange Commission (SEC), Nigerian Deposit
Insurance Corporation (NDIC), the Nigerian Stock Exchange (NSE), and Pension
Commission (PENCOM).
Under the planned approach, senior officials of the regulatory agencies are
to be restrained from holding significant equities in companies under
their jurisdiction. According to analysts, this is a loose approach to the CBN
move to prevent such regulators from holding shares in companies supervised by
them.
The intendment of this new rule is that officials, mostly senior personnel in the
regulatory agencies, will no longer have a free reign in terms of investment in
‘financial’ institutions, which they oversee. For instance, CBN and NDIC officials in
the Banking Supervision Department, whose duty is to monitor the health of the
banks, may cease to be shareholders in those banks.
Indeed, the quantum of credit facilities such officials can take from any bank will
be defined in the new rules. According to proponents of the new order, the
prevailing regime, where some officials in the regulatory agencies were either
former employees or investors in the firms, raises moral and credibility
questions.
According to The Guardian, who broke the news - an official of one the regulatory
agencies said that the essence of the code of conduct, “is to avoid a conflict of
interest between the regulators and the regulated, especially as regards
the level of shares senior officials can own in companies under them. The
rules also touch on the level of funds a regulator can borrow from a bank,
the terms and the disclosure requirements among other things.”
So why limit it to financial institutions?
For hypothesis sake, let us assume that the Chairman of SEC was the Chairman
of Cadbury Nigeria Plc under Bunmi Oni, as the facts made available suggested;
how would SEC have handled a situation where his chairman – holding a dual role
– will sit in judgement to be removed from the board and retain his SEC
Chairmanship without consequences on the moral fibre of the commission?
Posers:
If the ethical code is considered of such paramount importance outside the
‘disclosure of interest rule’ the Sec chairman has clung on to; why is it less
applicable in his case.

Further, if as we understand, the CBN has already co-opted other regulatory

agencies into a scheme that will enable them to operate as one entity (a brilliant
decision) in supervising all the financial institutions to avoid any loophole; while
allow the SEC situation to remain at status quo.
What if Musa El-Faki or Daisy Ekineh (recent past DG and Ag. DG of SEC
respectively) decides to accept an offer of chairmanship of a quoted company
tomorrow, would the SEC Chairman have the moral right to ‘borrow a leaf’ from
the CBN type directive to prevent him/her from doing so? Or would he start a
staff management change (or cleansing) in the enforcement function – thus
subjecting the sitting Director-General to a lame-duck status
An Enlightened Approach/Example
According to Lamido Sanusi - "I do believe that the dividing line between
the regulator and the operator needs to be very clear and I need to be
clear about my role as a regulator, and that includes creating a level
playing field." He stressed that this included avoiding questions of conflict of
interest. He continued: "I have just left First Bank and as an employee of First
Bank I had loans that were staff loans at concessionary rates. Usually, what
happens in institutions like that is when you have left; they leave your loans at
that concessionary rate. One of the things I did was to call the managing director
that I wanted my loans converted to a commercial rate, precisely because I am
the governor of the Central Bank." Sanusi said he took the step to set a standard
for himself if he intended to hold other regulators to those standards.
He also pointed out that there are certain circumstances that could lead to conflict
of interest, "and we need to be very explicit in our definition of those
circumstances. You may not avoid everything; you may not stop people from
borrowing from banks or buying shares in banks, but then if you do, to what
extent? What are the terms? What are the disclosure requirements?"
Based on the foregoing, the CBN Governor said he would suggest that “senior
regulators should not be shareholders in the institutions they regulate”,
adding that, "I personally would sell any shares in any bank as long as I was the
Governor." So what is the SEC considering?
SEC Considers Tenures for Quoted Firms’ Directors
Thisday published a story in January 2010, barely a week after the Central Bank
of Nigeria (CBN) rolled out its policy fixing tenure for bank chief executives -
http://www.proshareng.com/news/singleNews.php?id=9001 where the Securities and
Exchange Commission (SEC) stated that it was considering enforcing the
2009 Code of Corporate Governance which will limit the tenures of
directors of quoted companies. Under the proposal, directors of quoted
companies must retire at the age of 70 years or after serving for a maximum of
12 years - that is, three terms of four years on the board.
SEC, it was reported, was unhappy with a situation whereby older directors sit on
the board of quoted companies and deny younger hands the opportunity to
contribute to the development of quoted companies and institutions. This must
have informed the recommendations contained in the Report of National Technical
Committee on the review of the Code of Corporate Governance, which was
submitted to SEC in March 2009.
The committee, headed by Mr. Balarabe Mahmoud (SAN), was inaugurated on

September 15, 2008 by the SEC Chairman, Senator Udoma Udo Udoma to,

among others, review the existing Code of Best Practices on Corporate

Governance in Nigeria, that of the 2003 Code as well as to examine and
recommend ways of effecting greater compliance with the 2003 Code by public
companies. According to the Code, such steps are designed “to avoid conflict of
interest, breach of confidentiality and misappropriation of corporate
opportunities”. The code also encourages the appointment of independent
directors to boards of quoted companies.
While SEC is understood to be considering adopting the Committee’s report,

which could become effective immediately thereafter; we await a revised copy of
the recommendation to affirm whether it has any provision in it for the conflicted
status of the SEC Chairman.
Conclusion
The real joke in all this is that SEC is actually considering penalizing companies
and individuals for violating the new code of Corporate Governance once it
becomes operational. Indeed the punishment ranges from a fine to a possible
delisting of an erring company.
According to Thisday, the enforcement of the 2009 Code of Corporate Governance

is said to be on top of the agenda of the new SEC Director-General, Ms. Arunma
Oteh. How can she possibly hope to do this when she is unable to resolve the one
central issue affecting her independence – a SEC Chairman in direct contradiction
with the proposed code of Governance? The same report highlights the stack
reality that outside Senator Udo Udoma, there are also over 25 companies whose
directors are sitting as either multiple directors or interlocking directors in breach
of Organisation for Economic Co-operation and Development (OECD)
internationally accepted standards of best practice. Apart from the tenure and
age limit, the new code also frowned on family and interlocking directorship as
well as multiple directorships where one board member sits on the board of
several companies in the same industry.
The problem is that the Nigerian SEC has never been officially given the free hand
to perform their role which is to "to protect investors, maintain fair, orderly,
and efficient markets, and facilitate capital formation”. There has always
been a power tussle between the NSE/SEC.
The current work being done in the banking sector by Sanusi will not correct most
of the problems at the NSE. There has to be a major shake up at the NSE, and
the SEC has to show that they have the guts to take on the culprits (i.e.,
brokers/brokerage firms being on the buy/sell sides of a deal, lack of
transparency, etc) and this is not helped with a conflicted status of its chairman.
Reference: Udo Udoma & SEC – Legality, Perceptions and Sacrifice

http://proshareng.com/blog/?p=131

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Anxiety as Udo Udoma becomes UAC

chairman
By Daniel Osunkoya, February 8, 2010 01:47AM
Some market analysts have raised concern over the appropriateness of appointing the chairman of the
Securities and Exchange Commission, Udoma Udo Udoma, as the new chairman for UAC Nigeria Plc'
s Board of Directors.
They said market regulators should not be dinning with the people they were supposed to police
because it affects investors' confidence in the market.
The UAC Nigeria, a publicly quoted company, last month, named Mr. Udoma, a former Chief Whip of
the Nigerian Senate, as its chairman. Mr. Udoma is also a Director at Unilever Nigeria Plc, another
quoted company.
In the same vein, the Director General of the Nigerian Stock Exchange (NSE), Ndi Okereke-Onyuike,
also chairs the Board of Directors of Transnational Corporation of Nigeria Plc (Transcorp), a quoted
company.
No perceived doubts
Olufemi Awoyemi, Managing Director and Chief Executive Officer of Proshare Nigeria Limited, told
NEXT that issues related to "conflict of interest" or "conflict of role" may arise when senior officials in
regulatory institutions, such as the exchange commission and the stock exchange, assume positions of
authority in quoted companies.
Mr. Awoyemi said this development and the questions it raised calls into question Mr. Udoma's
compliance with, "the obvious corporate governance imperatives required in a clime like ours given our
history of subservient stewardship, a public perception defined by our recent history of an incestuous
relationship-biased regulatory environment, and the steps needed to restore confidence in the financial
market system, nay the capital market."
He said when it comes to how Mr. Udoma should choose or behave on administrative matters,
"sovereignty over decision does not rest with citizens -capital market operators and independent
analysts like me; they rarely do. It will be one in which the senator will have to make in the best
interest of the market - a sacrifice or sentence?"
The analyst said the exchange commission remains the only federal government agency dedicated to
looking out for investors' interest. "The role of this institution has over the years become more
pronounced for its failings rather than its successes. When things go on well enough, we take it for
granted. When markets go into a tailspin as we have it, the role of SEC as the investors advocate comes
into question," Mr. Awoyemi said.
He said there has been no time in history that investors have been more in need of an advocate than
today; "Such an advocate therefore must not just be scrupulously clean, but be seen to be indeed
independent and devoid of any real or perceived doubts on his/her standing."
Regulator as operator
In his own view, Ope Banwo, an analyst and legal practitioner at The Market Ombudsman, said Mr.
Udoma's appointment as UAC Nigeria's chairman "is one of the nonsense that is grinding Nigeria to a
halt." Mr. Banwo said, "How can there be transparency when a regulator is also an operator? It is only

in Nigeria that I have seen that, and it will not change until the powers that be recognise the fact there is
no way you can be a judge in your own court and there will be a fair judge."
The lawyer said, "I don't care how much integrity Mr. Udoma (who is also a legal practitioner) has, it
will be very difficult for him to convince us (market operators) that he would be fair when it comes to
the affair of UAC Nigeria if brought to the SEC. What would stop the Senator from revealing the secret
of SEC to UAC if an investigation issue occurs?" Mr. Banwo said the Senator's acceptance of the offer
"is very wrong and it shows that the government has not learnt anything from the financial mess
Nigeria is going through."
He said that the present financial crisis is a direct result of the "infectious relationship" that exists
between the regulators and the operators of the market. "Now we are laying the ground for another
hurricane some years down the road," Mr. Banwo added.
However, he said that there should be a law against such relationship since there is none presently. "It
is not like that anywhere else in the world. We are going to be pushing for that (the law) as market
ombudsman. If you are in a regulatory body, you should not serve in any capacity of publicly quoted
companies," Mr. Banwo said.
He has done no wrong

Supporting Mr. Udoma's action, Albert Edun, an executive member of the Nigerian Shareholders
Solidarity Association, said as long as the senator meets the requirement for the two posts and he is
proven to be competent to hold the posts "why don't we leave him there?" Mr. Edun said, "I believe
Mr. Udoma is an experienced man so I have no objection to his leadership abilities."
"The fact that he is SEC's chairman and at the same time UAC chairman does not matter once proper
requirements are met. What is necessary is that whenever issues occur in companies where he has
interest, he must leave the place for accurate debate to take place," Mr. Edun said.
This is not new
Explaining why he accepted the new position, Mr. Udoma said he was on the board of UAC before he
was approached to accept the part-time chairmanship of SEC. "And I informed the authorities that I am
on the board of UAC as well as other boards. These were relevant factors in making me suitable," he
said.
Mr. Udoma said, "Recently when the chairman of UAC retired, as the next most senior director, I
became the chairman. It's nothing new. I've been on the board of UAC before the appointment and it's
consistent with international practice. In countries such as Malaysia, Thailand, and other countries
where it is a part-time position, that is the practice and the procedure. If you were appointed a full-time
chairman, director general, or commissioner, then you resign.
"I am surprised about the reaction because I have been on the board of UAC before I was appointed. I
am surprised there was no issue raised since then. Now that I am the chairman which doesn't really
change anything either as a director or chairman, since the interest is the same, people are reacting."
The senator said what the Investment and Security Act (ISA) provides is that, "you declare upon
resumption of chairman your interest in the affairs of any quoted companies, and I did that in writing
about 20 months ago when I became the part-time chairman, and nothing has changed since. It's a four
year part-time chairmanship. I'm only part-time. I only go for maybe six meetings per year. I'm not
involved in the day to day management. I just go for board meetings."
Mr. Udoma said that the security act already anticipated that such an issue may occur and that was why
it says: "any matter that comes up involving any company which you have an interest, you excuse
yourself and you do not participate in the deliberation."
Unavoidable situation
However, as Mr. Udoma explained further, the issue of conflict of interest or role ‘is completely
unavoidable.' "The truth is that you cannot get anybody who will meet the qualification of the SEC's
chairmanship and will not have a conflict by definition because the ISA requires that you must have 15
years experience in capital market. That means you must be an operator in the market -either a lawyer
handling market related cases like me, or you're on the board of a company quoted in the market, or a
stockbroker, etc. and being involved in the market creates a conflict, so it is impossible to find someone
who will not have a conflict," the senator said.

Mr. Awoyemi agrees that the Senator's submission "is correct" and "good but not sufficient to resolve
the larger issue" facing his sovereignty.
"The legality of this (Mr. Udoma's) office does not and should not override the larger interest of the
sovereign - even if it does not create a de facto conflict of interest situation but has the appearance of a
conflict of roles situation," Mr. Awoyemi said.
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Reader Comments (4)
Posted by Deola on Feb 08 2010

This is why I will NEVER invest in the Nigerian Stock Exchange. And you are shocked to here about
insider trading. What is UAC does anything wrong, will the SEC have guts to do anything.
Posted by Trusted One on Feb 08 2010

The simple and sensible step is to ask whoever the new appointed individual is to relinquish all existing
roles b4 assuming such an office. That way you will sift public servants who have a true desire to
service - versus those on a personal crusade. Whilst i take udoma's point on the 15years experience -
the step would be to quit all such boards on assumption of the post and 3 years post resignation from
said post! So simple!
Posted by Danladi Attahru on Feb 08 2010

Udo Udoma is a shame to the office he holds. As a lawyer and an oxford graduate, he appears to have
lost any sense of ethics which are the guiding pillars expected of a man of his stature and exposure. His
arrogance in the light of clear and obvious corporate governance challenges qualifies him to be the
single most important impediment to instilling corporate governance at SEC. Arumah Oteh cannot
convince anyone that she can add value to the commission under this cloud. What a shame.

Udo Udoma: The Senate Committee on Capital Market Position

February 05, 2010
THE SENATE
FEDERAL REPUBLIC OF NIGERIA
COMMITTEE ON CAPITAL MARKET
NATIONAL ASSEMBLY COMPLEX
THREE ARMS ZONE
P.M.B. 141 GARKI
4th February, 2010 ABUJA, NIGERIA
Mr. Remi Babalola

The Honourable Minister of State for Finance
Minister of Finance
Central Area
Abuja
RE: SENATOR UDO UDOMA AND THE CHAIRMANSHIP OF UACN PLC AND
MEMBERSHIP OF BOARDS OF PUBLIC QUOTED COMPANIES.
Our attention has been drawn to the recent appointment of Senator Udo Udoma
as the Chairman of UACN a public quoted company in Nigeria. We are also aware
that he is currently the Vice Chairman of Linkage Assurance and a board member
of Unilever, both public quoted companies.
As the Minister overseeing the capital market and a seasoned banker you will
agree with me that section 4 (1) (a) of the ISA 2007 vests the board of the SEC
with enormous powers. For ease of reference Section 4 (1) a states that:
4. (1) The board shall be responsible for the general administration of

the Commission and in particular shall:
(a) Formulate general policies for the regulation and development of the
capital market and the achievement and exercise of the functions of the
Commission.
Hon. Minster, it is in pursuance of the fulfillment of the responsibilities of

regulating and developing the market that the act in section 13 makes elaborate
provisions for the functions and powers of the commission.
A cursory look at the functions and powers of the Commission under section 13 of
the ISA and the contemplation of the legislature when enacting the law seems to
clearly suggest that the office or the DG, any relationship that would tie them to
any of company that they (SEC) regulates.

There is therefore definitely and clearly a conflict of interest situation in Senator

Udo Udoma chairing the board of SEC and UACN and being on the board of public
quoted companies. We are of the opinion that the elimination of room for
unregulated relationships is critical to any perception of integrity or the ability of
the regulator to take actions without fear or favour.
We believe it is for this reason that SEC last year queried the Director General of
the Nigerian Stock Exchange on her continued chairmanship of board of
Transcorp and at the same time occupying the position of Director General and
Chief Executive of the Nigeria Stock Exchange.
Hon. Minister, we feel the need for you to take immediate action on this matter
because of the recent recovery of the market and the need to sustain it through
tackling any issue which is capable of wearing down the confidence in the market.
As you are aware our economy depends on efficient, open markets safeguarded
by the rule of law and the market deserves and is yearning for an impartial SEC
that safeguards the public interest. His membership of these boards is capable of
undermining this.
Hon. Minister, like all stakeholders we are in agreement that there exists a lacuna
and other several inconsistencies in the ISA 2007, it is for these reasons that the
committee is currently working on an amendment of the act to bring it in line with
realities and international best practices.
While this is being undertaken we wish to enjoin you to direct Senator Udo
Udoma to either step down as the chairman of the board of SEC or resign his
chairmanship and Vice Chairmanship of UACN and Linkage Assurance as well his
membership of the board of Unilever or any public quoted company.
Please accept the assurances of the committee’s highest regards,
Senator Ganiyu Olanrewaju Solomon

Chairman, Senate Committee on Capital Markets
cc:
Dr. Mansur Mukhtar
Hon. Minister of Finance
Ms. Aruma Oteh

Director General Securities and Exchange Commission
Senator udo Udoma

Chairman
Securities and Exchange Commission
Members of the Board

Securities and Exchange Commission

The Press Release by the HMSF – Feb 12, 2010:
Udo Udoma: Babalola Replies Senate Committee’s Enquiry
The Honourable Minister of State for Finance, Mr. Remi Babalola, has responded
to the enquiry from the Chairman of the Senate Committee on Capital Market,
Senator Ganiyu Solomon, about the appropriateness of the board appointments
of Chairman of the Securities and Exchange Commission, Senator Udo Udoma.
Senator Solomon had in a letter to the minister dated February 4, 2010

demanded an explanation over the perceived conflict of interest situation arising
from the appointment of the SEC chairman by UAC of Nigeria and Linkage
Assurance Plc as Chairman and Vice Chairman, respectively.
In his letter to the Senate Committee chairman dated February 9, 2010, Babalola
promised to review the situation and revert promptly to the Committee.
“Undoubtedly, the issues are quite critical and call for quick action especially on
the need to review the existing Investment and Securities Act (ISA) 2007 to
safeguard the integrity of SEC as a regulatory institution. Be rest assured that the
matter is being looked into and we will revert to you in due course,” he said.
The minister reaffirmed his commitment to higher regulatory and supervisory

standards in all segments of the financial services industry.
“All the regulators of the financial market are collaborating with a common code
of corporate governance most especially at this junction of the nation when we
are inculcating attitudinal change and character re-orientation for a better
Nigeria,” he added.
Solomon had also in his letter noted that the functions and powers of the
Commission under Section 13 of the ISA indicated that the office of the director-
general, chairman, the commissioners and staff of SEC ought to be free from any
relationship that would tie them to any of the company that SEC regulates.
“There is therefore definitely and clearly a conflict of interest situation in Senator

Udo Udoma chairing the board of SEC and UACN and being on the board of public
quoted companies.
“We are of the opinion that the elimination of room for unregulated relationships
is critical to any perception of integrity or the ability of the regulator to take
actions without fear or favour,” Solomon said.

The Press Release by Senator Udo Udoma – Feb 14, 2010:
Udo Udoma justifies his dual roles as UACN and SEC Chairman
By Lanre Oyetade, Group Business Editor, Tribune
Senator Udoma Udo Udoma, Chairman of UAC of Nigeria Plc, has described as
baseless the petition by Chairman of Senate Committee on Capital Market,
Senator Ganiyu Solomon asking the Minister of State for Finance, Mr Remi
Babalola, to compel Udoma to resign as Chairman of the Securities and Exchange
Commission (SEC) following his recent appointment as Chairman of UACN Plc.
In a statement yesterday, Udoma dismissed the allegation of conflict of interest

and disclosed that Senator Solomon was aware that he (Udoma) was serving on
the boards of UACN Plc, Linkage Assurance Plc and Unilever Nigeria Plc during his
screening by Senator Solomon’s Committee for SEC chairmanship.
Udoma disclosed: “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 to consult and think about it before accepting. One
of the things I needed time to examine was whether the appointment would be
consistent with my other commitments. 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. My investigation also revealed that this was an established
practice. Indeed, my immediate predecessor as chairman of SEC and I served on
the same board whilst he was the chairman of SEC. Had it been otherwise I would
have declined the offer to be the chairman of SEC.”
He further said: “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. At my screening I presented to that Committee
my curriculum vitae clearly showing that I was serving on the boards of UAC of
Nigeria Plc, Linkage Assurance Plc. and Unilever Plc., as well as being a partner in
the commercial law firm of Udo Udoma & Belo-Osagie. Under the circumstances,
it is difficult to understand Senator Solomon’s claim that he was not aware that I
was already serving on those boards before my appointment as chairman of SEC
in June 2008.”
Udoma, who became Chairman of UACN Plc on January 2, this year having served
on the board for several years, said he was quite shocked by Senator Solomon’s
petition because he had even disclosed his recent appointment as Chairman of
UACN Plc to Senator Solomon during a recent meeting in Lagos.
His words: “I am puzzled by the letter because I had no indication whatsoever

that Senator Ganiyu Solomon had any problem with my holding appointments on
the boards of public limited liability companies. About a week before I travelled
(to Malaysia) I received an invitation from Senator Solomon to meet with himself
and his deputy in Abuja to discuss matters of mutual interest. Unfortunately the
date he indicated was not convenient for me and I called him to say so. I offered,
instead, to visit him in his house in Lagos which he accepted. Much of the

discussion at the meeting was to do with strengthening the collaboration between

SEC and the Capital Market Committee of the Senate. In that regard, I pointed
out that since I was not an executive chairman, and visited Abuja only when we
had board meetings, the principal person he would have to deal with would be the
Director General and I promised to arrange a meeting with the new DG for that
purpose. I raised the issue of my recent appointment as chairman of UAC of
Nigeria Plc, and reminded him that I had been on the board of the company prior
to my appointment as chairman of SEC and had declared it, as required by law.
The meeting ended with no outstanding issue and I informed him that I would be
travelling out of the country. His letter therefore takes me completely by
surprise.”
Udoma said that during his visit to Malaysia, he discovered that part time
members of the Security Commission serve on boards of quoted companies but
the law is being reviewed restricting them to only companies on which they were
serving prior to their appointment. This is because it would be most unfair to
approach reputable individuals whose experience was needed by the Commission
to serve as part time board members, and then to ask them to give up their
existing commitments for an unpaid national assignment.
“Just as in Nigeria, part time commissioners in Malaysia only receive sitting

allowances, and no salary. 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. However, full time members are generally restricted from
accepting any other appointments except in other regulatory agencies,” Udoma
further said.
He described as erroneous and totally misleading the attempt by Senator

Solomon to equate his role as SEC Chairman with that of the Director-General of
the Nigerian Stock Executive who serves as Chief Executive in that capacity.
According to Udoma, the NSE DG was “rightfully queried for accepting to serve on
the board of a quoted company whilst a full time executive of the primary
regulator of the capital market. The more appropriate comparison should have
been with my good friend and highly respected businessman, Oba Otudeko, who,
as the non-executive president of the Stock Exchange, the primary regulator of
the capital market, served as non-executive director of First Bank of Nigeria Plc.”
Even as Udoma has not violated the current law in Nigeria, he suggested that
Senator Solomon’s Committee should play a role in modifying the law in order to
remove any suspected conflict of interest. “The solution for those who feel that
the existence of such a potential conflict is unacceptable in Nigeria might well be
to adopt the United States model where SEC Commissioners are all full time. This
will require an amendment of the Investment and Securities Act. These are all
matters for debate, and Senator Ganiyu Solomon, as the Chairman of the Senate
Committee on the Capital Market, could play a role in helping to lead that debate.
However, it is wrong and in very bad taste, for Senator Solomon to seek to bring
to public ridicule a person who has done nothing wrong; a person who simply
responded to an invitation to serve his country within the terms of the existing
law, and practice.

Media Coverage of the Senators Statement:
http://www.thisdayonline.com/nview.php?id=166506
Udoma: FG, Senate Knew of Directorship Before Confirmation as SEC Chairman

From Kunle Aderinokun in Abuja, 02.15.2010
• Oba Otudeko was non-executive president of Nigeria stock Exchange (NSE)

while being on the board of several quoted companies including First Bank
• Aliko Dangote is the current non-executive President of the NSE but he is also
Chairman of Dangote Sugar Plc, Dangote Cement Plc and Dangote Flour Plc
• This is the case in several other countries including Malaysia and Thailand.
Chairman of United African Company of Nigeria (UACN) Plc, Senator Udoma Udo Udoma, has
defended his appointment as Chairman of the company while also being non-executive Chairman of the
Securities and Exchange Commission (SEC).
Udoma in a statement made available to THISDAY yesterday, described as baseless the petition by
Chairman, Senate Committee on Capital Market, Senator Ganiyu Solomon, asking the Minister of State
for Finance, Mr. Remi Babalola, to compel him to resign as SEC Chairman following his appointment
as Chairman of UACN Plc.
In the petition, Solomon specifically drew the attention of the minister to the anomaly which he said
was inherent in the appointment of Udoma as Chairman of SEC while remaining a member on the
board of some publicly quoted companies such as UACN, Linkage Assurance and Unilever.
Solomon said the appointment goes contrary to the laws setting up SEC, which, according to him,
states in Section 13 of ISA 2007 under the functions and powers of the commission that the office of
DG should have no relationship with any company under its (SEC) regulation.
He said: “There is therefore definitely a conflict of interest in Senator Udoma chairing the board of
SEC and UACN and being on the board of Unilever and Linkage Assurance. The elimination of room
for unregulated relationships is critical to any perception of integrity or the ability of the regulator to
take action without fear or favour.” But Udoma has dismissed the allegation of conflict of interest.
He said Solomon was aware that he (Udoma) was serving on the boards of UACN Plc, Linkage
Assurance Plc and Unilever Nigeria Plc during his screening for SEC chairmanship by the Senate
Committee on Capital Market.
Udoma said: “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 to consult and think about
it before accepting. One of the things I needed time to examine was whether the appointment would be
consistent with my other commitments. 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. My investigation also revealed that this was an established practice. Indeed, my
immediate predecessor as chairman of SEC and I served on the same board whilst he was the chairman
of SEC. Had it been otherwise I would have declined the offer to be the chairman of SEC.
“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. At my screening, I presented
to that committee my curriculum vitae clearly showing that I was serving on the boards of UAC of

Nigeria Plc, Linkage Assurance Plc. and Unilever Plc., as well as being a partner in the commercial law
firm of Udo Udoma & Belo-Osagie.
“Under the circumstances, it is difficult to understand Senator Solomon’s claim that he was not aware
that I was already serving on those boards before my appointment as chairman of SEC in June 2008.”
Udoma, who became Chairman of UACN Plc on January 2, 2010 having served on the board for
several years, said he was shocked by Solomon’s petition because he had even disclosed his recent
appointment as Chairman of UACN Plc to the Senator during a recent meeting in Lagos.
Meanwhile, Babalola has promised to address the issues surrounding the chairmanship of Udoma at the
SEC.
A statement signed by Babalola’s Special Assistant (Communications), Mr. Oluyinka Akintunde, said
Solomon had in a letter to the minister dated February 4, 2010 demanded an explanation over the
perceived conflict of interest situation arising from the appointment of the SEC chairman by UAC of
Nigeria and Linkage Assurance Plc as Chairman and Vice-Chairman, respectively.
Akintunde revealed in his letter to the Senate Committee chairman dated February 9, 2010, that
Babalola promised to review the situation and get back promptly to the Committee.
He added: “I am puzzled by the letter because I had no indication whatsoever that Senator Ganiyu
Solomon had any problem with my holding appointments on the boards of public limited liability
companies. About a week before I travelled (to Malaysia), I received an invitation from Senator
Solomon to meet with himself and his deputy in Abuja to discuss matters of mutual interest.
“Unfortunately the date he indicated was not convenient for me and I called him to say so. I offered
instead to visit him in his house in Lagos, which he accepted. Much of the discussion at the meeting
was to do with strengthening the collaboration between SEC and the Capital Market Committee of the
Senate.
“In that regard, I pointed out that since I was not an executive chairman, and visited Abuja only when
we had board meetings, the principal person he would have to deal with would be the Director-General
and I promised to arrange a meeting with the new DG for that purpose.
“I raised the issue of my recent appointment as chairman of UAC of Nigeria Plc, and reminded him
that I had been on the board of the company prior to my appointment as chairman of SEC and had
declared it, as required by law. The meeting ended with no outstanding issue and I informed him that I
would be travelling out of the country. His letter therefore takes me completely by surprise.”
Udoma said that during his visit to Malaysia, he discovered that part-time members of SEC serve on
boards of quoted companies but the law is being reviewed restricting them to only companies on which
they were serving prior to their appointment. This, he said, is because it would be most unfair to
approach reputable individuals whose experience was needed by the commission to serve as part time
board members, and then to ask them to give up their existing commitments for an unpaid national
assignment.
“Just as in Nigeria, part time commissioners in Malaysia only receive sitting allowances, and no salary.
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. However, full-time members are generally restricted
from accepting any other appointments except in other regulatory agencies,” Udoma further said.
He described as erroneous and totally misleading the attempt by Senator Solomon to equate his role as
SEC Chairman with that of the Director-General of the Nigerian Stock Exchange (NSE) who serves as
chief executive in that capacity.
He noted that the NSE DG was “rightfully queried for accepting to serve on the board of a quoted
company whilst a full-time executive of the primary regulator of the capital market. The more
appropriate comparison should have been with my good friend and highly respected businessman, Oba
Otudeko, who, as the non-executive president of the Stock Exchange, the primary regulator of the
capital market, served as non-executive director of First Bank of Nigeria Plc.”

Even as Udoma insists he has not violated the current law in Nigeria, he suggested that Senator
Solomon’s committee should play a role in modifying the law in order to remove any suspected
conflict of interest.
“The solution for those who feel that the existence of such a potential conflict is unacceptable in
Nigeria might well be to adopt the United States model where SEC commissioners are all full time.
This will require an amendment of the Investment and Securities Act. These are all matters for debate,
and Senator Ganiyu Solomon, as the Chairman of the Senate Committee on the Capital Market, could
play a role in helping to lead that debate.
“However, it is wrong and in very bad taste, for Senator Solomon to seek to bring to public ridicule a
person who has done nothing wrong; a person who simply responded to an invitation to serve his
country within the terms of the existing law, and practice,” Udoma said.
Meanwhile, Babalola has promised to address the issues surrounding the chairmanship of Udoma at the
SEC.
He was responding to the enquiry from Solomon, about the appropriateness of the board appointments
of Chairman of the SEC, Udoma.
A statement signed by Babalola’s Special Assistant (Communications), Mr. Oluyinka Akintunde, said
Solomon had in a letter to the minister dated February 4, 2010 demanded an explanation over the
perceived conflict of interest situation arising from the appointment of the SEC chairman by UAC of
Nigeria and Linkage Assurance Plc as Chairman and Vice-Chairman, respectively.
Akintunde revealed in his letter to the Senate Committee chairman dated February 9, 2010, that
Babalola promised to review the situation and get back promptly to the Committee. “Undoubtedly, the
issues are quite critical and call for quick action especially on the need to review the existing
Investment and Securities Act (ISA) 2007 to safeguard the integrity of SEC as a regulatory institution.
Be rest assured that the matter is being looked into and we will revert to you in due course,” Babalola
was quoted as saying.
Akintunde said the minister reaffirmed his commitment to higher regulatory and supervisory standards
in all segments of the financial services industry.
“All the regulators of the financial market are collaborating with a common code of corporate
governance most especially at this juncture of the nation when we are inculcating attitudinal change
and character re-orientation for a better Nigeria,” he added.
The media aide to Babalola said Solomon had also in his letter noted that the functions and powers of
the commission under Section 13 of the ISA indicated that the office of the director-general, chairman,
the commissioners and staff of SEC ought to be free from any relationship that would tie them to any
of the company that SEC regulates.
http://www.businessdayonline.com/index.php?option=com_content&view=article&id=8457:udo-
udoma-justifies-dual-roles-as-uacn-sec-chairman-&catid=85:national&Itemid=340
Udo Udoma justifies dual roles as UACN, SEC chairman

Monday, 15 February 2010 01:23 Ameto Akpe
•As finance ministry promises to review appointment
Udoma Udo Udoma has described as baseless the petition by chairman of Senate Committee on Capital
Market, Ganiyu Solomon, asking minister of state for finance, Remi Babalola, to compel him to resign
as chairman of the Securities and Exchange Commission (SEC) following his recent appointment as
chairman of UACN Plc.

In a statement, Sunday, Udoma dismissed the allegation of conflict of interest and disclosed that
Solomon was aware that he (Udoma) was serving on the boards of UACN Plc, Linkage Assurance Plc
and Unilever Nigeria Plc during his screening by his committee for SEC chairmanship.
According to him, “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 to consult and think
about it before accepting. One of the things I needed time to examine was whether the appointment
would be consistent with my other commitments. 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. My investigation also revealed that this was an
established practice. Indeed, my immediate predecessor as chairman of SEC and I served on the same
board whilst he was the chairman of SEC. Had it been otherwise, I would have declined the offer to be
the chairman of SEC.”
Remi Babalola
He further said: “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. At my
screening I presented to that committee my curriculum vitae clearly showing that I was serving on the
boards of UAC of Nigeria Plc, Linkage Assurance Plc and Unilever Plc, as well as being a partner in
the commercial law firm of Udo Udoma & Belo-Osagie. Under the circumstances, it is difficult to
understand Senator Solomon’s claim that he was not aware that I was already serving on those boards
before my appointment as chairman of SEC in June 2008.”
Udoma, who became chairman of UACN Plc on January 2, this year, having served on the board for
several years, said he was quite shocked by Solomon’s petition because he had even disclosed his
recent appointment as chairman of UACN Plc to Solomon during a recent meeting in Lagos.
His words: “I am puzzled by the letter because I had no indication whatsoever that Senator Ganiyu
Solomon had any problem with my holding appointments on the boards of public limited liability
companies. About a week before I travelled (to Malaysia) I received an invitation from Senator
Solomon to meet with himself and his deputy in Abuja to discuss matters of mutual interest.
Unfortunately, the date he indicated was not convenient for me and I called him to say so. I offered,
instead, to visit him in his house in Lagos which he accepted. Much of the discussion at the meeting
was to do with strengthening the collaboration between SEC and the Capital Market Committee of the
Senate.
“In that regard, I pointed out that since I was not an executive chairman, and visited Abuja only when
we had board meetings, the principal person he would have to deal with would be the director general
and I promised to arrange a meeting with the new DG for that purpose. I raised the issue of my recent
appointment as chairman of UAC of Nigeria Plc, and reminded him that I had been on the board of the
company prior to my appointment as chairman of SEC and had declared it, as required by law. The
meeting ended with no outstanding issue and I informed him that I would be travelling out of the
country. His letter therefore takes me completely by surprise.”
Remi Babalola, minister of state for finance has promised to review the appropriateness of the board
appointment of Udo Udoma, chairman, Securities and Exchange Commission (SEC).
This is Babalola’s response to the enquiry from the chairman of the Senate Committee on Capital
Market, Ganiyu Solomon, about the appropriateness of the board appointment of chairman of the
Securities and Exchange Commission, Udo Udoma.

Udo Udoma, SEC and the Call to Quit

February 15, 2010; 1411 hrs, Omole, Lagos, Nigeria
“Allow a situation to go bad for too long and suddenly there are no good
solutions left”. - Late Arthur Burns, former Chairman of the Federal Reserve Bank of the United
States
Yesterday, Senator Udo Udoma justified his dual roles as UACN and SEC chairman
when he described as baseless the petition by Chairman of Senate Committee on
Capital Market, Senator Ganiyu Solomon seemingly asking the Minister of State
for Finance, Mr Remi Babalola, to compel him to resign as Chairman of the
Securities and Exchange Commission (SEC) following his recent appointment as
Chairman of UACN Plc along with his roles as Vice-Chairman of Linkage Assurance
Plc, Director of Unilever Nigeria Plc as well as being a partner in the commercial
law firm of Udo Udoma & Belo-Osagie Principal (a registered practice with the
SEC).
He pinned his argument on the logic of ‘approbating and reprobating’ in the

same breadth which he attached to the action taken by Senator Ganiyu Solomon.
He averred that it was the same Senator Ganiyu Solomon-led Senate Committee
on Capital Markets that approved his appointment in the first place – an
appointment made after adequate screening for the SEC chairmanship – with his
curriculum vitae giving a full disclosure (unlike what UACN Plc did) of his
directorship of the above three firms.
The Senator himself and those close to the ‘Kings College Old Boys Group’ had
made the case that the key issue was not his chairmanship of UACN Plc but the
directorship of a company on which the question of fiduciary rights and duties
rest.
The more important issue in their view is that - if he was considered fit to hold
both roles by the select committee of the Senate; it cannot now be said that this
was wrong – pretending as it would appear, that the knowledge of his
directorship, was a present day discovery.
We agree with this reasoning, albeit; up to a determinate point – 14/08.
Indeed, and sadly for this school of thought; our argument had always been
premised on Udo Udoma’s directorship of a quoted company as we alluded to in
our August 22, 2009 report – BULL IN THE CHINA SHOP at page 63 where we
stated that “The current holder of the office of Chairman SEC is a distinguished
senator and a widely acknowledged believer in the upliftment of standards and
values. It is thus curious to note that in the performance of this role, he ought to
have recognised that his current directorship of UACN Plc raises serious issues
that could compromise the perception of impartiality. It is simply not right and
there must be a cogent explanation for this, giving what we know of the man and
his pedigree. We do not have any case of wrongdoing alleged against the
Chairman but we believe that the elimination of the room for ‘unregulated
relationships’ is critical to any perception of integrity or the ability of the regulator
to take actions without fear or favour of ‘powerful’ forces that loom large over the
SEC. It must be noted that SEC has operated under excruciating circumstance
that have seemingly drowned out the considerable amount of good work done.
This work however, we insist, is not at a level that matches the level of growth in
the market. That is the responsibility gap the Chairman will have to address”.
Assuming that circumstances remained at the old status quo, we would not be in
a position to make a fuss about this standpoint.

On August 14, 2009 however, everything changed and with SLS came a new
and profound sense of purpose and standard for judging corporate governance in
Nigeria.
The previous conflicted status, for which we wrote about then, i.e. the
directorship – remains the central issue and not so much the Chairmanship of
UACN Plc (a honorary position subject to the choice of the directors), the obvious
attempt to conceal this conflicted position by UACN Plc and the new standards set
in that same week by the CBN Governor meant that everything needed to be
looked at with a “fresh eye”.
Our piece on Udo Udoma, SEC and Gap, Feb 03, 2010,
the Perception
just about sums up the
http://www.proshareng.com/articles/singleNews.php?id=2029
arguments here. When the Senator suggested further in the press release that his
appointment was of a part-time nature, he was being economical with the truth
as the above has shown.
If all he does was to execute the relevant section of the Investments and
Securities Act (ISA) – i.e. to declare his current interests and not participate in
any decision involving any of them – he should equally have known that the
appearance of a conflict was as equally grave for a regulator just as the definitive
act.
The golden rule remains – “You should avoid even the appearance of such a
conflict”.
After 14/08 in Nigeria, the standards for corporate governance changed and if
the CBN Governor can set and apply those standards in the market place – it was
only fit and proper for the Kings College and Oxford Graduate to recognise that
global best practice had shifted and moved two notches ahead.
In this regard five (5) significant positions from the Senators Press Release
deserve a recalibration of the central argument:
1. The Senator said that “my investigation also revealed that this was an
established practice. Indeed, my immediate predecessor as chairman
of SEC and I served on the same board whilst he was the chairman of
SEC. Had it been otherwise I would have declined the offer to be the
chairman of SEC.” This is clearly incongruent with the central argument that
post 14/08 the standards for what was acceptable had changed. He was
looking to the past rather than to the future with regards to the engagement
rules being set for the present. Indeed, rather than being a vehicle of change,
he suggested that we should hold ourselves back to the standards of old – a
position SEC itself jettisoned when it made a case on August 19, 2009 – a
move much unrecognizable to its previous stance; albeit one done under the
cover of SLS’s bold move.
2. He further said: “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. At my
screening I presented to that Committee my curriculum vitae clearly
showing that I was serving on the boards of UAC of Nigeria Plc,
Linkage Assurance Plc. and Unilever Plc., as well as being a partner in
the commercial law firm of Udo Udoma & Belo-Osagie. Under the
circumstances, it is difficult to understand Senator Solomon’s claim
that he was not aware that I was already serving on those boards
before my appointment as chairman of SEC in June 2008.” Deriving
from the established locus of the central argument made earlier – i.e. the
scale and scope of the heightened state of best practice as it relates to

corporate governance in the financial services sector post 14/08; this

argument cannot hold.
Again, instead of holding himself and the office to higher standards; he has
chosen to rely on well-worn arguments related to status and historical acts
taken against a lower standard of performance. It is however instructive to
note that the role of the SEC chairman vis-à-vis his law firms’ role in the
capital market indeed opens himself to the perception of creating an
undue advantage – which may not necessarily be of his own making but as
a function of the operating environment. Evidence available suggest that not
only was he instrumental in forming the association of capital market lawyers
– a good act by the way; his firm has in the last two years been involved in a
sizeable number of transactions in the capital market. This could as well be a
co-incidence as the firm is adjudged credible, competent and deserving.
Nonetheless, this opens him to the accusation of creating an undue advantage
for the firm.
3. Senator Udo Udoma said in his press release that during his visit to Malaysia,
“he discovered that part time members of the Security Commission
serve on boards of quoted companies but the law is being reviewed
restricting them to only companies on which they were serving prior
to their appointment. This is because it would be most unfair to approach
reputable individuals whose experience was needed by the Commission to
serve as part time board members, and then to ask them to give up their
existing commitments for an unpaid national assignment”. He added – “Just
as in Nigeria, part time commissioners in Malaysia only receive sitting
allowances, and no salary. 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. However, full time members are generally
restricted from accepting any other appointments except in other
regulatory agencies.”
It is not only disingenuous for a legal practitioner and a serving Chairman who
considers this a national service to present such a submission as de-facto fact
ignoring the premise that the Malaysian Securities Chairman is of an executive
status (quite unlike ours designed to be non-executive yet with powers
to approve or disapprove decisions made by the DG/CEO).
In the first place, we modeled our SEC after the US SEC (one of the key
submissions which the Dennis Odife report frowned upon and which remains
debatable – yet it is wrong to create a doubt as to the benchmark Nigeria is
working with for this purpose). To the best of our knowledge; our SEC is not
modeled after the Malaysian SC though we recognise that we are able to
obtain best practice ideas from such performing or ‘similar operating
environment’ like theirs. As regards his choice of Malaysia to justify the
part-time argument, we will accept it even as we expand the
discourse to include the qualifying criteria for chairmanship of such a
board the Senator might have in mind.
For the purpose of his comments above, we feel it is important for the market
to realize that Tan Sri Zarinah, Chairman of the Malaysian Securities
Commission (SC) is a graduate of law as our esteemed Senator. She did not

go to Oxford but obtained an LLB (Hons) from the University of Malaya. She
started her career in the Government Legal and Judicial service where she
served in the courts as well as the Attorney-General's Chambers. She
assumed this post on 1 April 2006, after she had served as Deputy Chief
Executive of the Securities Commission and member of the Commission since
1 December 2001.
According to the Malaysian Securities Commission’s

website -
http://www.sc.com.my/main.asp?pageid=223&menuid=191&newsid=&linkid=&type=
Tan Sri
Zarinah is the Vice Chairman of the Emerging Markets Committee of the
International Organization of Securities Commissions (IOSCO). She was
Chairman of the ASEAN Capital Markets Forum, a grouping of senior ASEAN
securities regulators, from 2006 - 2008.
Tan Sri Zarinah currently chairs the Malaysian Venture Capital Development
Council and the Capital Market Development Fund, and is a member of the
National Economic Consultative Council (NECC), the Labuan Offshore Financial
Services Authority (LOFSA), the Financial Reporting Foundation (FRF), the
Foreign Investment Committee (FIC), and the Board of Directors of the
Institut Integriti Malaysia (IIM). Tan Sri Zarinah is also a member of the Panel
of Industry and Corporate Advisory Board, Graduate School of Management,
Universiti Putra Malaysia.
In terms of previous working experience, Tan Sri Zarinah spent 22 years with
Shell and was Deputy Chairman of Shell Malaysia prior to joining the SC; thus
ensuring that by the time she joined the SC (not as chairman); she was not
conflicted in any way as the standards for the board were obviously higher
than that for an executive commissioner or a Director General.
Thus; as regards the “PART-TIME” status of members, the board is comprised

of a ‘career’ chairman and a board of competent, committed and part-time
members as follows:
Tan Sri Zarinah Anwar

Chairman, Securities Commission Malaysia
Francis Tan Leh Kiah

Managing Director, Azman, Davidson & Co., Advocates & Solicitors
Dato' Muhammad Ibrahim

Assistant Governor, Bank Negara Malaysia
Dato' Gumuri Hussain

Chairman, SME Bank (Bank Perusahaan Kecil & Sederhana Malaysia Bhd)
Dato' Mohd Bakke Salleh

Group Managing Director, FELDA Holdings Bhd
Fazlur Rahman Ebrahim

Managing Director, Prokhas Sdn Bhd
Datuk Wira Ismail Saleh

Secretary General, Ministry of Plantation Industries and Commodities
Datuk Latifah Datuk Abu Mansor

Deputy Secretary General of Treasury (Policy), Ministry of Finance
The organisation structure for the Malaysian SC look like this – NB: the
Nigerian SEC is not so modeled and we need to be careful in comparing apples with
oranges), viz:

4. Senator Udo Udoma described as erroneous and totally misleading the

attempt by Senator Solomon to equate his role as SEC Chairman with that of
the Director-General of the Nigerian Stock Executive who serves as Chief
Executive in that capacity. According to Udoma, the NSE DG was “rightfully
queried for accepting to serve on the board of a quoted company
whilst a full time executive of the primary regulator of the capital
market. The more appropriate comparison should have been with my
good friend and highly respected businessman, Oba Otudeko, who, as
the non-executive president of the Stock Exchange, the primary
regulator of the capital market, served as non-executive director of
First Bank of Nigeria Plc.” This is a worrisome analogy the Senator seeks to
make here. Do two wrongs make a right? Does an SRO equate to an
apex regulator in terms of the standard of governance expected and
executed?
It trite knowledge in the market that SEC and the NSE have an unhealthy
relationship that is festered by personal leverage, influence and power rather
purpose, processes and safeguards. Shadowy figures have worked assiduously
through an expansive network to deliver the removal of the Director General
of the Nigerian Stock Exchange, Dr. (Mrs.) Ndi Okereke Onyuike and whilst
the market and observes believes the NSE will get a deserving change in
leadership, most of the accusations against the person of Ndi Okereke-
Onyuike has refused to stick simply because she is first, not reporting to SEC
but the council of the NSE and second, her decisions have often had the
backing/support of the council.
Why? The SEC who had the mandate to do so did not. Primary regulator? SEC
as the apex regulator approved the public offer of TRANSCORP Plc where it
was clearly stated that she was the Chairman of the company. She was on
television and on road shows marketing the offer; and this writer – issued four
separate reports (two published as full page features in BusinessDay) raising
the alarm on the situation and highlighting the risk of allowing the political
risk cloud the governance issues that may arise. SEC has now found its voice

after the fact. Maybe the Senator can tell us about the outcome of the public
query issued?
The comparison with Oba Otudeko is lost on us as the same

situation/circumstance exist with Alhaji Aliko Dangote, current President of
the NSE and Chairman Dangote Group; a tradition by the NSE since inception.
If what he is saying is that should he be asked to step down, this other people
should to – that is perfectly in order. That was his job in the first place. He
ought to set the standard for governance in a post 14/08 financial services
regulatory environment. He is finally getting the message after all.
With this mindset, what has the past and supposedly questionable status of
governance got to do with the enhanced regulatory regime SLS has worked
hard to create? Senator Udo Udoma may need to be reminded that it is the
SEC, under his chairmanship that is empowered by the provisions of ISA to
oversee the activities of the NSE based on best practice – not use their
failings to justify a flawed position by the apex regulator.
5. Senator Udo Udoma posited that whilst he has not violated the current law in
Nigeria, he suggested that Senator Solomon’s Committee should play a role in
modifying the law in order to remove any suspected conflict of interest. “The
solution for those who feel that the existence of such a potential
conflict is unacceptable in Nigeria might well be to adopt the United
States model where SEC Commissioners are all full time. This will
require an amendment of the Investment and Securities Act. These
are all matters for debate, and Senator Ganiyu Solomon, as the
Chairman of the Senate Committee on the Capital Market, could play a
role in helping to lead that debate. We agree entirely with him on this
point and challenge the Senate Committee on Capital Markets as well as the
Honourable Minister of State for Finance, Remi Babalola (under whom SEC
reports) to consider it a matter of economic priority to review and amend the
ISA; leveraging the work done by the Adedotun Suleiman-led Committee on
Capital Markets (2009), the unaddressed issues in the Dennis Odife panel
report (1996) and the developments in company law and global securities
exchange market to amend and pass the law.
Udo Udoma went on to add “However, it is wrong and in very bad taste,
for Senator Solomon to seek to bring to public ridicule a person who
has done nothing wrong; a person who simply responded to an
invitation to serve his country within the terms of the existing law,
and practice”. The position taken here by Senator Udo Udoma is curious and
may be overplaying the ‘appeal to sympathy’ template for public office
holders. Why? – If it was such an inconvenient service, why not let it go? No
one has accused him of anything BUT called on him to raise the bar – What
can be wrong in that?
We will not hold brief for Senator Ganiyu Solomon. We do know that we sent
a petition to the senate committee asking them to recognise and elevate the
standards for the capital markets to the increased standards set by the Sanusi
Lamido’s Central Bank of Nigeria; learning from the contributory role an
unsupervised capital market played in feeding the frenzy that brought the
market to its knees.
This we believe is just one of such steps – for to change the capital market as
we know it in Nigeria; the market needs a clean slate upon which to work on
and this must start from the leadership – in appearance and deed.
For us at Proshare, the objective was to raise the consciousness of members

of corporate Nigeria to the paradigm shift that occurred on 14/08 in spite of

its imperfections and to challenge the system to rise up to a higher

benchmark – one for which the rules are still being written. Lets those who
think the stand take heed lest they might fall!
Conclusion
Do these associations, actions and examples represent/result in or have the

appearance of a conflict of interest/role situation? The Proshare Service appears
to think so.
This was and has never been an attempt to ridicule Senator Udo Udoma in any
way. He, of all persons, must know that in the climes with which he benchmarks
Nigeria; the standards of probity are much higher than that to which we,
analysts, the Nigerian media and corporate Nigeria have held him.
We, unlike most, have stayed loyal to the investor advocacy remit we started
with and are happy to note; he also subscribes to. For all who seek a winner/loser
scenario; that offers us no joy for what we seek is already happening – The
opportunity to engage in a rigorous public debate on the standards needed to
position SEC in such a way that provides market confidence in the system and
eliminates the turf way between SEC and the NSE.
With regards to the small matter of finding a replacement for him should he
decide to resign his post as SEC Chairman, we believe that this is self indicting.
One of the key indicators of a good institution is the ability to have at all times a
good contingent plan to ensure sustenance of leadership at the SEC. There are
clearly persons that may come to mind but when subjected to the same
standards may not qualify – that should not therefore be criteria for adopting a
flawed model.
SLS, a Kings College Old Boy has raised the bar – all other regulators must raise
their game.
References:
The Bull in the China Shop

August 22, 2009
http://www.proshareng.com/reports/view.php?id=2016
Regulators, Reporting and Resolutions

January 06, 2010
Udo Udoma & SEC – Legality, Perceptions and Sacrifice

January 12, 2010
Udo Udoma, SEC and the Perception Gap

February 03, 2010
Udo Udoma: The Senate Committee on Capital Market’s Position

February 10, 2010

All opinions on this page/site constitute our best estimate judgement as of this date and are subject to change
without notice. Investors should see the content of this page as one of the factors to consider in making their
investment decision. Proshare Limited, its employees and analysts accept no liability for any loss arising from the use
of this information. All enquiries should be directed to info@proshareng.com

Reactions on Monday, February 15, 2010:

Next:
Reader Comments (16)
Posted by Mohammed on Feb 15 2010
The possibility of conflict of interest is real and not imagined. Mr. Udo Udoma, if he has any iota of
dignity should quit SEC Chairmanship and hold his private sector board appointments or vice versa. He
cannot eat his cake and having it. SEC is a capital market regulator. It requires to have independent
officials who can exercise independent decisions for all market participant. The continued retention of
Mr. Udo Udoma is not good for the capital market, it is not good for the companies, it is not good for
the Nigerian economy and polity. He should go or be booted out!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Posted by Bayo on Feb 15 2010
That the chairman of the one of our key financial services regulator cannot see a conflict of interest in
this matter is truly scary and suggests that he is not the right man for the job in the first place...But hey,
the Head of the NSE was also a director of an entity listed on the NSE! Go figure...
Posted by CountryMan on Feb 15 2010
udoma is too good a lawyer to get caught in such an easy trap...your laws are weak...tighten them up...
Posted by Dayo on Feb 15 2010
Nigerians never fail to pursue shadows in derogation of substance. If the Senate is really concerned
with potential conflicts of interests (or any appearance thereof) on the SEC's PART-TIME board, it
should simply go to the root of the matter and AMEND the Investment and Securities Act, rather than
hassling properly-appointed individual board members.
Posted by uyii edo on Feb 15 2010
If the law permits it why are we screeming, if he is qualified to be there why cry wolf. If his
appiontment meets the requirments of the law then leave him alone and stop disturbing the man.
Posted by Segun on Feb 15 2010
@Dayo your comments might be well intentioned but falls flat in the face of actions already taken by
Udo udoma's junior and much bolder reformist, Sanusi lamido.
Posted by gb on Feb 15 2010
Countryman..I fully agree with you on this..."the laws are weak"! Any decision by Udoma not take the
appointment will be "persona" sacrifice..but guess what? We dont want "personal" sacrifices
anymore...Let the NA critically review the law and ensure in its intent and purpose transparency and
conflict(s) of interest(s) are not dependent on gamers "goodwill"
Posted by Ade on Feb 15 2010
Twisting his arm to resign is not really moral. If there is an issue with a law it should rather be fixed
than moan so much about it. And talking about fixing laws, may you want to start with the CBN laws
and its powers. Then you can move to the exchange commissions and then exchange. But I think what
is more pressing now is properly impeaching the president instead of the stupid illegal move to install
an Acting President with an unprecedented majority vote (can they just all stop fooling Nigerians and
bloody do what they are meant to do) when in all form, its quite illegal. Face more pressing matters or
waste more time on fixing real issues in Nigeria.

Posted by Kpek on Feb 15 2010
This is probably 'unfair' but I really think Mr. Udoma should be made to step down; having seen the
sort of 'regulation' done by Ndidi and given the unfortunate propensity round about here for 'influence-
peddling' this really would not meet the standards of justice being done & being manifestly seen to be
done - in other words, in an ideal situation, there should be no possibility of an 'accusation' of 'conflict'
being founded, & here there clearly could be ... ... it is not enough to state that the 'letter' of the laws do
not preclude his appointment; the 'spirit' of the law and the far stricter standards of corporate
governance that have been put in place internationally (all of which transpired well after this
unfortunate piece of legislation was passed) cause this situation to fall far short of 'international best
practice', & make, in one's humble opinion, his position untenable.
Posted by lokasa on Feb 15 2010
You connot serve as a regulator of a company that you are a board member. Ganiyu Solomon is very
right, there is a BIG conflict of interest here.
Posted by uchay on Feb 15 2010
@ Kpek: you are too good! Way to go!!
Posted by daniel on Feb 15 2010
Are we not used to conflict of interest already? Interestingly Udoma is bold enough to cite malaysia
and thailand which have one of the best corruption indices in the world?better than the american and
european contries from which our financial systems were derived? It only remains to point out others
with conflict of interest so that mud,feaces and crap is thrown all over! So here goes?Is Aliko Dangote
not president of the nigerian stock exchange? Appointed just months after being accused of
manipulating AP stock prices? Then there is Ndi-Okereke in NSE and chairman(sorry person) of
Transcorp the biggest investment fraud in nigeria? Please help me out with this list;I find it difficult to
talk after Alhaji Dangote!
Posted by Roz Ben-Okagbue on Feb 15 2010
There is undoubtedly a conflict of interest, whether it is practiced in other countries or not however the
law permits it. The NA should focus on the law and not on the person. Amend the law if you have a
problem with its application!
Posted by Sari on Feb 15 2010
the proper thing to do is effect the necessary changes in the laws! That is what organised society's do. It
is not his fault there is a 'loop hole' in the law! Abeg let focus on the foot cause and not the symptoms.
Rome was not built in a day!
Posted by RWS2 on Feb 15 2010
@ KPEK, actually Udo-Udoma's appointment is in compliance with both the 'letter' as well as the
'spirit' of the governing law, ISA enacted in 2007 (barely a little over 2 years ago). For starters, since
ISA provides (in Section 3(2)(a)) that the SEC chairman must have at least 15 years experience in the
capital markets, there is little likelihood of avoiding this sort of POTENTIAL conflict of interests.
Nevertheless, ISA foresees exactly such POTENTIAL conflict and offers as a cure (1) full disclosure
and (2) recusal -- which is a standard global best-practices cure for potential conflicts across the world.
Accordingly, I agree with those comments that the law should be changed if found unsatisfactory rather
than hounding individual duly appointed under such (bad?) laws. It is about time that Nigeria focused
more on strengthening and building INSTITUTIONS and less on individuals and their proclivities.
Posted by Sumayya on Feb 16 2010
The law permits him to hold the position, i dont have a problem with that... my problem is with the
leadership that keep recycling people , are there no ther deserving/qualified personalities in Nigeria to

hold such positions... haba, let others be giving opportunity to contribute to the development of this
nation other wise very soon some individuals will mortgage the country by virtue of their position just
like yar'adua attempted to ....
Posted by Dr. Uzo Chieke, USA on Feb 18 2010

For a chairman of a public regulator to start disclosing private discussions and making references to
other persons supposed in similar conflicted position to justify a position he falsely says they begged
him for is to confirm why he does not merit the position in the first place, all things aside. I was willing
to take a back seat until I read his ill-advised press release. One thing that struck me was the fact that he
could not properly contextualise the NSE situation as an SRO and his position as an apex regulator. He
talks about part-time when indeed he had been reported for holding board meetings of SEC in his home
and some staff of SEC had been complaining of his turning SEC into a personal estate where people go
to him for one assistance or the other as we Nigerians do to our leaders who fail to create a level
playing field. By not choosing the part of honour, he has revealed his deeper values. Going or staying
does not matter any more as the public confidence in the regulator is further diminished. very poor
judgement on this ethical matter.
ThisDay:
COMMENTS
Akintunde Doyin
02.15.2010 18:24
Udoma is an unserious man and if this is a reply from a SEC Chairman, then all hope is lost. He did not
even recognise the increased standard of care posited by Sanusi
Emeka Ofomata
02.15.2010 13:05
Mr Udo Udoma was a distinguished senator and is a learned man. The reality and perception must have
a meeting point.
please kindly resign immediately and rise above the fray. Nigerians and Nigeria can do with some
order and men of integrity. As the Chairman of the regulatory body, your actions could be perceived to
be subjective.
You really don\'t need this distraction!
Daniel
02.15.2010 13:05
I wonder who is giving the instances of Aliko Dangote and Oba Otudeko. NSE is different from SEC.
SEC is a regulator of NSE itself, while NSE is owned by the private sector. Most Presidents of the NSE
is from the private sector.
Thus, SEC is a different ball game. It regulates the Capital Markets as a whole, and thus its Chairman
must not be a Player. You cannot be a Refree and a Player at the same time.
Senator Udo Udoma should resign humbly from SEC or resign from the company he is serving on.
Mohammed
02.15.2010 10:41
Mr. Udo Udoma should decide either to keep his private sector board appointments or the SEC
Chairmanship. But, not both. This is because SEC is the overall regulatory agency of the capital
market. It requires to have independent officials exercising independent judgments at all times in the
interest of the economy. Being a board member of other quoted companies creates the possibility of a
conflict of interest. Secondly, it is disingeneous for Mr. Udoma, a lawyer, to equate the case of
membership of NSE with that of SEC. NSE is a private, self regulatory association of individual
companies while the SEC is a purely government regulatory agency which is set up to work in public
interest. A situation where conflict of interest, whether real or imagined, should not be tolerated. Mr
Udoma should be asked to go or be appropriately booted out!
G-Boy
02.15.2010 10:25
When it comes to regulation of capital markets, there is no need using Malaysia and worse still,
Thailand as our yardstick. The US is a better model. I think it\'s improper to hold a position in the SEC
while serving on the board of a listed company.
Even the Senate Committee Chairman cannot waive this so it doesn\'t matter that he was told.

SEC: The Proshare Motivation

As regards the piece Udo Udoma, SEC and the Call to Quit; February 15, 2010;
http://www.proshareng.com/reports/view.php?id=2424 – follows Senator Udo Udoma’s
‘unusual’ step of issuing a press release where he raised matters that needed to be
recalibrated/placed in perspective as it was misrepresenting the arguments for a higher
standard of governance, we believe the matter need not get to the level of a ‘street fight’
unless of course there are issues between the Senators and Ministers; as it would now
appear to be.
If Senator Udo Udoma had taken a stand, say he suspended his directorships in those
companies and kept his SEC Chairmanship; he would have sent a more powerful signal to
the capital market that he was ready to apply same to everyone from NSE, CSCS, Operators,
Consultants and Quoted companies.
He would be in a position to align the reforms in the market space as one founded on the
highest and strictest standard of care in our leadership…. Only few would even aspire and
fewer still would qualify and this would rub off on the officers in charge of supervision,
enforcement and investigations. Some modicum of discipline would begin to emerge in this
‘anyhow’ capital market we saw during the sustained market downturn.
For good measure we had raised our objection to the matter as far back as August 22, 2009
and the decision to take this on came when we observed that the UACN Plc press release left
out the SEC Chairmanship in the Senators profile. It stands to reason that if they omitted this
– then they acknowledged the appearance of a conflict of interest or of roles that exist.
We have laws that are lagging behind the realities of day-to-day business practice and global
best practice and which needs to be our focus – CAMA, ISA, and others that should help
provide the operating environment needed for our drive to implementing the FSS 2020 and
Vision 2020. These are times that call for uncommon leadership and bold initiatives/reforms
and it must surely start from the leadership. Like him or hate him, SLS has created our own
9/11 in the financial services – i.e. the 14/08 paradigm.
The 14/08 Principle states that corporate governance issues left unaddressed represents the
single most critical factor that hinders/challenges the development of our firms, nay economy.
A paradigm shift was on that day initiated with painful consequences for investors (who got
the wrong end of the stick and pummelled their confidence) and this makes it unacceptable to
ignore the need to extend this standard of care to the whole market – regulators of other
markets, operators and our quoted companies. This, if done will be the organised private
sector’s contribution as a market to the country – demanding for a higher standard of care in
our elected officials whose actions shape our destiny and our economic well being.
Hounding Senator Udo Udoma is not acceptable and if the impression has been created, it
was never intended. Holding him to a higher standard of care and integrity is appropriate and
indeed encouraged because of his antecedents and pedigree. If anybody can be picked to
symbolise the ‘change champion’ needed at this time; he qualifies hands down.
In the next few days, it can be imagined that there would be more press releases from the
Senators and the ‘drama’ can and should be avoided. All the talk about politics, personalities,
power over purpose and so on is a distraction the market can do without. In its place, we
should encourage serious debates and deliberations on the key issues – serious and
development enabling issues – with a heightened sense of urgency to push through ISA
reforms and implementation of some of the recommendations of the reform committee to
enable SEC deliver on its objectives – Investor Protection.
This will be my last contribution on the subject and I leave those of you with considerable
stake and leverage in the industry to seek for ways of delivering on this desired goal – take
the decisions needed to move the SEC to its rightful place and give it the moral authority to
allow the Chief Executive of the Commission implement far-reaching changes needed at this
time. We can do this in a manner that respects individual credibility, contributions and
capacity. Thank you.

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SEC, UDO UDOMA & CORPORATE

The Fact Files:

….taking a defining stand in the pursuit of a more focused attention to

ISSN 1597 - 8842 Vol. 1 No. 26

February 18, 2010, Lagos, Nigeria

Regulators, Reporting and Resolutions

Our resolve this year is to focus on developmental issues and an articulation of

Yet, we remain respectful to constituted authority and systems with an eye on

CBN and Mass Sack in Banks – Myths and Realities

We however take solace in our position as espoused in The Nightmare before

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 2

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 3

Lance Elakamah continues serving as the ADG

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 4

What we find curious in this development is the non-communication of this with

UACN Names Udo Udoma, SEC Chairman as its Board Chairman

The country’s largest conglomerate also announced the elevation of Managing

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 5

The New Year Resolution

Olufemi Awoyemi, FCA

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 6

Udo Udoma & SEC – Legality, Perceptions and Sacrifice

“A man does what he must.. in spite of personal consequences, in spite

This development and the questions it raised, continued to agitate my mind as I

These considerations proved quite unsettling when juxtaposed against the

The import of this article/presentation therefore is to articulate the salient points

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 7

The Original Sin

In our previous publication on the ‘possible conflict of interest’ situation in the

Legality and the Capital Market Reforms

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 8

Senator Udo Udoma is correct in his submission that “Section 11 of the

Conflict of Interest – Laying out the Arguments

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 9

a quoted company board member are or appear to be potentially at odds with

We looked at such possible areas of conflict (in roles/interest) and narrowed it

CONFLICT BY ASSOCIATION: The SEC Chairman is not involved in day-to-

The Public Perception

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 10

In fact, for many professionals, it is virtually impossible to avoid having conflicts

In nearly every capital market, especially ours, heightened challenges in the

We believe that Senator Udo Udoma is a qualified, competent and reasonable

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 11

Olufemi Awoyemi, FCA

Profile: Senator Udoma Udo Udoma

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 12

He specializes in advising on Nigerian investment laws and the investment environment

He is a member of The Nigerian Bar Association and International Bar Association.

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 13

I have just finished reading a stimulating piece by Femi Awoyemi of ProShare on

Threats to government business

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 14

When a personality of Peterside's eminence makes pronouncements of

If we accept Atedo Peterside's letter as being in order, then we must be equally

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 15

Udo Udoma, SEC and the Perception Gap

The Perception Gap Hypothesis

A culture of incestuous relationships between regulators and operators has, over

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 16

1. Perception of injustice, no reprimand and no sanction for erring defaulters for

The expectation of a change arising from the appointment of an outsider has

The CBN Directives on Bank CEO’s as an Informal Code for Regulators

ISSN 1597 - 8842 Vol. 1 No. 26 www.proshareng.com 17

The Senate Committee on Capital Markets

SEC, Udo Udoma & Corporate Governance - Fact File 1802

SEC, Udo Udoma & Corporate Governance - Fact File 1802