UPDATE 2-Nigerian SEC sacks stock exchange boss over governance

Wed Aug 4, 2010 8:07pm EDT

* Director-general sacked, president suspended

* Follows allegations of mismanagement, weak oversight

* Part of drive to clean up Nigerian capital markets (Adds quote, details)

By Chijioke Ohuocha and Nick Tattersall

LAGOS, Aug 4 (Reuters) - Nigeria's Securities and Exchange Commission sacked the head of the stock exchange on Wednesday and suspended its chairman, in what it said was a move to restore investor confidence amid a raft of governance concerns.

The SEC said Nigerian Stock Exchange (NSE) Director-General Ndi Okereke-Onyuike would be removed immediately and that an interim administration would be announced before sub-Saharan Africa's second-biggest stock market opened on Thursday.

NSE President Aliko Dangote, one of Nigeria's best-known tycoons, and other members of the NSE governing council would be suspended after being elected in defiance of a court order, pending the outcome of litigation, the SEC said.

"The commission has closely followed the developments in the Nigerian Stock Exchange, particularly with respect to inadequate oversight..., ongoing litigation, allegations of financial mismanagement, governance challenges and the inordinate delays in the implementation of a succession plan," the SEC said.

"The commission has decided that it is in the interest of the public and necessary to protect the investor to issue (these) directives," it said in a statement.

Okereke-Onyuike, Dangote and other council members could not immediately be reached for comment.

The move is the latest sign of a more muscled approach from Nigeria's capital markets regulator since its new chief executive, Arunma Oteh, took office in January pledging tougher penalties to help restore investor confidence.

"Given the gravity of the allegations around financial mismanagement of the exchange, the commission has also directed the conduct of an independent investigation into the allegations," the SEC statement said.

DOGGED BY CONTROVERSY

Sub-Saharan Africa's second-biggest economy has been one of the darlings of frontier markets investors, with a population of more than 140 million people and a stock market that has outperformed emerging markets peers.

But weak regulation and impunity for offenders have clouded its image.

The stock exchange has long been dogged by controversy.

The SEC announced last week it was taking 260 entities and individuals to a special tribunal over alleged market abuse in the run-up to a stock market collapse and banking crisis which ended in a $4 billion bailout last year. [ID:nLDE66Q2B8]

In March, a court overturned the election of billionaire industrialist Aliko Dangote as NSE president following an appeal by shareholders in African Petroleum (AP) AP.LG, whose stock price he had been accused of manipulating. [ID:nLDE62B240]

The SEC had last year cleared Dangote, one of only two Nigerians on the Forbes billionaires list, of any involvement in manipulating AP shares but the court upheld AP's appeal against his election.

Further adding to the sense of crisis, Dangote was quoted by Nigerian newspapers on Monday as saying the exchange was broke and that it was being forced to dip into funds belonging to an independent clearing house subsidiary to finance its operations.

NSE officials declined to comment.

Nigeria's Business Day newspaper reported on Wednesday that U.S. firm Accenture (ACN.N), retained by the exchange to help select a new chief executive to replace Okereke-Onyuike who was due to retire later this year, had suspended its work over the non-payment of fees. Accenture declined to comment. (For more Reuters Africa coverage and to have your say on the top issues, visit: af.reuters.com/ ) (Reporting by Chijioke Ohuocha and Nick Tattersall; Editing by Sofina Mirza-Reid)

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