Dangote; the Big Fish that should be in Jail, now NSE President!

Written by Daniel Elombah
Friday, 07 August 2009 08:32
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Dangote; the Big Fish that should be in Jail, now NSE President!
NSE President

The appointment of Aliko Dangote as the 17th President of the Nigerian Stock Exchange after months of controversies, accusations and speculations, comes as a shock and huge disappointment to all that wished for the enthronement of an enduring business ethics and corporate governance in the Nigeria capital market.

Dangote, who, until his election, was the First Vice President of the NSE, emerged the President, following his appointment by the NSE Council members in Lagos by unanimous acclamation.

Prior to the AGM, there was heavy tension, as the capital market community was inundated with conflicting reports about the conduct of AGM. There were speculations that the AGM and elections would not hold, following controversies surrounding Dangote’s alleged involvement in the manipulation of African Petroleum’s Plc share price.

Different parties had called for the resignation of Dangote from the Council of the NSE, while other groups had gone to court, praying the court to stop the conduct of the elections.

Just a few months ago, in April 2009 to be precise, there were strident calls for Dangote to resign as vice chairman of the Nigerian Stock Exchange (NSE) following the murk and dirt that arose from the bitter rivalry between Nigeria`s richest oligarchs; Aliko Dangote and Femi Otedola.

It was felt that Dangote should resign his post as vice chairman of the Nigerian Stock Exchange (NSE) over perceived conflict of interests in the financial saga that saw the SEC suspend and fine Nova Finances Securities owned by Eugene Anenih, a Dangote proxy.

The reason of the nasty money feud between Mr. Femi Otedola and Alhaji Aliko Dangote lie somewhere between the very origins of their stupendous wealth, the very nature of their merchandise and the peculiar rules of engagement in the jungle of primitive accumulation of wealth in which they navigate.

Their feud threatened to drown some major banks and obliterate whatever is left of the Nigerian Stock Exchange (NSE) and the Securities and Exchange Commission (SEC).

The stupendous wealth ascribed to these men was one of the predictable legacies of the Obasanjo presidency and its Yar’Adua aftermath. Through the manipulation of state power, Obasanjo either created or fed a carefully selected oligarchy of mega rich Nigerians.

Through a flawed privatisation exercise, carefully chosen national assets were sold to these cronies while lucrative licences, monopolies and concessions for telecommunications, petroleum products imports, and essential daily need items were generously handed out to a few individuals, much like the Russian Oligarchs.

Pressured to resign

Dangote, the billionaire businessman and Vice President of the Council of the Nigeria Stock Exchange, came under intense pressure to resign from the council before the Annual General Meeting of the NSE.

The Committee in calling dangote to resign, took into consideration Dangote's status, image and position in the country and felt it would be better to appeal to him to resign rather wait till August during the AGM when the council might vote on his eligibility to become the president of the NSE on moral and ethical grounds.

The council took the decision as a result of the market's perception of Dangote's alleged role in the price manipulation of African Petroleum Plc's shares early in the year.

What was the accusation against Dangote?

In a glaring case of Insider trading – a crime all over the world, The SEC suspended Nova Finance Securities last Thursday March 26, 2009 after investigations uncovered unethical practices. The SEC investigation triggered another investigation into Afribank Registrars; accused of aiding and abetting the unethical practices by Nova Finance Securities.

Afribank Registrars - who are registrar to AP plc – confirmed that the SEC'S complaint rests on the failure of Afribank Registrars' internal control mechanism to detect or prevent the dubious transactions by Nova Finance Securities and that its records were falsified to cover up the illegal transactions.

The suspension and fine of Nova Finances & Securities may not be evidence of the guilt of Afribank Registrars but it provides the clearest evidence of the complicity of the group of Dangote consortium partners in masterminding the fraud.

After several months of denial, the suspension of Nova Finances is a very sad illustration of the way business is done in Nigeria and the mindless audacity of some people in authority like Dangote.

Curiously, Dangote did not sever all his ties to Nova. In fact during the period under review, Dangote and Nova with the assistance of Afribank Registrars fraudulently swapped a total volume of five hundred thousand units of irredeemable non-cumulative convertible preference shares in ten different transactions, which were admitted to the daily official loss of the Nigerian Stock Exchange. The ensuing panic and loss of share value created a scary scenario for AP investors.

The result was that shareholders lost of confidence in AP shares, leading to a massive exodus of existing shareholders, who hurriedly offloaded their AP shares and precipitating a sharp decline in its price.

This was a serious case of unethical practices, ie insider dealing and cross-share trading, “Nova and Aliko were just crossing shares between themselves, there were no money exchanged; rather they were even losing money by paying commissions for the swaps”.

The management of AP accused Nova Finance and Securities Ltd. and Alhaji Aliko Dangote of unethical manipulation of AP shares. This, the company claimed, had led to a decline in value of its shares. It is imperative to note that this type of negative stories is partly why many Nigerians have lost confidence in the stock market.

In the United States, Martha Stewart dipped her hand in the Cookie jar of insider trading, and the laws caught up with her, despite her riches and affiliations with the top echelons of the political class of the United States. As soon as she was indicted, her fellow big fishes abandoned her and left the law to take its cause against Stewart.

In a demonstration of the dictates of a country that not just mouths Rule of Law but practices it, Stewart paid the ultimate penalty for the crime after the verdict was handed over by the jury: Jail term for months.

But in the drama of this Dangote and Otedola insider trading mess, the big fish, Dangote can never go to jail for insider trading that he was accused of. He is a big fish, and big fishes never go to jail in Nigeria no matter what happens.

It took the vigilance of the management of African Petroleum (AP) Plc to spot and blow the whistle on the finagling with the price of the company's shares on the Nigerian Stock Exchange. But by the time it raised the alarm through advertorials in the print media in March, the company's estimated 160,000 shareholders had lost about N240 billion in the value of their stocks.

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