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Tag: Corporate governance

  • Therefore, what is corporate governance?

    Therefore, what is corporate governance?

    “Corporate Governance has become perhaps the nearest directly-impacting multi-national-government of the marketplace to ordinary persons. Everyone goes to the market irrespective of creed or ideology”

     

    Profiling the subject there are certain facts to note:

    • That Corporate Governance (CG) is a Leadership-Management course that is very recent in the academia, being under two decades.
    • That originally its modules were informed of three sources: Legal, Economics and Organisanist product, CG embraces all the above three without a particular inclination to any, because it is an instrument used principally by decision-makers.
    • Decision-Making in the 21st century is made complex by the multiplied imperatives of the market economy, which can be discussed under the known core concepts (of corporate governance) but which also throws up enquiry lately into the grey areas and which are now yielding result particularly in collaboration with other modes.
    • To create a composite picture of Corporate Governance as acceptable discipline globally there is need to factor-in a baseline of the MDG indices in the profile of emerging economies as incentive before drawing the border line.
    • Its end is integrity but its delivery in the 21st century seems to outgrow the philosophy of Ethics hence the cutting-edge will be in certain newly introduced modules meant to add perspective to the general core concepts and they include character-internalisation modules.
    • Imperative for Business Schools (academia) to embrace a new dimension about delivering Corporate Governance, namely via multi-disciplinarity.

     

    Dimensions:

    Three dimensions are immediately thrown up on enquiring about Corporate Governance, namely:

    • Formalism: Deconstructing the phrase into its two basic elements: “corporate” and “governance”; and then put back together.
    • The Classic: Reviewing the antecedence and attempted definitions and opinions of experts/authorities on the subject; and how it is structured, for study and for transmission.
    • Notion or Experience? To determine how much of Corporate Governance is actually polemics or experiential; then relate this to everyday experience, first internationally and then locally.

     

    Formalism:

    “Corporate” derives from the word ‘corporation,’ in a historical reference to the beginning of 20th century America, when the volume of business in the companies grew considerably larger than a limited liability company could any more handle. Therefore it became a distinguishing mark to break the structure of management into departments for effective control in a professional, semi-autonomous design that is accountable to the top. Businesses could then be dis-personalised from individuals who owned them, and still remain viable and liable. This fact encouraged companies to go public so that others could buy-in by stocks, later called “shares.” It was at the onset of the problematic notion of “Ownership and Control”.

    Other formal structures came along with a boost in public-private obligations such as regulations, legal implications of business relationships and adjudication between parties within and without, together or when they were parting – be it voluntary or by force. All these developments were evidently not a part of the limited liability setting, or of the sole proprietorship long before that. And their functions have since become the identifying features of “corporations.”

    “Governance” refers to the management purpose of control by formal authority over a territory of humans; with the particular implication of human/civil rights, choice to associate and sundry, under the social contract.

    Both elements above, “corporate” and “governance” by their roles are mutually-reinforcing. While the government circle wants to emulate the private sector – that is, make its activities profitable by delivering value and being able to measure it, in order to put a tab on its progress- the corporate world on the other hand wants to emulate the establishment’s system of organograms and procedure that underlie government activity. Moreover the corporation is responsible to the state, particularly to regulators who report to government(s).

    To “govern” connotes a formal human-organisational activity. In Corporate Governance which began by the notion of globalisation, there is influence reaching across to other nations in a way similar to the multinationals. In the post-globalised era of information explosion Corporate Governance has become perhaps the nearest directly-impacting multi-national-government of the marketplace to ordinary persons. Everyone goes to the market irrespective of creed or ideology.

    Therefore, in the new notion, it is a forum with vicarious power to determine the direction of most people of the world in a fashion that is humorously referred to as ‘Marketology.’ It is the new culture with some kind of underlying morality; the science of the markets that explores the motives and its momentum.

     

    Classic: Men, Market

    Morality, Compliance and               Integrity:       

    Perhaps owing to its nature and the circumstances of its emergence the evolution of Corporate Governance as a staple on the school shelf has been prolonged. Between society, corporation and the individual, Corporate Governance connotes the idea of stakeholders on a venture and among whom there is a commitment to comply to that structure that binds, hence the Stakeholder theory.

    A stakeholder is anyone who may be affected in the prospect or default of any venture. However experience has shown that this issue of compliance is what has continued to fail in the marketplace over the years, requiring often and again that it has to be enforced, but why? In the first place “enforcement” presupposes a resistance which therefore required extra effort, and would have been found extraneous if initially men were willing to comply most naturally. This leads to the need for inquiry into the nature of men.

  • Fed Govt to MDAs: adopt corporate governance

    THE Federal Government has directed Ministries Department Agencies (MDAs) under its jurisdiction to adopt and comply with the best practices of corporate governance for national growth.

    The Head of Service of the Federation, Mr. Danladi Kifasi, gave this directive in Abuja yesterday, when the management of the Institute of Directors (IoD) of Nigeria visited him in his office.

    He said the government of President Muhammad Buhari was committed to upholding justice, fairness and honesty, which, according to him, were the basis of corporate governance.

    He added that government agencies would abide with these rules for socio-economic growth.

    Kifasi said he agreed with the ideals of the IoD, adding that he would ensure that the ideas were replicated in the civil service.

    He said: “I appreciate what IoD is doing as well as its ideals. Besides, I intend to be one of the members of the institute.  One of the past heads of service was a founding member of IoD and I will encourage other directors to become members”.

    The IoD’s President and Chairman, Mr. Yemi Akeju, said the visit was meant to formally inform the Head of Service of the launch of IoD Nigeria Register of Independent Directors with a view to helping such directors play important roles in the boards of organisations or agencies assigned to them.

    He said the independent directors were meant to protect minority shareholders, adding that the Nigeria Register of Independent Directors was made up of directors and senior executives from a cross-section of industries and professions.

    Akeju said through the register, companies, government agencies and key parastaltas would be able to recruit experienced directors to boards to promote growth.

     

  • ‘Businesses fail for lack of corporate governance standards’

    ‘Businesses fail for lack of corporate governance standards’

    DR. NICOLAS OKOYE, President/Founder, Anabel Group of Companies is an expert in strategic planning, leadership, business growth and development. In this interview with IBRAHIM APEKHADE YUSUF, he shares his view on business sustainability among other related issues.

    Some family-owned businesses prefer their wards to take over ownership of their businesses without proper succession plan. What’s your idea of a good succession plan?

    here’s nothing wrong with that really. But it becomes a problem when this is done without appropriate training. Some parents still do it and I think that’s really a poor judgment. It is at huge cost to their business. Most of the people who did in the past their businesses crashed not too long after they died. So, the need for education around the business is very important. And I would assume that our masters and captains of industries that have built formidable businesses over the years should have the discipline to groom and train their children before they put them in positions of authority where they are taking decisions that would affect the lives of people that work for them and affect the business as a whole. Without that grounding, even with a Harvard education, they can’t take the right decisions. So, I think that people who own companies, especially family-owned companies should look at things differently.

    Is there a global best practice?

    Parents should ensure that their wards are grounded not just in the business, but also in the environment you’re asking them to operate in. That’s key. So, the grounding has to be in threefold, that is the local environment, the business itself and the industry itself. They must understand the business, the industry and of course, they must understand the local environment too.

    Are there global best practices we can cite?

    There are quite a number of good examples of family-businesses that have stood the test of time. Halliburton is someone’s name. Somebody set up that business many years ago. And the business is still operating till date. Becker Hues, Philips, Nike, Macdonald’s and so. All these big companies you hear about today were owned and founded by people. They set up these businesses many years ago and they are still operating till date. I can go on and on.

    Are there local examples?

    Of course, we haven’t got to that stage here in Nigeria because we’re making the mistake of holding onto the business with little or no regard for growth and expansion as the case may be. Majority of our companies are not public companies and once they’re not public, they are not meeting corporate governance standards that place high premium on sustainability as it were. Because if it’s a public corporation, you can’t just make your son the CEO, he has to grow through the ranks. You can be the majority shareholder no doubt, but for your son to become the CEO, if you so wish, he has to learn the ropes. So, even in Nigeria there are examples of where proper succession planning has been done. So, we can only hope that other companies will emulate those examples and take advantage of it.

     

  • Don seeks corporate governance

    Prof Babatunde Mohammed of the Department of Education Management of the Faculty of Education, Lagos State University (LASU), has proffered corporate governance as the key to achieving the set goals of a university.

    He spoke at the 25th graduation of LASU (Lagos State University) Staff School, with the theme: Education and progressive changes in democratic dispensation in Nigeria.

    In his lecture titled: ‘Education and good corporate governance’ Mohammed who once served as teacher in the school, explained that societies whether micro or macro, has a system of educating its youths and as such, education for a good life has been one of the persistent of man in history.

    He said because schools are considered ‘domestic industries’ while pupils are ‘domesticated pets’, school managers should know they cannot manage schools like other industries they know.

    He said corporate governance is an internal system encompassing policies, processes and people who are shareholders and stakeholders who direct and control management activities with good business objectivity, accountability and integrity.

    Using LASU as a case study he said: “In my opinion, all stakeholders in LASU which include the management (Vice Chancellor, Registrar, Bursar, Librarian), Deans and Committee of Provosts, Heads of Departments, lecturers, Deputy Registrars, administrative staff, student and others should reflect on how we are managing LASU. A university that is over 30years (eight vice chancellors) and had experienced close to two third of its years of existence is still wallowing in crisis.”

    To obtain good corporate governance; school managers should abstain from activities that speak no good for the school, but rather embrace integrity, transparency, accountability, fairness among others.

    He advised the school not to engage any staff without the Teacher Registration Council of Nigeria (TRCN) certificate, urgingthose without the certificate to obtain one.

    He also said staff school teacher should embrace dialogue in line with the principles of corporate governance in pursuing their affairs, rather than conflict, noting that the school should continue to be seen as part of staff welfare package.

    The head teacher of the school, Mrs Adeola Aribike, called on stakeholders to go back to the drawing board and retrace their steps for the desired change to be achieved.

    She advised the graduating pupils to maximise what they had learnt and also not to relent in their pursuit of a fulfilled life.

     

  • We ‘ill drive growth with corporate governance, says ETI

    Ecobank Transnational Incorporated (ETI) Plc will continue to lay emphasis on best practices and good corporate governance as it seeks to consolidate its growth and deliver better returns to shareholders.

    Chairman, Ecobank Transnational Incorporated (ETI), Mr. Emmanuel Ikazoboh, who gave this assurance at a reception for shareholders of the holding company, said the company has continued to implement the 51-point corporate governance action plan approved by shareholders last year.

    He said the company has implemented substantial part of the corporate governance while efforts are ongoing at resolving outstanding areas.

    He added that the governance structure at the board level was also being reviewed to produce an oversight architecture that would enable the board to be most effective in executing its oversight and reform agenda for ETI.

    He noted that the good corporate governance at the company has started to impact on its overall fundamentals and share price.

    According to him, between June 30, 2014 when the present board of directors was inaugurated and May 11, 2015, the company’s share price increased from N16.89 to N23.27 within the period, representing a 37.8 per cent increase.

    “Cost efficiency with cost income ratio has gone down from over 70 per cent a year ago to about 62.7 percent as at the first quarter of 2015 and is still going down. Our return on equity has improved markedly from 15 per cent in 2014 to 19 per cent in this first quarter and still increasing,” Ikazoboh said.

    He pointed out that the group’s non-performing loan ratio had dropped to less than four per cent, assuring that the company would build on this solid balance-sheet foundation to ensure strong performance in a sustainable manner.

    Ikazoboh reiterated that the Ecobank Group would continue to be an independent pan- African institution owned by Africans and other investors who subscribe to the pan African ideals of the company.

    “The ETI board of directors is strongly determined that your bank be the star performer you have always envisioned it to be. We shall take some difficult decisions in the short-term but we are confident that these decisions will reap benefits in the immediate future,” Ikazoboh said.

    He assured that the pan-African company has a bright future that will guarantee higher benefits for all stakeholders.

    The board of ETI Plc recommended a bonus issue of one share for every 15 shares already held by shareholders as return for the immediate past business year ended December 31, 2014.

    The bonus recommendation came as the financial services group announced that its net profit rose by 179 per cent in 2014. Key extracts of the audited report and accounts showed that net profit after tax jumped to N65.68 billion in 2014 as against N23.57 billion recorded in 2013. Pre-tax profit rose by 144 per cent from N35.37 billion to N86.44 billion. Gross earnings had grown by 19 per cent from N319.56 billion in 2013 to N379.32 billion in 2014.

     

     

     

     

     

  • FirstBank: Corporate governance promoter

    FirstBank: Corporate governance promoter

    For more over 12 decades, First Bank of Nigeria Limited (FirstBank) has continued to provide exceptional services to its numerous customers at home and abroad. The lender has broken new ground, acquiring new lenders, and winning accolades for its services in the financial sector, writes ALVIN AFADAMA.

    Banking thrives on quality services and trust. At First Bank of Nigeria Limited (FirstBank), the customer is seen as king, and is treated thus.

    It is therefore not surprising that in its over 120 years in business, the management and staff of FirstBank have strived to give customers the ‘exceptional services’ that have kept and strengthened the business relationship.

    The feedback from stakeholders has equally been exceptional, as they responded with awards and different forms of recognition for the lender. The bank has also continually evolved, changing its brand names severally, but retained the high quality of services that define its brand essence.

    For instance, for the fourth consecutive year, First Bank of Nigeria has been ranked number one banking  brand in Nigeria by The Banker magazine of Financial Times and Brand Finance, London, United Kingdom in their annual 2015 The Top 500 Banking Brands.

    The Country Representative of The Banker magazine – Nigeria, Mr. Kunle Ogedengbe, the lender moves from being number 382 in 2014 to 336 this year. A leapt of 46 places.

    Other Nigerian banks that made the ranking include Zenith Bank, Guaranty Trust Bank and Access Bank. Zenith Bank moves to number 388 from 453 in 2014, Guaranty Trust Bank moves to 417 from 422 while Access Bank made first entry into the ranking.

    Brand value of First Bank increases to $300 million in 2015 from $228 in 2014 representing an increase of 31.57 per cent. The brand value according to the Silvia Pavoni, the Economics editor of the magazine, is “the licensing rate that a third-party would need to pay to use that company’s brand.”

     

    The history

    FirstBank was established in 1894 as the premier Bank in West Africa, and is now Nigeria’s number one bank brand and the leading financial services solutions provider in the country.

    The bank was founded by Sir Alfred Jones, a shipping magnate from Liverpool, England. With its head office originally in Liverpool, it commenced business on a modest scale in Lagos, under the name, Bank of British West Africa (BBWA).

    In 1912, the lender acquired its first competitor, the Bank of Nigeria (previously called Anglo-African Bank) which was established in 1899 by the Royal Niger Company. In 1957, it changed its name from Bank of British West Africa (BBWA) to Bank of West Africa (BWA). Again in 1966, following its merger with Standard Bank, UK, FirstBank adopted the name Standard Bank of West Africa Limited and in 1969 it was incorporated locally as the Standard Bank of Nigeria Limited in line with the Companies Decree of 1968.

    Changes in the name of the Bank also occurred in 1979 and 1991 to First Bank of Nigeria Limited and First Bank of Nigeria Plc, respectively. In 2012, the bank changed its name again to First Bank of Nigeria Limited as part of a restructuring resulting in FBN Holdings Plc (FBN Holdings), having detached its commercial business from other businesses in the FirstBank Group, in compliance with new regulation by the Central Bank of Nigeria (CBN).

    FirstBank had 1.3 million shareholders globally, was quoted on The Nigerian Stock Exchange (NSE), where it was one of the most capitalised companies and also had an unlisted Global Depository Receipt (GDR) programme, all of which were transferred to its Holding Company, FBN Holdings, in December 2012.

    Building on of its solid foundation, the bank has consistently broken new ground in the domestic financial sector for over a century and two decades. FirstBank is present in the United Kingdom and France through its subsidiary, FBN Bank (UK) Limited with branches in London and Paris; and in Johannesburg, Beijing and Abu Dhabi with its Representative Offices there. In October 2011, the lender acquired a new subsidiary, Banque International de Credit (BIC), one of the leading banks in the Democratic Republic of Congo.

    In November 2013, FirstBank acquired ICB in The Gambia, Sierra-Leone, Ghana and Guinea, and in 2014, the Bank acquired ICB in Senegal. These were major landmarks in its plan for growing its sub-Saharan African footprint.

    As the global operating environment evolves, FirstBank has kept pace, responding to the dynamic needs of its customers, investors, regulators, host communities, employees and other stakeholders. Through a balanced approach to plan execution, FirstBank has consolidated its industry leadership by maintaining trans-generational appeal. Thus, the Bank has continuously boosted its customer-base, which cuts across all segments in terms of size, structure and sectors.

    Leveraging experience spanning over a century of dependable services, FirstBank has continued to build relationships and alliances with key sectors of the economy that have served as strategic building blocks for the wellbeing, growth and development of the country. With its huge asset base and expansive branch network, as well as continuous re-invention, FirstBank is Nigeria’s strongest banking franchise, maintaining market leadership on all fronts in the nation’s financial services industry.

     

    Growth strategy

    FirstBank has about 800 business locations in Nigeria that are online, real time, and enjoys one of the largest domestic sales networks in the country. As a market leader in the financial services sector, the elnder pioneered initiatives in international money transfer and electronic banking, serving  more than nine million customer accounts.

    Besides, the lender’s strategy has been focused on restructuring the business to take advantage of growth opportunities within the industry, pursuing business line expansion across strategic business units, continuously implementing a systematic international expansion plan and sequencing its growth initiatives across defined metrics.

     

    Manpower development

    FirstBank’s manpower development policy recognises the invaluable contribution that human resources make to the growth and development of countries successfully navigating from third world to developed country status. Besides, its human capital management initiatives are geared towards providing necessary support to staff, departments, and the various business drivers to enable the Bank achieve its goals and objectives.

    The lender also hires personnel with the unique skill sets needed to fully leverage its operations. Its  succession planning framework ensures perpetual business continuity.

    The long drawn transformation in the Nigerian financial services sector has distinguished it as Nigeria’s strongest financial services group. This is arguably as a result of the Bank’s proactive and far-reaching transformation programme initiated ahead of the turn of the present century. FirstBank was the first quoted company in Nigeria to  achieve the feat of hitting the trillion naira mark in market capitalisation, the clearest evidence of the market’s estimation of its worth.

     

    Corporate governance/ Awards

    A best-fit corporate governance promoter, FirstBank’s corporate governance practice remains at the industry’s leading-edge. This is especially evident in its laudable leadership transition processes, ensuring that there is seamless business continuity and stability in all aspects of the Bank’s businesses. This corporate governance posture has won the Bank much respect and recognition both locally and internationally.

    In its 120 years of uninterrupted operations, FirstBank’s outstanding services have attracted innumerable recognitions and awards. The bank was first listed on The Nigerian Stock Exchange (NSE) in March 1971 and won  the NSE’s Annual President’s Merit Award for the best financial report in the banking industry a record thirteen times. This subsisting feat received additional impetus when the Bank in 2011 was bestowed with the “Best Financial Reporting Company” award by Africa Investor, one of Africa’s most respected multimedia investment news and information publishers.

    In the same period, FirstBank was named the “Most Innovative Bank in Africa” by African Banker Awards. This highly coveted award goes to the African bank that has demonstrated original and practical uses of technology to provide customer convenience, better and cheaper services, and greater access to the financial services industry in Africa.

     

  • We ‘ll continue to lead in corporate governance, says Transcorp

    Transnational Corporation of Nigeria (Transcorp) Plc has reiterated its commitments to upholding best practices and good corporate governance.

    With the conferment of the Most Compliant Firm on Transcorp by the Nigerian Stock Exchange (NSE), the conglomerate stated that the recognition would spur it to continue to lead in corporate governance. The award is given to the company which demonstrates the highest degree of compliance with the rules and regulations of the Nigerian Stock Exchange in the year under review. The winning company is also expected to have demonstrated its recognition for the importance of corporate governance.

    Chairman, Transnational Corporation of Nigeria (Transcorp) Plc, Mr. Tony Elumelu, said the award was a confirmation of the positive changes that the new core investor had brought to Transcorp and would further serve as a motivation for continuing best practices.

    According to him, when Heirs Holdings took over Transcorp in 2011, one of the core objectives agreed at the very first strategy session was the need to transform Transcorp into an institution with world class corporate governance standards in all its processes, reporting and compliance.

    “This prestigious award confirms that we are delivering successfully on our commitment. The NSE’s stamp of approval acts not just as a powerful recognition of our achievements over the past year but also acts as a motivator to inspire us to continue to raise the bar on corporate governance,” Elumelu said.

    Chief executive officer, Transnational Corporation of Nigeria (Transcorp) Plc, Mr. Emmanuel Nnorom, said the award confirms that best corporate culture is an integral part of the conglomerate.

    “This highly coveted award means so much for all of us at Transcorp. Our teams have worked tirelessly to meet and exceed the statutory requirements for disclosure and I am delighted to see that this comes not only from a legal and professional obligation but as an integral part of our corporate culture at Transcorp. My heartfelt thanks and congratulations go to every member of the Transcorp team,” Nnorom said.

    The award has further increased investors’ appetite for Transcorp’s shares after third quarter results showed that the conglomerate may sustain its dividend payment, which started in 2013. Key extracts of the interim report and accounts of Transcorp for the nine-month period ended September 30, 2014 showed that turnover leapt by 166.55 per cent. Gross profit rose by 129.6 per cent while operating profit doubled by 112.7 per cent. The conglomerate’s profit before tax grew by 88.5 per cent while profit after tax rose by 130.7 per cent.

    Transcorp’s turnover rose to N31.40 billion in September 2014 as against N11.78 billion in comparable period of 2013. Gross profit also rose from N9.20 billion to N21.12 billion. Operating profit stood at N12.36 billion in 2014 compared with N5.81 billion in 2013. Profit before tax jumped from N5.15 billion to N9.71 billion while profit after tax doubled from N3.58 billion to N8.26 billion.

  • Corporate governance society to meet

    THE Society for Corporate Governance Nigeria will hold its  yearly conference on Friday at the Oriental Hotel, Lagos by 10am.

    The theme for the event is “Leadership & Governance in the Public Sector.”

    The conference will discuss the practice of corporate governance in the public sector and its effects on businesses as well as the economy.

    The challenges of leadership in public sector governance, among others, will also be discussed.

    This year’s forum will be chaired by the society’s President, Chief Olusegun Osunkeye, OON, OFR.

    The keynote speaker is the Central Bank Governor, Mr. Godwin Emefiele while the special guests are Lagos State Governor Babatunde Raji Fashola, SAN and former Anambra State governor, Mr. Peter Obi, CON.

    It will witness the presentation of the society’s latest publication, ‘The Blue Book.’

  • SEC’s roles in corporate governance compliance

    SEC’s roles in corporate governance compliance

    In its avowed commitment to ensuring sound corporate governance in the nation’s capital market, the Securities and Exchange Commission, SEC Nigeria recently waded into issues relating to corporate governance issues in Ecobank Transnational Incorporated (ETI). Both the intervention and its outcomes affirmed Nigeria’s pole position in market regulation in Africa. It constituted a pathfinder on regulatory imperatives for multi market jurisdiction players in the robustly evolving African business landscape.
    ETI, a celebrated indigenous African multinational success story, is the holding company of the Ecobank Group, with footprints in 34 countries across West, Central and East Africa.
    The steps taken by the SEC Nigeria have proved commendable and reassuring especially given the challenges with regulatory response to multinational firms particularly in a continent like Africa with weak institutional development, poor legal frameworks and rule of law inadequacy. In this kind of context, it is so easy for violations of rules to happen unremarked and without being apprehended particularly when perpetrated by multinational enterprises who take advantage of the overall parlous picture of weak institutions and the regulatory lapses which this sirs in various country jurisdictions in which they operate to perpetrate arbitrage.
    It is against this background that the SEC’s intervention in isolating, apprehending and arresting governance breaches in ETI must be recognized as an inspiring show of leadership which points the way forward for Africa and the Emerging Markets.
    How it all started
    What triggered this landmark regulatory undertaking was a somewhat innocuous whistle blowing by an employee, Executive Director of Risk and Finance at ETI, Laurence do Rego, who had written a letter to the regulator alleging insider dealings, alterations in the compensation element of the CEO’s contract which by – passed governance structures, and a planned sale of the group’s non-core assets.
    She wrote to express reservation and concern for a number of actions that the MD and Board Chairman had taken. She alleged that these actions promoted personal interests of the people involved and their conduct ran counter to laid-down operational structures and procedures.
    With a less proactive regulator, this correspondence may well have elicited an unenthusiastic response in the manner of a mere call or warning letter to the people involved, but not so for the Nigerian regulator which over time has garnered a reputation for steely determination in rule enforcement and for incessantly hankering after entrenchment of an order of sound corporate governance in Nigeria’s market. By universal consensus, the Nigerian regulator had done assiduous work in recent times to sanitize the Nigerian market which, prior to 2010, had garnered a reputation for constituting a cesspool of sorts for improper conduct by market participants.
    On the basis of the petition, the Nigerian regulator went to work; it engaged the board and management of ETI on the observed lapses and instituted wide reaching investigations to ascertain both the veracity and enormity of the breaches. The regulator did not stop there; it engaged the services of KPMG, a leading international audit and management consulting firm to support the work of an extensive governance audit of ETI.
    The diligent work spanned months and the results, expressed in an initial report, were confirmatory that indeed significant breaches had occurred at ETI.
    Sequel to the findings of the rigorous audit, SEC held a meeting with members of the Board of ETI on Monday, 16th December, 2013 during which the results of the exercise were presented in order to elicit feedback from them. It was agreed at the meeting that such feedback be made available to the regulator on or before Friday, 3rd January, 2014 ahead of the audit results being forwarded to ETI for dissemination to the bank’s shareholders.
    The SEC is certain that the implementation of the recommended remedial plan would eliminate the governance lapses in addition to strengthening the ETI franchise. The Commission also reiterated its commitment to ensuring the integrity of the market and the protection of the investing public.
    “It is important to emphasize that the Corporate Governance Audit is being done at the level of the ETI Holding Company and does not reflect governance at any of ETI’s banking subsidiaries that are responsible to the banking and market regulators in the countries in which they operate.” The Commission said.
    The SEC urged ETI to develop a one year remedial plan with specific measures to address the remarked governance gaps. In the public interest, the regulator demanded a quarterly reporting schedule from ETI to keep abreast with the progress being made.
    The Commission was persuaded that ETI needed to appoint a substantive Board Chairman in place of Lawson who had exceeded in the course of the governance audit. The new Chairman would lead the effort to attain an improved governance climate. “It will be important that such an appointment is the result of a credible selection process” the SEC Nigeria stresses. “Such a Chairman also needs to have the relevant experience and skills to guide this remedial plan. The Chairman should have integrity, independence and should not have the potential for conflict of interest in the discharge of the role. Steps should also commence to ensure that ETI has Board members and a Management team that have the requisite skills and experience to oversee or manage the affairs of ETI at this time” the regulator emphasized.
    Principal among the remedial measures was the convening of an AGM to put the recommended remedial measures to vote and give them the force of legitimacy.
    The SEC therefore advised ETI that the findings constituted an important basis for convening an Extra – Ordinary General Meeting (EGM) of shareholders to deliberate and pass resolutions on the critical findings and recommendations of the corporate governance audit. The SEC further advised that the EGM should be held before the end of February 2014.
    The AGM has since held and shareholders voted overwhelmingly for adoption of the remedial measures which are now being implemented. It is history that the Chairman and MD have quit.
    SEC Nigeria’s show of leadership has elicited commendation from local and global investor publics. The financial media which followed the evolution of the SEC intervention in ETI with an eagle have similarly applauded the effort as an exemplar of alert regulatory watch and response.
    There is unanimity that the SEC Nigeria showed great reflex, was prompt and decisive in taking actions against the allegations to protect investor funds as well as the institutional health of ETI.
    Already, sister regulators in Africa have been flocking to the Nigerian regulator not only to obtain report of the audit but to also share information and knowledge and the modus provender of the Nigerian regulator.

    •Obi Adindu and Efe Ebelo work in corporate communications department at the Securities and Exchange Commission (SEC).

  • Operator seeks corporate governance

    Indigenous oil and gas operators must provide a strong corporate governance framework to foster growth, the Chief Executive Officer, Midwest Oil and Gas Limited, Adams Oko-Ene, has said.

    He spoke at a stakeholders’ forum in Lagos. He said the complexities in crude oil transactions requires that local operators known as independents provide a solid risk management framework to get bigger and international partnership.

    He said: “Everybody would have take a critical examination of their operations and see if they are complying with the globally acceptable financial standards. Operators need to access opportunities for their businesses; they can only do this by putting in place best practices of corporate governance.’’

    According to him, banks are stronger and have the capacity to finance big-ticket transactions in the oil and gas industry, stressing that they would only give loans of operators that show enough due diligence.

    “Banks are in a position to give, let’s say $100million or $200million loans, to players in the local energy services industry. To access this, operators need to improve on their operations by providing clear, consistent and internationally acceptable method of financial transaction to investors,’’ he added.

    He said banks would like to know that whether prospective loan seekers are acquiring green field assets or old ones; prospects in the assets and other attributes before they provide credit.