…As Regulators blame shareholders for asset losses***
The Lagos State House of Assembly on Monday threatened to impeach Governor Akinwunmi Ambode for allegedly spending funds which were not appropriated for.
The Assembly subsequently asked Ambode to appear before it within one week over the 2019 budget, which has caused disagreement between the two arms of government.
Ambode had sent the 2019 budget to the House in December against the tradition of laying the budget before the House.
The Speaker of the House, Mudashiru Obasa, told the lawmakers that it was important to give the governor a fair hearing over the issue.
He said the governor’s action was in violation of the constitution.
Obasa said, “The attorney general, finance commissioner and commissioner for budget and economic planning that ought to have advised the governor did not do so.
“The most important thing is that we should let the people know that a budget that has yet to be approved was being spent, which was why we could not attend to the governor on the budget on Monday 21, January.
“We must give them a fair hearing to come and explain what happened.
“The point has been made that there must be something before the House before you can commence expenditure. We want to call on the governor to come within a week to explain himself…”
“We can start gathering signatures for impeachment. We can wait till another time,” he said.
The discussion was sequel to a report presented by the Deputy Speaker of the House, Wasiu Eshinlokun-Sanni, who is the chairman of an ad hoc committee set up to look into the issues surrounding the 2019 budget during a parliamentary meeting of the lawmakers.
The deputy speaker revealed that the committee met with relevant commissioners and heads of agencies which revealed several infractions.
He said the committee discovered that the 2019 Budget was already being implemented by the executive without being laid on the floor of the House. He also noted that 2018 budget, as of the 3rd quarter of 2018 had not performed up to 50 per cent.
Another legislator, Akeem Bello, called on Ambode and his deputy to resign.
Another lawmaker, Dayo Saka-Fafunmi, said, “Public funds do not belong to any of us, it belongs to the people of Lagos State. Section 120 subsection 2 states that no money should be withdrawn from the accounts of the states unless it is approved by the House.
“All the violations amount to gross misconduct. Section 188 subsection defines gross misconduct. We strongly believe that essential services that ought to be met are missing in the state. I am in line with the statement and decisions of the members that if the executive members are not ready for governance, they should resign or should be impeached.”
In the meantime, capital market regulators have blamed shareholders for their investment losses, urging them to report corporate governance lapses perpetrated by the boards of listed firms, and collaborate with management to create sustainable wealth through profitability.
From the loss of over N700 billion in private placement scams during the era of stock market boom, to the sale of three nationalised banks, where investments estimated at N83 billion were lost, and another N10 billion lost to the recent Skye Bank takeover, readily come to mind.
Indeed for over 10 years after the 2007-2008 global financial crisis, which triggered a worldwide economic recession, bringing to a halt more than a decade of increasing prosperity for western economies, Nigerian investors are still recounting their losses, even as they battle with perennial issues bedevilling the nation’s capital market.
The situation, which has created significant liquidity problem for the equities segment, has further depressed the market, as retail investors do not have the purchasing power to patronise the market.
But to the Securities and Exchange Commission (SEC), and the Nigerian Stock Exchange (NSE), blamed such losses on the failure of shareholders are to blame for not speaking out against corporate governance lapses among board members of listed firms.
According to them, when such cases are reported, the regulators will carry out appropriate investigations, while sanctions are subsequently applied where necessary, to correct the anomaly.
Specifically, the Chief Executive Officer, NSE, Oscar Onyema, said: “One of the things we pride ourselves in doing at the Exchange is the protection of investors. We know that when something goes wrong, the first person you want to shoot is the Exchange, and possibly the SEC, because we are in the front line.
“If I take Skye bank specifically, the Exchange has done a lot to protect the interest of shareholders, but please let us understand that we are operating in the market place where shareholders themselves have some responsibilities.”
He continued: “We operate within legal boundaries, and if you take banks, the primary regulator for banks is the Central Bank of Nigeria (CBN), and their own limits is different from ours, and we cannot say we will stop the CBN from taking regulatory actions against the bank. But we can encourage shareholders to make sure they keep their eyes on the board, and make sure that they ask the pertinent questions and hold the board and their management accountable.
“We will make sure that disclosures are done, and we will not allow companies that are not disclosing to continue to be in the market. We will work with other regulators to make sure that if there is any way we can protect and preserve value for shareholders, that would be done,” he added.
The Head, Registration, Exchanges and Market Infrastructure Department, SEC, Emomotimi Agama, said: “Corporate governance is important for every institution. The monitors of corporate governance incidentally are the shareholders. So if the shareholders do not monitor the corporate governance of the institutions where they are investing or have invested, it is as good as throwing their money into the well.”
He continued: “The private placements are limited liability companies that do not fall within the regulation of SEC, and that is why investors must make inquiry. They must take their time to find out the nature of these companies, what do they do, what is the future of these companies? Also find advisers to do these for them, as no adviser worth its salt will review an account or a company and the company is bad and would tell the investor to invest in it.”
A stockbroker and Managing Director, Sofunix Investment Limited, Sola Oni, described shareholders as the highest risk takers, noting that investors must stay ahead of events in listed companies.
“The trend we are facing today is a challenge to shareholders that they should not be docile. They have the duty to know what is going on where they put their money. For quoted companies, shareholders are supposed to be very close to stockbrokers who are supposed to be their advisers. Shareholders are supposed to know what is happening and keep the board members on check. But what do we notice, people will buy shares, and they do not even know what is going on in the company.”
Punch with additional report from Guardian NG