INDEPENDENT NEWS

Cablegate: Nigeria: Ambassador's Meeting with Security and Exchange

Published: Mon 16 Jun 2008 12:41 PM
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P 161241Z JUN 08
FM AMEMBASSY ABUJA
TO RUEHC/SECSTATE WASHDC PRIORITY 3142
INFO RUEHOS/AMCONSUL LAGOS PRIORITY 9453
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RUCPDOC/DEPT OF COMMERCE WASHDC
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UNCLAS SECTION 01 OF 02 ABUJA 001147
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DEPARTMENT FOR EB/IFD/OIA
DEPARTMENT PASS TO USTR (AGAMA)
TREASURY FOR RHALL AND DPETERS
E.O. 12958
TAGS: EFIN ECON ETRD PGOV KCRIM EAID NI
SUBJECT: NIGERIA: AMBASSADOR'S MEETING WITH SECURITY AND EXCHANGE
CHAIRMAN ADVANCES TRANSPARENCY EFFORTS
SENSITIVE BUT UNCLASSIFIED -- HANDLE ACCORDINGLY.
1. (SBU) Summary: The Ambassador met with the Nigerian Security and
Exchange Commission (SEC) Chairman Mallam Musa Al-Faki on June 4 to
discuss efforts the SEC is doing on transparency in capital markets
with stock brokerage houses, banks, and in the area of money
laundering. Chairman Al-Faki stated that his most critical
challenges are the need to put in place the necessary regulatory
framework to deepen transparency in the Nigeria market place, the
legislative changes on the Land Use Act, to ensure a better mortgage
environment and improve the capacity of his staff. The Chairman
expressed a desire to work closer with the United States SEC on a
range of issues, as well as other elements of the U.S. Mission,
particularly the FBI. The Ambassador underscored USG focus on
transparency in all sectors and our efforts to fight corruption.
She highlighted the presence of the FBI and LegAtt in Lagos and
noted that there were synergies where his office and LegAtt could
work together. End Summary.
2. (U) The Ambassador met with SEC Chairman Mallam Musa Al-Faki on
June 4 to discuss a range of issues on transparency in Nigerian
capital markets. Chairman Al-Faki has been the SEC chairman since
2004. He is also the Chairman of the Africa, Middle East Regional
Committee (AMERC) of the International Organization of Security
Commissions (IOSCO) and has been re-elected recently to that
position. Chairman Al-Faki described the four main SEC activities:
-- The supervision and oversight of the Nigerian Stock Exchange
(NSE);
-- Promoting awareness and effective regulation of NSE activities;
-- Building a strong, transparent structure in which the NSE
activities can flourish; and,
-- Ensuring transparency in Nigerian markets
3. (SBU) The Ambassador noted the USG focus on the importance on
increased transparency in all areas of business, particularly the
market sector, and noted the importance of the right regulatory and
legislative frameworks in order for Nigeria to truly move forward.
The SEC and his director echoed the same request we have heard from
many that Nigerian policy and businesses seek more U.S. trade and
investment. The Ambassador said she was aware of these sentiments
and highlighted key things, such as a bilateral investment treaty
and trade and investment framework needed to be in place to really
encourage U.S. investment and growth in Nigeria.
Improving Regulations, Laws and Cooperation
-------------------------------------------
4. (SBU) Chairman Al-Faki said that effective regulations are needed
to enhance confidence in the Nigerian market and financial sectors,
and that international exposure, particularly Nigerian membership in
IOSCO, has improved regulatory practices in Nigeria, leading to
higher standards and more accountability and transparency. To
deepen this momentum, he continued, the Land-Use Act and tax laws
must be updated and corporate reporting standards should be raised
to international levels. The Ambassador replied that the USG
through USAID and the Overseas Private Investment Corporation (OPIC)
have been working closely with the GON on reforming the Land Use
Act.
5. (SBU) Regarding law enforcement cooperation, SEC Director of
Enforcement and Investigation Udora said that his office recently
contacted FBI headquarters in Washington and reported a possible
case of money laundering and abuse of the GON financial system,
providing both the name and location of the suspect. He lamented
that the FBI had not responded to the Nigerian SEC overture. The
Ambassador was surprised by this and said she would have Mission's
LegAtt office contact him soonest (since the meeting, LegAtt has
followed up on this and other partnership opportunities seem to be
on track).
Capacity Building Assistance
----------------------------
6. (SBU) Chairman Al-Faki contended that cooperation with the U.S.
SEC is critical for his agency to build capacity. He characterized
the Nigerian SEC structure as largely based on the U.S. model and
said that there were several key areas of interest for cooperation
based on SEC future planning. The SEC plans to work with the NSE to
make all of its transactions electronic by 2009, and further develop
the corporate bond market. The Chairman remarked that investors in
Nigeria prefer to invest in equities but a balanced capital
structure is needed, and development of the corporate bond market is
one of the SEC's biggest challenges.
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7. (SBU) Comment: The SEC plays an important regulatory role in
improving and maintaining the transparent financial sector in
Nigeria's market. The Ambassador invited the SEC to participate in
the upcoming export credit USTDA workshops and send representatives
under the U.S.-Nigeria framework for partnership to working groups
on investigation and fraud prevention. Following the meeting
EconOff and Acting USAID Mission Director met with a representative
from the U.S. based firm, Financial Markets International, Inc., to
discuss capacity building programs. The FMI rep noted that the
company has worked with USAID in other countries on their SEC
capacity building programs and was interested in Nigeria. Econoff
passed FMI contact information to the Managing Director of the
Nigerian Capital Market Institute, an affiliate of the SEC in charge
of training programs. End Comment.
SANDERS
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