25 April 2019

Nigeria: SEC in the Limelight Over Gwarzo Acquittal

The recent acquittal of the suspended Director General (DG) of the Securities and Exchange Commission (SEC), Mounir Gwarzo, brings the SEC into the limelight as Gwarzo's sympathisers have risen up in arms reiterating their belief that he was suspended illegally.

Delivering judgment on the case recently, the presiding judge of the Federal High Court in Abuja, Mr Baba-Yusuf, held that the prosecution did not prove beyond reasonable doubt that the accused persons, in this case Gwarzo and his co-defendant Zakwanu Garba, who was the Executive Commissioner of the Commission at the time, committed the offences for which they were charged.

From the get go, Gwarzo had always insisted that he was suspended because the former Minister of Finance, Kemi Adeosun wanted him to stop his investigation into Oando Plc and not the corruption charges levelled against him by the Independent Corrupt Practises and Other Related Offences Commission (ICPC).

You would recall that these charges included paying himself a whooping N104 million severance allowance, allegedly likened to the Gross Domestic Product of a small country, as Executive Commissioner after he was appointed SEC DG, as well as taking an excess car grant allowance of N10 million.

In addition, a report of the Administrative Panel of Inquiry into Allegations of Violations of Public Service Rules, Financial Regulations and other Extant Rules and Regulations set up by the then Minister of Finance had allegedly found that he had used his position in SEC to award contracts worth over N33 million to companies he was a Director in, all whilst serving as SEC DG.

Following the excitement after Gwarzo's acquittal and the call to reinstate him as SEC DG by his sympathisers, the National Image Solidarity Group (NISG) have called for an in-depth look into the facts before us.

They have stressed that the charges against Gwarzo were not false as the offences allegedly took place.

At his acquittal the judge had said the Board of SEC was the highest authority in the SEC and had by resolution approved Gwarzo's severance benefit and car grant. The ICPC in appealing this judgment said it was dissatisfied with the judgment because the board resolution the trial judge relied on did not decide severance benefit but retirement and resignation benefits.

Whilst the ICPC appealed the court's decision the SEC must use this time to re-position itself as a regulator beyond reproach.

A regulator that is not defined by the whims of individuals, because all humans are fallible.

Contrary to Gwarzo's claims, whilst Adeosun was still the Minister of Finance the forensic audit into Oando Plc did begin and is still ongoing.

On Tuesday, March 7, the then acting SEC DG Dr Abdul Zubair, had announced during a press conference that Deloitte had been asked to proceed with the forensic audit of Oando after the regulator was accused of delaying the process. The press conference came a day after Oando withdrew its lawsuit against the Commission.

So clearly Gwarzo's suspension was not as a result of his unwillingness to drop the forensic audit into Oando.

Since then Zubair has been replaced as acting SEC DG and before the naysayers speculated as to his removal the reoccurring character in this drawn out saga, Adeosun resigned from her post as the Minister of Finance.

Mary Uduk is the current acting SEC DG, a role she took on in April 2018 and you could effectively argue that from the onset she has presided over the forensic audit into Oando.

Uduk has been described as an astute administrator and a leader with exceptional quality. She is well experienced and has a blemish free record, key characteristics under the current circumstances. As the Oando forensic audit comes into the spotlight again it is important that she proactively take the necessary steps to fast track the audit and release the report so the Commission is seen as able to function effectively whichever individual is leading it.

It is imperative that the SEC be above personality clashes between public officers, but be seen as a regulator diligently working in the interests of the capital market.

When Uduk was appointed acting SEC DG, she came in with a mission to fulfil the commission's statutory mandate through team work, collaborative engagements of stakeholders and a committed sense of purpose. Given the circumstances of her appointment, she knew then that her primary task was to restore investors' confidence in the nation's capital market system and by so doing, make the Nigerian investment space attractive to global and domestic investors, despite the nation's economic challenges.

Under her watch she has been applauded for the introduction of initiatives that will instil investor confidence and discipline in transactional processes. For example, the cumbersome process that was in place in merging multiple share accounts was reviewed when she came on board, today accessing unclaimed dividends and merging multiple share accounts into one is now considerably easier.

The Uduk-led team has actively promoted the e-Dividend Mandate Management System (EMMS), the Direct Cash Settlement (DCS) and the multiple subscription service option for investors. In addition, investor confidence has been further boosted through the National Investors Protection Fund (NIPF) Risk-Based supervision and the Complaints Management Framework that opens communication channels for investors to lodge complaints and get prompt responses.

Under her leadership the SEC has made concerted efforts to push initiatives aimed at educating investors on capital market development. To this end, the Commission has been carrying out regular investor education campaigns nationwide to inform investors of the benefits of investing in long term securities and avoiding investments in illegal schemes, among others.

SEC has also initiated a collaborative relationship with the Nigerian Educational Research and Development Council (NERDC) on the development of a curriculum for basic and secondary schools on Capital Market studies as part of the management's futuristic approach in Nigeria's capital market development.

Far more fundamental to the current and future of the nation's investment space is the sustained implementation of the 10-year Capital Market Master Plan (CMP), which in the past year, has been given more attention.

Uduk recently disclosed that the Commission had commenced implementation of 66 out of the over 90 initiatives outlined in the CMP with 13 of them completed so far. She listed the de-materialisation of shares, re-capitalisation of capital market operators, setting up of a National Investment Protection Fund, and establishment of the West African Securities Regulators Association, as some of the completed initiatives.

Uduk expressed optimism that many of the yet-to-be completed initiatives now at various stages of implementation would be concluded before the end of 2019.

Against a backdrop of such reforms Uduk must continue full steam ahead in creating a modern and effective Commission. The onus is also on the Commission to complete the forensic audit into Oando in a timely fashion to retain the Commissions integrity as having the interest of shareholders at heart. As the most neutral party in this nearly two-yearlong saga it is imperative that Uduk sees the conclusion of the forensic audit in as transparent a manner as possible as a key mandate.

The executives within the Commission must work to ensure that if Gwarzo does return, he come into a Commission that has moved far ahead in terms of the process of closing out on investigations, introducing reforms to the capital market and positively effecting change. And it is a very big if because he is yet to be vindicated. The reality is none of us know what the outcome of an ICPC appeal will be or whether Gwarzo will indeed be reinstated, whatever the case may be the onus is on the regulator led by Uduk to ensure that the Commission cannot remain the same way she met it when she took on the role of acting SEC DG.

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