Late last year, top managers of Afribank Nigeria Plc were in panic at the prospect of a hostile takeover. They were not sure where it would come from, but nightmares remained of Access Bank’s aggressive takeover bid in 2006, and Bank PHB’s attempt in 2007. In both cases, the loses were collosal: N25 billion was lost in the botched Access Bank bid, and N19 billion when Bank PHB came calling.
This time, as NEXT investigations revealed, Union Bank was going to dump half a billion units of Afribank shares, a possibility that caused intense anxiety in the Afribank boardroom. The challenge was how to fend off the predatory competitors, who, smelling blood, had started circling, with an eye to mop up Afribank shares; knowing that the capital market arm of the bank, AIL Securities, was hopelessly soaked in debt.
The panic in the Afribank house was palpably dismal, until Jibrin Isah, one of its executive directors came up with a magic formula. Afribank must trigger an urgent and decisive move, an insider recalls Mr. Isah saying, to buy back its own stocks from large volume investors who had secured their shares at the public offer.
One man to lead this salvation campaign, the hapless Afribank team members were told, was a certain Peter Ukuoritsemofe Ololo.
Mr. Ololo, a 52 year old chartered accountant and stockbroker, may not be a celebrity, but in Nigeria’s financial circles, he was the big time player who, according to regulatory and security officials who spoke anonymously to NEXT in Abuja and Lagos, helped define the architecture and landscape of the country’s capital market in the past five years.
Today, the Mr. Fix It, whose corporate debts make up over 10% of the total debt portfolio of the five troubled banks, has all fingers pointed in his direction as the mastermind of the collapse that has humbled the much touted virility of the Nigerian capital market.
The Afribank Magic
To rescue Afribank, what Mr. Ololo, using his Falcon Securities Limited, had to do was simple: descend on the market and vacuum 500 million units of Afribank shares away from the public and the reach of the predators through a note issuance facility [NIF] with AIL Securities.
A note issuance facility is in place, according to Investopedia, when a syndicate of commercial banks has agreed to purchase any short to medium-term notes that a borrower is unable to sell in the capital market. Basically, Falcon Securities applied for and received a N15 billion loan; while Resolution Trust and Investment Company Limited, another of Mr. Ololo’s firms, applied for and received N28 billion to get this process started.
This was easy as ‘Ololo’, as he is fondly called at the market, is deferred to by most of the players, as well as regulators at both the Nigeria Stock Exchange [NSE] and the Securities and Exchange Commission [SEC].
“Ololo is the quintessential market marker,” a competitor broker described him to NEXT, describing him in mythic dimensions - a trend repeated by many other market operators.
Three years ago, when a competitor brokerage house on Martins Street in Lagos ran into the awkward problem of buying about N3 billion worth of Union Bank shares that it could not fund, to save the market from embarrassment, it was Mr. Ololo that the management of the Nigeria Stock Exchange independently sought to bail out the market and save the day.
The man and the mystique
It is deals like this that have deepened Mr. Ololo’s mythic aura. But adding to that is Ololo’s placid mien and what a stock broker calls “his generosity of spirit and his incredible sense of humility.”
Still, close associates say the man’s most defining feature is a strong sense of bi-polarity: he can be an epitome of humility; but lurking behind the pleasant countenance lies the makings of grandeur. “Mr. Ololo may come late to most stations of his life, yet he manages to emerge as the biggest winner in many of his life’s games,” one market associate told NEXT.
After a modest early life and primary education at Sapele, Delta State, the young Ololo found himself in Lagos struggling to earn a secondary education. . First he went through the lowbudget Western College of Commerce in Yaba, Lagos, and then the Lagos City College Yaba where he could only enrol as an evening student. He would later complement this with an adult education stint at the Methodist Boys High School, Lagos.
In spite of this disadvantaged start, Ololo still made it to university, earning a 1983 accounting degree from the Ahmadu Bello University, in Zaria, and securing a charter three years after. He got another chartered licence as a stockbroker in 1991.
At this point, Mr. Ololo had become Head of Account and Corporate Finance at Falcon Mortgage Bank Limited, a subsidiary of Morel Group, a business owned by Lucky Oghene Umoru, a former commissioner for finance in the old Bendel State, which later split to become Edo and Delta states.
Curiously, after a long history of paid jobs, Mr. Ololo finally established his own stock brokerage, which he named Falcon Securities in 1993 - as if it were part of the Falcon Mortgage Bank chain. More curiously, he then put his former boss, Mr. Umoru, on the board of the new company, giving him a miniscule 0.02 percentage holding.
Information about Falcon Mortgage Bank and Morel Group dramatically disappeared from the internet on Friday.
As he consolidated on Falcon Securities, Mr. Ololo went ahead with a quiet but determined business immersion philosophy, setting up Resolution Trust and Investment Company Ltd., Petosan Property and Development Company Ltd., Petosan Oil and Gas Ltd. and Petosan Farms in tow.
The year 2007 was probably the most significant on the Ololo calendar. His career took a sudden upward swing in this period, as the man moved to endear himself to a choice club of about a dozen bank chiefs. Today, his bank debts profile stands at over 160 billion naira.
One way to explain Mr. Ololo’s immense influence may be his powerful affiliations: on the board of his signature company, Falcon Securities Limited, are two past senators; Tunde Ogbeha and Solomon Otegbola. Nigeria’s No. 3 citizen, David Mark, is also a shareholder in his company.
With the back rest of a dozen bank executives, and the umbrella of the high and mighty, he scaled the twin huddles of cash flow and political influence that would have stood between him and the pinnacle of the capital market.
The unravelling
The 18 year ride screeched to an abrupt halt however, when the current wave of indictments by the Central Bank of Nigeria (CBN) was followed by arrests and charges by the Economic and Financial Crimes Commission (EFCC) - marking the beginning of ‘Ololo’s’ troubles. He was eventually arrested alongside bank executives.
According to the EFCC, a huge portion of the loans taken by Ololo’s firms - Falcon Securities Limited, Petosan Oil and Gas Limited, Petosan Property and Development Company Limited, Petosan Farms, and Resolution Trust and Investment Company Limited - were carried out illegally. In charges brought against him and some of the bank chiefs, the EFCC stated that, at various times between 2007 and 2009, Mr. Ololo’s companies borrowed about N141 billion naira from three banks (Oceanic Bank Plc, Afribank Plc, and Union Bank Plc) without adequate security. In one of the cases, the EFCC states that “Dr. Bartholomew Bassey Ebong (the former managing director of Union Bank of Nigeria Plc), between November and December 2007, recklessly granted a credit facility in the sum of N30,480,000,000 (thirty billion, four hundred and eighty million naira) to Falcon Securities Limited without adequate security, ”
The EFCC also accused Mr. Ololo of fraudulent manipulation of shares prices in conspiracy with two banks, Afribank and Union Bank.
“You Sebastian Adigwe (the former managing director of Afribank Nig. Plc), Peter U. Ololo and Falcon Securities Limited sometime in the year 2008, did conspire among yourselves, by fraudulent means, to manipulate the market price of the Afribank Plc’s shares, ” the commission stated in charges it filed against the Afribank boss.
Confidential sources familiar with the bank chiefs’ prosecution told NEXT that to corroborate the commission’s position, Ndubuisi Osakwe, the former Group Head of Financial Institutions and Special Projects of Afribank, told the EFCC that his superiors in the bank had brought in Mr. Ololo to save the bank from a hostile takeover bid.
“[Jibrin Isah] said they (executive board members) had discussed on the need to get a friendly capital market operator who will assist to buy-up the Afribank shares under a ware housing arrangement with AIL Securities,” Mr. Osakwe reportedly said.
EFCC sources confirmed Friday that Mr. Osakwe also alleged that Jibrin Isah, whom he named as his line executive director, informed him that “Falcon was the second company stockbroker the GMD, Sebastian Adigwe, recommended should assist in the Afribank share buy-back restructure transaction.” Now EFCC prosecutors are using that to tie up Mr. Ololo, adding snippets from other scenarios to press charges of price manipulation and insider trading.
Following Mr. Adigwe’s recommendation, Falcon Securities applied for and received a N15 billion loan; while Resolution Trust and Investment Company Limited, another of Mr. Ololo’s firms, applied for and received N28 billion. These actions helped boost the share price of Afribank on the stock exchange, the EFCC believes.
The commission further states that it was not only Afribank that utilised Mr. Ololo’s ‘market wizardry’. Union Bank, one of Nigeria’s oldest banks, was also involved in similar transactions.
According to the EFCC’s charge: “You Bartholomew Bassey Ebong (the former managing director of Union Bank of Nigeria plc), Peter U. Ololo, and Falcon Securities Limited between 2007 and 2009, did conspire with each other by fraudulent means to manipulate the market price of the Union Bank of Nigeria Plc’s shares, ”
The commission was referring to a loan of over N30 billion that the bank gave Mr. Ololo to buy its shares with the sole aim of increasing the value of the bank’s shares.
Analysts and stock brokers however insist that this is not peculiar to Union Bank, and that most of the banks had similar deals with the Falcon boss.
The “typology of crime”
[b]While the capital market witnessed an unprecedented boom between late 2006 and early 2008, the regulating securities and exchange commission, especially under Mr. Musa Al-Faki (who was relieved of the position in May this year) was relegated to inconsequence by a cartel that included some stockbrokers, banks executives, and officials of the Nigerian Stock Exchange (NSE). “Ololo was a principal actor in that environment,” a NEXT source said, adding that this cabal made it a mission to crush the prospect of corporate governance in the market environment, weakening transparency wherever it could be found.
Ultimately, as another stock market insider said to NEXT, “the typology of crime in the Nigerian capital market revolves around five key principles: insider trading, share manipulation, regulatory failure, regulatory collaboration, and outright fraud.” The momentum driving all these, according to the lady, is good ole greed.
“The types of Ololo trived on information, which is the oxygen of the market, and if you have insider information plus easy credit line as he had from the bank chiefs, you can afford to drive the market in the furious style Ololo did,” said a broker from a rival outfit who, like Mr. Ololo, also dealt solely in institutional stocks.[/b]
Standing by ‘Ololo’
Despite the criminal charges hanging on his head, ‘Ololo’ continues to enjoy impressive peer respect among brokers, keeping intact his consecration as the unofficial “market maker” of the Nigerian capital market, one who had all his market assets in his head and for whom hardball was a trading philosophy.
“Yes, he was playing that role (market maker), there is no doubt about that,” said Rasheed Yusuf, chairman of the Association of Stockbroking Houses of Nigeria (ASHON).“I don’t know about non-performing exposures; everybody knows what that is all about. It’s not like the stockbrokers took the money away or used it for something else. They used it to buy stocks which are being held by the banks concerned.”
When reminded that the EFCC insists Mr. Ololo was manipulating share prices on the stock exchange, Mr. Yusuf said “(The) CBN has taken these people to court, so why don’t you let us wait for their outcome? If the outcome proves that our members have done anything that they shouldn’t do, then that is the time we will take action.”
Mr. Yusuf also absolved other stock broking firms of accusations of borrowing without adequate collateral, saying, “out of about 300 brokers that trade in the country, so if they have one or two that they believe have done anything outside, then they have the right to take actions.”
If found guilty, Mr. Ololo - who was recently granted bail by the courts - risks spending seven years in jail; for possible violation of section 422 of the Criminal Code Act of 1990, as amended in 2004.
“Any person who conspires with another by deceit or any fraudulent means to affect the market price of anything publicly sold, or to defraud the public, or any person, whether a particular person or not, or to extort any property from any person, is guilty of a felony, and is liable to imprisonment for seven years,” the law says.
Elor Nkereuwem and Nicholas Ibekwe contributed to this report http://234next.com/csp/cms/sites/Next/Home/5458551-146/story.cspIs the Nigeria Stock Exchange anything more than a Fraud? |
