Daily Independent (Lagos)
David Agba
18 November 2008
Abuja — Cadbury Nigeria Plc and two of its executive directors are to be probed by the Economic and Financial Crimes Commission (EFCC) over misstatements in the company's 2004-2005 annual report.
Messrs J.S.T Bogunjoko and Biodun Jaji, both of Cadbury are two of the affected executive directors being dissatisfied with Securities and Exchange Commission's (SEC) decision and they had individually filed appeals at the Investment and Securities Tribunal (IST).
However, the Tribunal upheld the sanctions imposed on Cadbury and its directors by SEC, declaring them culpable.
SEC, the apex regulator of the capital market, had on March 28, 2008 imposed sanctions on the beverage maker, and its directors, reporting accountants and other senior executives based on the outcome of its investigation into the alleged false misrepresentations in financial reports they filed with the commission.
Kenneth Ezea, Head, Public & International Affairs in a statement at the weekend in Abuja said the appeals by the two executive directors were however consolidated by the tribunal at the trial and judgment sessions.
In its judgment, the tribunal noted that SEC, being the body that regulates the capital market, received the appellant's financial statement sometime in 2005.
According to the statement, it also received reports of alleged misstatements contained in the appellant's 2002 - 2005 annual reports.
In order to facilitate investigation on the matter, the Administrative Proceedings Committee (APC) was set up by the SEC.
The appellants were invited to appear before the APC but they challenged its competence to sit and investigate the matter since the APC was set up by SEC.
Consequently, they filed an action at the Federal High Court seeking preservative orders to restrain and halt the proceedings.
The court granted an interim order but following SEC's application the order was discharged.
The APC thereafter went ahead with the proceedings. Still not satisfied, the appellants appeared at the APC's proceedings of February 13, 2008 and applied for a stay of proceedings pending the determination of the matter before the Federal High Court which was refused them, the statement added. Consequently, the appellants walked out of the sitting without providing any defence to the allegations raised against them.
The APC gave its decisions on the matter on March 27 and 28, 2008 while the appellants and their counsel were absent.
By the said decision, the appellants were directed to "pay a fine of N100, 000.00 in the first instance and a penalty of N5000.00 per day from June 30, 2002 to December 14, 2006 amounting to N8, 245,000.00 within 21 days from the date of the decision for filing with the 1st respondent financial statements that contained untrue/misleading statements, failing which trading on its shares will be suspended.
They were also directed to "pay a fine of N100, 000.00 in the first instance and a penalty of N5, 000.00 per day from August 24, 2005 to the date of the decision amounting to N4, 855,000.00 within 21 days for filing a Rights Circular for the N5 billion irredeemable convertible loan stock which contained false/misleading statement, failing which trading on its shares will be suspended.
They were equally directed to "pay a penalty of N5, 000.00 per day from June 30, 2002 to December 14, 2006 amounting to N8, 120,000.00 within 21 days from the date of the decision for failing to provide funds in bloc for payment of dividends to its shareholders despite the 1st respondent's directive to the appellant," the statement said.
The directors were variously disqualified from operating in the Nigerian capital market, being employed in the financial services sector and holding directorship positions in any public company, amongst others.
Cadbury Plc and two of its Executive Directors, J.S.T Bogunjoko and Biodun Jaji being dissatisfied with the SEC's decisions filed an appeal with IST on the grounds that Cadbury plc was denied fair hearing and that the SEC did not have the powers to impose punishments on the directors and refer them to the EFCC.
In making their case, the appellants argued that
"The case was founded on breach of the right to fair hearing under the rules of natural justice and non-compliance with the mandatory rules of procedure in commencing and continuing the proceedings against the Appellants by the SEC.
"Given the multiplicity of roles performed by the officers of the SEC, who also constituted the APC, it was impossible for the appellants to be accorded fair, independent and impartial hearing by reason of the fact that the SEC and its APC were the investigator, complainant, prosecutor and judge.
"Their constitutional rights were breached by the failure of the SEC to adhere strictly to Rules 2 and 3 of the Schedule VII SEC Rules; and
"Failure by the SEC to invite the appellants to its sittings of March 27 and 28 2008 was also a ground for the appeal and it is fundamental."
The SEC and APC on the other hand argued that the Appellants were given several opportunities to defend themselves.
They further argued that their Records
of Proceedings showed that the appellants were invited to its sitting and, indeed, did appear but refused to participate in the proceedings.
SEC also argued that it has powers to regulate, monitor, control, investigate, and prevent fraudulent dealing and unfair practices in the capital market.
It also submitted that the provision of Section 36 of the Constitution of the Federal Republic of Nigeria 1999 provides an opportunity for appeal against any decision the party disagrees with, adding that since the decision of the panel was not final and conclusive, SEC could not have breached the appellants' constitutional right to fair hearing.
In its judgment, the tribunal held that "the appellants' (Cadbury Nig. Plc, J.S.T Bogunjoko & Biodun Jaji) right to fair hearing was not breached by the Respondents (SEC & APC) at the APC's proceedings; and that the SEC and APC have the power to impose the sanctions they did on the directors and to refer them to the EFCC the way they did."
It therefore upheld the decision of the respondents made on March 28 2008.
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