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Guardian Editorial: Senator Udoma: Conflict of interest

Senator Udoma: Conflict of interest Editorial

The petition by the Chairman of the Senate Committee on Capital Market, Senator Ganiyu Solomon, asking the Minister of State for Finance, Mr. Remi Babalola, to compel Senator Udoma Udo Udoma to resign as the Chairman of the Securities and Exchange Commission (SEC), reveals a lot about the absence of thoroughness in the Senate confirmation process.

Senator Solomon based his petition on Udoma's recent appointment as Chairman of the United Africa Company of Nigeria, UACN, Plc. This is odd. Senator Solomon was certainly aware that Udoma was serving on the boards of UACN Plc, Linkage Assurance Plc and Unilever Nigeria Plc during Udoma's screening by the Committee for the chairmanship of the SEC. Udoma's curriculum vitae, which he laid before the Senate Committee, clearly spelt out all his existing commitments. Yet the Committee went on to confirm him on the basis of the information supplied. It will portray a lackadaisical approach to his job if Senator Solomon was, as he is claiming, not aware that Udoma was already serving on those boards before his appointment as Chairman of SEC in June 2008.

We have had cause to complain, over and over again, about the sloppiness with which various Senate committees have gone about their tasks. The entire confirmation process has often been brought into disrepute, with all manner of people confirmed for positions for which they clearly lack aptitude and preparation. The below-par performance of much of the ministerial team over the years is a befitting indictment of the cavalier attitude with which the key players in the confirmation process have gone about their work. Senator Solomon's faux pas is the latest evidence.

Senator Udoma is counted among the best and brightest of a generation. His reputation is outstanding and his integrity widely regarded as unimpeachable. However, he should not have accepted the SEC chairmanship in conjunction with his other appointments on the boards of publicly quoted companies. There is a clear conflict of interest here, which should not be overlooked. That Udoma made a public declaration of interests in line with Section II of the SEC Act does not excuse or resolve the conflict of interest. That his immediate predecessor as Chairman of SEC was also in a conflict of interest situation only highlights that it is time to clarify the issue once and for all.

Senator Udoma's exemplary integrity does not guarantee that all those who will succeed him will match his personal credentials. Furthermore, at this particular point in time, confidence in the efficacy of the Stock Exchange has to be rebuilt after the turbulence and erosion of trust that have recently taken place in the capital market. For this reason, there should not be any distraction or controversy over the chairmanship of SEC. As far as we are concerned the precedent of the immediate past Chairman of SEC, Oba Otudeko, who served at the same time on the boards of publicly quoted companies was wrong and its ghost should now be laid to rest.

It would be seen as patently absurd, for example, if the Chairman of the National Communications Commission (NCC) was also a director of, say, MTN or Globacom. Nobody will also accept that the head of NAFDAC can also be a director of a pharmaceutical company. It is time we accept that conflict of interest situations are better avoided in order to aid the efficacy of markets as well the overall health of a democracy. It is, for example, still painful to recall the clear conflicts of interest induced by the chairmanship of the infamous Transcorp Plc by Dr. Ndi Okereke-Onyiuke, who was also, at the time, absurdly, Director-General of the Nigeria Stock Exchange. After that particular incident it was to be hoped that foreclosure would be made on that particular issue.

For these reasons, the admirable Senator Udoma has a duty to choose between the chairmanship of SEC and his other board appointments on publicly quoted companies. He cannot and should not combine the two. From the perspective of the national interest, it would be helpful, in our view, if he chose the chairmanship of SEC. For his integrity, professional skills and deep intellectual preparation would be of immense value at a time when confidence in the Stock Exchange has to be rebuilt. It is our prayer that he considers this option.

Regions : Africa

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