- Category: Business and Economy
- Published on Monday, 15 February 2010 03:09
- Written by Admin
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There were indications on Wednesday that the recent defence by Senator Udoma Udo Udoma of his dual chairmanship of UAC of Nigeria, one of the country's oldest conglomerates and the capital market apex regulator- the Securities & Exchange Commission (SEC) may not have yielded fruits.
Members of the Senate Committee on Capital Market want him to either relinquish his position in UACN, remain in SEC, or vice versa, because of the corporate governance implication of being an operator and a regulator simultaneously.
The committee, according to a source on Wednesday, has petitioned the Minister of State for Finance, Remi Babalola, who supervises the SEC on the dual position of Udoma, who they noted is also Vice Chairman of Linkage Assurance Plc, another company quoted on the Nigerian Stock Exchange (NSE).
The committee in its letter to Babalola dated February 5, 2010, signed by Senator Ganiyu Solomon, countered that there is a conflict of interest situation in Udoma in the chairman of the apex regulator being on the boards of regulated companies.
According to the committee: "As the Minister overseeing the capital market and a seasoned banker, you will agree with us that Section 4(1) (a) of the Investments and Securities Act (ISA) of 2007 vests the board of the SEC with enormous powers. Honourable Minister, it is 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 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 companies that they(SEC) regulate. There is therefore definitely and clearly a conflict of interest situation in Senator Udoma chairing the board of SEC and UACN and being on the board of public quoted companies."
The committee also noted that the ISA is being amended owing to several inconsistencies and other gaps previously not envisaged and which are no long in line with realities and international best practice.
"While this is being undertaken, we wish to enjoin you to direct Senator Udoma to either step down as Chairman of board of SEC or resign his chairmanship and vice chairman ship of UACN and Linkage Assurance as well as his membership of the board of Unilever Nigeria Plc or any public quoted company," the law makers said.
Udoma had last week defended his position, noting that he was already on the board of UACN before his appointment as SEC chairman in 2008, while assuring that there is no conflict of interest, adding that since taking the SEC job, he has not accepted any other offers.
There was no conflict of interest, he reportedly noted, since his job in the commission is not in executive capacity, arguing that the position is in line with provisions of the law, besides being in line with international best practice.
The committee is however of the opinion that there is need to check incestuous relationships between the regulator, and regulated, both of who should maintain a safe distance to maintain integrity and allow the regulator to take actions without encuberances. The committee alluded to double standards by the commission, which had last year queried the Director-General of the NSE for combining her job with that of chairing the Transnational Corporation of Nigeria (TransCorp)
Udoma, they continued, would have to relinquish his positions on the boards of quoted companies to ensure an 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.