By Dipo Olowookere
Some investors in the Nigerian capital market have expressed serious concern over recent reports of an alleged financial misconduct at the nation’s apex capital market regulator, the Securities and Exchange Commission (SEC).
Those who spoke with Business Post said the allegation of illegal payment of N104.85 million severance package to the Director General of SEC, Mr Mounir Gwarzo, could send a wrong signal to investors.
Already, since after the day the news was first reported on Wednesday, October 25, 2017, the Nigerian stock market has closed in the negative territory.
According to petition against Mr Gwarzo, after he was appointed in 2015 by former President Goodluck Jonathan, he allegedly paid himself N108.9 million as entitlement for being an Executive Commissioner of the regulator for two and a half years.
It was said that despite the opposition against, he allegedly received the amount as benefits of his former position.
He was also alleged to have used his position to favour companies linked with him and some of his close associates by awarding contracts to the firms.
“On assumption of office as the DG of the Commission, Mr Gwarzo immediately requested that the sum of N104,851,154.94 (One Hundred and Four Million, Eight Hundred and Fifty-One Thousand, One Hundred and Fifty-Four Naira and Ninety-Four Kobo), be paid to him as severance package for the cessation of his appointment as Executive Commissioner of the Commission.
“The requested severance package in the sum of N104,851,154.94 (One Hundred and Four Million, Eight Hundred and Fifty-One Thousand, One Hundred and Fifty-Four Naira and Ninety-Four Kobo), was paid by the Commission into Mr Gwarzo’s bank account, held with Guarantee Trust Bank PLC, with account number 0023868895.
“Mr Gwarzo received the above stated payment of a severance package in total disregard of the opinion of Mr Frana Chukwuogo, the Acting Head of the Commission’s Legal Department, who clearly stated, in accordance with best practices, that a severance payment can only be paid to an employee of the Commission who has concluded his or her service and has completely disengaged from the Commission and not to an employee who has been promoted within the Commission and has not severed his employment with the Commission,” the petition read.
The petition further said, “Mr Gwarzo and two of his relatives are Directors of Outbound Investment Ltd. (the Company). Since Mr Gwarzo assumed office as DG of the Commission, the Company has been the sole supplier of diesel to the Commission.
“The Company has also supplied air conditioners to the Lagos Zonal office of the Commission, as well as supplied fridge to the Commission. See Appendix BI attached hereto.
“Payments made by the Commission to the Company for contracts executed can be verified from the Company’s bank account held with United Bank for Africa Plc, with account number 1016723428.
“In addition, the Company has executed more contracts for the Commission which are not listed in Appendix B1, however these contracts can be verified from the Commission’s accounting records.
“Mr Gwarzo is the DG of the Commission is a Director of Medusa Investments Limited (the Company). The only other Director of the Company is Khadija Mustapher, who is also the wife of the DG of the Commission. See Appendix B3 attached hereto.
“The Company has actively been used by Mr Gwarzo, as a shell to carry out illegal transactions as is verifiable from the frequent transactions carried out through the Company’s bank account held with Guaranty Trust Bank Plc, with Account Number 0023953920. Mr Gwarzo is a signatory to the said Company account. See Appendix B1 attached hereto.
“Mr Haris Haliru Gwarzo, the younger brother of the DG of the Commission, is the Sole proprietor of Northwind Environmental Services (the Company). The Company has been engaged by the Commission to clean the Commission’s Kano Zonal Office, since the inception of Mr. Gwarzo’s tenure as the DG of SEC. See Appendixes B1 and B4 attached hereto.
“Payments made by the Commission to the Company for contracts executed, can be verified from the Company’s bank account with Diamond Bank Plc, with Account Number 0095179297.”
According to some investors who spoke with Business Post on the issue, things like this are not good for the Nigerian capital market.
“The matter has started to have a negative effect on the stock market. You can see that a day after the news broke, the market reacted to it negatively.
“Things like this bring panic to investors, who will quickly want to dispose of their portfolios so as not to be caught unawares,” an investor in the Nigerian capital market, Mr Sunday Adesanya, told our correspondent.
Another investor, who begged not to be named, said, “The right thing for the DG to do now is to resign to allow full investigation into the matter. News of financial misconduct at the nation’s capital market regulator isn’t good for the market, which has had a fair performance this year. I just hope the House of Representatives get to the root of this matter.
Meanwhile, as at the time of publishing this report, SEC did not respond to an email Business Post sent on Friday for comments on fears raised by investors.
