EFCC Signs MoU With NSE To Tackle Stock Market Fraud

The Economic and Financial Crimes Commission signed a Memorandum of Understanding, MoU, with the Nigerian Stock Exchange on Friday in Lagos, in order to promote cooperation between the Exchange and the Commission and to guard against infractions on extant rules by players on the Exchange.

Ibrahim Lamorde, the EFCC Chairman, while signing the MoU, assured that the Commission will duly meet its obligations as spelt out in the MoU, in order to help achieve the highest levels of transparency and accountability in the operations of the Nigerian Stock Exchange and take the Nigerian stock market to the next level.

While describing the signing of the MoU as an acknowledgment of the obvious significance of the NSE in the lives of millions of Nigerians and the nation as a corporate entity, Lamorde commended the new management of the NSE led by Mr. Oscar Onyema. He said the Onyema led management assumed control of the NSE at a very difficult time in the life of the Exchange and indeed, the life of millions of Nigerians who had either directly or indirectly lost trillions of naira to the global economic meltdown. “Investor confidence in the market crashed from an all-time high to an all-time low. Nigerians voted with their feet, when they discovered that their losses may have been mitigated if there were some basic systemic safeguards in place. Those safeguards are being installed today by this management of the NSE and we are today seeing their benefits, as many of the discerning investors who turned their backs on the Nigerian Stock Exchange have been finding their ways back”, Lamorde said. He also commended the management on the recent launch of the X-Gen trading platform, which he said, is one of the most advanced in the world. “What that launch and other measures quietly introduced by Onyema and his team have done for the Nigerian capital market, is to put our market at par with any other anywhere in the world”.

According to Lamorde, the health or sickness of the stock exchange can be brought on by a variety of factors which, only a few are outside the control of the operators and stakeholders, themselves. “For instance, the EFCC has absolutely nothing to do about global financial meltdowns as a result of economic or political policy decisions in other parts of the world with negative, ripple impacts on the exchange”, he explained.

He however maintained that the EFCC will most certainly be interested where players on the NSE engage in practices that negate laid down rules and good corporate governance, with the pre-determined end being to confer undue advantage on themselves or their interests.

Going down memory lane, Lamorde said that in the past 10 years, the Commission has had occasions to intervene decisively, in events or outcomes of activities on the Exchange that were criminal.

Specifically, he explained that on the 7th of June 2005, Justice Joseph Oyewole of the Lagos High Court, sentenced Mr. Kingsley Ikpe, Managing Director of Thomas Kingsley Securities Limited, to 163 years imprisonment for capital market infractions.

According to Lamorde, the conviction and sentence was significant, not just because of the number of years he was to be behind Kirikiri Maximum Prison, or that it was one of the very first the Commission secured, but also because of the pedigree and professional antecedents of the convict: “at the time of his conviction, Mr. Ikpe, an alumnus of the Harvard University, was 61 years old and had held such important positions as Managing Director of Nigeria-Arab Bank and Chairman, Fidelity Bank. “Who would have expected such a person to be found guilty of fraudulent conversion of his client’s money?”, Lamorde asked. He added that in his plea for leniency, Mr. Robert Clark (SAN), counsel to Ikpe, told the court, ‘If any soothsayer or any crystal ball gazer had told him he would be in Kirikiri, he would not have believed’!

Lamorde said Ikpe’s client, the Chairman of Orange Drugs Limited, Chief Anthony Ezenna, could also not have believed the chain of events that led to his being scammed of his hard-earned money, entrusted to his broker.
His words: “It would stand to good reason that the experience of Ikpe would have put some fear in all capital market operators, but it did not seem to have done so, as, in the eight years since then, EFCC has been inundated with calls for intervention either from individual investors or by the market regulators.

He said that another interesting case which the Commission was invited to be a part of by the Investment and Securities Tribunal (IST) was that involving N1.03 billion worth of diverted and illegally traded and converted shares (and dividends) of Nestle and Unilever. He said the culprits were Bankolams Investment Limited.

According to Lamorde, it would seem that such landmark cases have not snuffed life out of the criminal disposition of all miscreants on the floor of the Nigerian Stock Exchange, “as recently as the 27th of September 2013, we resolved a case against a stockbroker, in favour of his client.

He said the Commission has in the last 10 years uncovered all the criminally ingenious strategies used by unscrupulous capital market players to scam and defraud hapless citizens of their life savings and investments. Some of these methods, which are very much known to the operators, include: market (shares) manipulation through insider dealings, fraudulent falsification of accounting records, clearing of third party dividend warrant and impersonation of dead investors, among several others.

He further said that the Commission has 20 cases at various stages of prosecution in courts across the country. “Recently, we secured seven convictions in some of the cases that had been under trial. The total value of capital market in fractions that the EFCC has intervened in between 2003 and today stands at over billions of naira”.

The EFCC Chairman said he can confirm that the values of individual capital market infractions are fluctuating southwards in relation to those of the early years of EFCC interventions. The success, he said, may be on account of better corporate governance on the part of the market players and stricter regulation coupled with the enforcement efforts of the EFCC.

He however explained that it must be underlined that the loss of even one kobo by an investor through the shady deals of those he has entrusted his hard-earned money, to invest and guard, is totally unacceptable to the EFCC.

Earlier, the NSE Chief Executive Officer, Mr. Onyema, said the MoU with the EFCC is a way of further strengthening the collaboration which already existed between the NSE and Lagos office of the EFCC. “With this, stock market operators will know that it is not business as usual”, Onyema said.

Author: NewsAdmin

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