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The Case against Dr. Ndi Okereke Onyiuke

by Daniel Elombah

Text Box:    Onyiuke Okereke

One would have expected that Dr Ndi Onyiuke Okereke, the Director-General of the Nigerian Stock Exchange would use the opportunity of her appearance before the Senate Committee on Banking and Insurance, Capital Market and Finance, to defend herself and the organisation she heads of the grave allegation, that they in collaboration with the Banks, have perpetrated a massive fraud against Nigerian investors.

The Securities and Exchange Commission (SEC) had made a startling revelation that it knew of stupefying insider dealings perpetrated by banks in collaboration with the Nigerian Stock Exchange (NSE), which eventually plunged share prices into the current unprecedented crash.

Dr Ndi Onyiuke Okereke indeed confirmed that Nigeria has, so far lost a whopping N812 billion. Others say the loss would be over N7 trillion.

According to the Economic Confidential, the country’s Stock Market Value of equities has dipped by N2.2 trillion in January alone. Analysts say the loss of 14 per cent of the market value in January was unprecedented and monumental.

In spite of this, governor of the Central Bank of Nigeria (CBN) has re-assured Nigerians that the global financial crisis would not affect the Nigerian banking sector, because as he puts it, "the sector has remained robust."

Please, how can a sector that totters at the brink of disaster be termed as robust? A market rated as the worst performing in the world.

The fact is; all the major economic indices show clear signals of looming danger in the financial sector. According to the Economic Confidential, out of our 24 banks, 16 are considered weak, six manageable and two strong enough for the economy. I wonder what CBN’s definition of robust is.


And now, accusing fingers are pointing at the Nigerian Stock Exchange from no less credible source than the Security and Exchange Commission, as the major culprits for the crisis.

You would therefore imagine that Dr Ndi Okereke would use the opportunity of her appearance before the Senate Committee, to defend herself and the organisation she heads of the grave allegation, that they in collaboration with the Banks, have committed a grievous crime against Nigerians.

Instead, Ndi Okereke, like Pontius Pilate washed her hands off any culpability for the disaster and instead attributed it to the global crisis; at the start of which, she said, most foreign investors from the west, who have invested in Nigeria immediately rushed in to shore up their capital from the nation’s capital market:

"During this time many of them came in and withdrew their share capital even at lower prices. For instance, in 2007, a total of N256 billion worth of share capital were repatriated by the foreigners and the same thing happened in 2008, where a total of N556 billion worth of share capital were also repatriated."


According to a Financial Times report of June 23, 2008, some investors were prior to the crash “troubled by high valuations, dubious corporate governance, rampant speculation, and suspicions of market manipulation”.

So even without the global downturn; the over-inflated Nigerian stock was subjected to widespread abuse and insider trading of unimaginable magnitude and was headed for disaster.

What happened therefore was a natural consequance of the malfeasance of the Banks and their regulators. They neglected to take the lesson of 1929.

The experience of Lagos in 2008 mirrored New York of 2009. Just as the late 1920’s in the US was a time of prosperity and excess, and despite warnings against speculation, many believed that the NYSE could sustain high price levels. What followed was a speculative boom that led hundreds of thousands of Americans to invest heavily in the stock market, a significant number even borrowing money to buy more stock.

But the euphoria and financial gains of the great bull market were shattered when share prices on the NYSE fell at an unprecedented rate and collapsed.

In the same way, the period of 2002 – 2008 was a period of boom for the Nigerian economy.  The Nigeria‘s foreign reserves rose to $57.2bn at the end of December 2008. Crude oil prices hit a peak of $147 per barrel in July 2008.

The Nigeria Stock Market opened January last year at N10.18 trillion market capitalisation and then peaked at N12.6 trillion on March. This showed a gain of over N6 trillion and a growth rate of 74.7 per cent in 2007.

There was a mad rush to invest in stocks. Trust Nigeria’s follow follow mentality.

Nigerian banks exploited the mad rush and transformed themselves into issuing houses, brokers and bankers all in one (all the Nigerian banks formed issuing houses). They took turns to organize this merry go round to extort more money from the unsuspecting public. Not once, nor twice but as fast as they could organize the next sale. Multiple issues were held over a short period of time.

In a period of three years, Zenith “voodoo” Bank organised three sales bonanza; first in 2005, then in 2006 and again in 2007. They were raking in money from the unsuspecting public each time, until their shares peaked at 35 naira.

In 1929, New York brokers were routinely lending small investors more than 2/3 of the face value of the stocks they were buying. The rising share prices encouraged more people to borrow and invest; people hoped the share prices would rise further.

The price rose above the capacity of ordinary people to buy shares and the brokers simply lent more. The Speculation thus fueled further rises and created an economic bubble. On October 24, 1929, the market finally turned down, and panic selling started.

For the New York broker of 1929, substitute Nigerian bankers.

They would simply issue new shares and lend money to their customers to invest in those same banks shares. Moreover, the Bank would simply use depositors’ money to invest in those shares, thereby creating artificial robustness in the market.

Banks (almost all of them) lent millions to their staff and coerced them – sometimes against their wish -to invest in the Banks own shares.

One of the banks gave loans to their staff ranging from 10 million to 500,000 Naira. The staffs were happy at the upfront loan until they learnt it will be in the same banks stock. Each month a certain percentage was deducted from their salary to pay off the loan. What fraud!

One of the senior managers took the bank to court when he retired because his bank insisted that the payout he would have earned would be used to defray his loan!

The junior staff could not afford to be so audacious. Threatened with a sack, all were intimidated to take the loan and during the famous mega merger, the bonus they would have earned was used to defray the loan. Today, the shares are worth next to nothing!

The regulators that would have protected these poor staffers became participus criminus.

When challenged, the Central Bank governor famously said they have no right to tell Banks how to invest their money. In order words: ‘why worry, share in the fun’!

But in March 2008, a rumour that the central bank and the securities regulator had ordered banks to stop making loans to stockbrokers for margin trading led to a 15 per cent fall in three months – indicating how fragile the market’s foundations were. Investors were shaken, stock prices sank, and liquidity from margin lending evaporated.

Instead of seizing that opportunity, Soludo confirmed that n o formal order was given and it was back to business as usual

Part of the causes for the present crisis is that a lot of Nigeria brokers are stuck with the loans and the banks are stuck with liquidity problems while certain chief executives of some banks became richer than their banks.

Some of the Chief Executive Officers engaged in a spending spree on non-profitable investments like acquisition of private jets, mansions and yacht for recreation purposes. A fraudster’s lifestyle!

Thus, even without the global downturn, even without the alleged repatriation of foreign funds, our stock market was inflated, artificial; the correction would have been as shocking and painful. The artificial boom led to bust.

Who is to blame for the present crisis?

The banks are private companies; they believed that that their responsibility is to their depositors, creditors, staff and shareholders. While it is good practice to act for the good of the sector and the society at large, but frankly, it is the job of the regulator to ensure they did; in this instance, the Central Bank, The Security and Exchange Commission, but especially as far as illegitimate dealing in stock is concerned, The Nigerian Stock Exchange- and the buck stops at the table of Dr Ndi Onyiuke Okereke.

Why did Dr Ndi Okereke ignore all the warning signals? Why did she fail to nip the looming disaster in the bud? Why did she shirk her responsibilities?

There are three theories for this:

  1. Fraudsters thrive on the inability of people either to spot what is going on, or a lack of the wherewithal to do something about it.
  2. When those who are supposed to regulate get distracted or worse, get corrupted, it create conditions that favor those who are deliberately dishonest.
  3. When regulation is imposed upon companies by governments or regulators who have little or no direct knowledge of the area they are trying to regulate, it sometimes end up encouraging behaviours that are not appropriate.

SEC has let it be known that they spotted what was going on and warned NSE accordingly, so the first theory would not apply.

Those that knew Dr Ndi Onyiuke Okereke testifies she is professional who knew her job, so we are inclined to discountenance the third option.

That leaves us with the second option which is; either Dr Okereke was distracted, or she was corrupted.

Dr Ndi Onyiuke is a not a stranger to controversy. A woman whose house was burning was more interested in making money out of Obama. Her ‘Africa for Obama’ organised a dinner/concert in Lagos on Monday August 11, purportedly for Obama’s’ campaign. They reportedly raised about N100m. Obama had to disown them saying: “Obama for America and the Democratic National Committee will not accept any funds raised at this event or through the fundraising activities of this group”.

When confronted Ndi Okereke declared: “I want to make it clear that I am a Nigerian and I have the right to do anything I want with my time and my money.”

If Dr Ndi Okereke was distracted, was she also corrupted?

If as she claimed; she lived in America for 14 years and holds a green card, She is obviously aware that the US political candidates cannot legally accept donations from individuals who are neither US citizens nor permanent US residents. What was her motive in organising the dinner/concert?

Prof. Ndi Okereke-Onyiuke, was arrested, quizzed and released by the Economic and Financial Crimes Commission (EFCC) over the N100 million.

Many Nigerians - reminded of her acts of indiscretion including her potentially conflicting roles as the NSE D-G and the chairperson of Transcorp; her fundraising, under the umbrella of ‘Corporate Nigeria’, for the re-election of former President Olusegun Obasanjo during the 2003 elections; her being a staunch supporter of Obasanjo in his bid to run for a third term - and for the sake of sanitizing our polity, called for the EFCC not to stop with the Obama scam, but should clear the Augean stable, by prosecuting Professor Ndi Okereke-Onyiuke and her cohorts for corrupting the Nigerian Electoral System.

In saner climes, these series of misadventures are more than enough for any self-respecting person to step aside from any important post, whether public or private, and if such a person fails to follow the path of honour by quitting, should be given the boot.

Mr. Festus Odimegwu, who was Okereke-Onyiuke’s co-traveller on the train of indiscretion - was cleverly eased out of his post at the Nigerian Breweries.

But whereas Odimegwu worked for a private company, Onyiuke worked for a public company, owned by the whole Nigerians. Thus like the proverbial he-goat owned by the whole Village, Nigerians must be starved to death!


The unfortunate outcome is that, for all this sordid deeds; Professor Okereke-Onyiuke and cohorts were rewarded with---Transcorp, NITEL, Oil Blocs, Hilton Hotel Abuja, Customs Duty Waivers, National Honours, Professorship, among others.

Continuing her testimony before the Senate Committee, Dr. Okereke Onyiuke tried to allay expressed fears that the capital market is in trouble: "Nigerians should be patient; people should not panic because things would soon fall in line again. The share prices would soon bounce back, because the fundamentals of the economy are still very strong."

Tell that to the marines! We all know what happened to the guy that said that ‘the fundamentals of our economy are strong’ during the US Presidential elections. Unfortunately, unlike his American counterpart, the Nigerian electorate have no one to hold accountable.

The issues are: Sometime last year, SEC raised alarm over perceived insider dealings in the NSE but was promptly intimidated into silence and apathy. Who prevented the NSE from being investigated after this warning and why did the governor of the Central Bank despite warnings allow the Banks to get away with this ‘Ponzi scheme’?

Insider dealing is a crime.

One of the ways to look at the issue is, to borrow the words of Richjard Alderman, the Director of the UK Serious Fraud Office; ‘look at the victim’; considering the rip off from the point of view of the victim and thinking about how to bring justice to the victim.

Such victims include my good friend, Emenike, whose investments were almost totally wiped out. He left for America on scholarship and invested all his savings in the stock market, hoping to reap the rewards when he comes back. He came back to Nigeria late last year only to see his investments gone.

What about another colleague, Emma. He has lived in the UK for the past 25 years. With the signs of economic recovery experienced in the past 6 years, he started investing in Nigerian Stock hoping to leave finally for Nigeria this year. His dream has been shattered.

These individuals are crying out for justice. Unfortunately, they are not getting it from their elected representatives.

In other countries, the managers of their economy are grovelling and apologising to the Representatives of the people for their poor handling of the public assets. What happened at the aforementioned Senate hearing was a farce.

In a similar enquiry in the UK Parliament, it emerged that the deputy chairman of the Financial Services Authority and adviser to the Treasury, Sir James Cosby personally fired a whistle blower, Paul Moore, the former head of risks at the Halifax Bank of Scotland, when Sir Cosby was the Chief Executive of HBOS. Paul Moore had warned that the bank was growing too fast. Sir James Cosby resigned last week.

Our own whistle blower had emerged in the person of the SEC. Instead of holding the feet of these criminals at the NSE to the fire, what passed for a senate hearing ended with a weak admonition from the Senators to the NSE to investigate and report back to them the whereabouts of the depositor’s monies in the failed banks, because a lot of people who lost their money in those banks are daily being harassed by their creditors?

As pointed out by the Leadership: It is worrying that no one is standing trial over the heinous financial crimes that have foisted untold hardship on innocent investors. Some bankers and indeed the top echelons of the NSE should be tried for insider dealings. The cleansing of the capital market must start with NSE.

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