By Nse Anthony-Uko
These are not the best of times for the suspended Director General of Securities and Exchange Commission (SEC), Mounir Gwarzo given the allegations of a variety of fraudulent activities leveled against him.
When the Minister of Finance Mrs Kemi Adeosun announced his suspension on November to 29, 2017, to pave way for investigations, Gwarzo’s case seemed like that of a victim who got caught in the midst of a power play involving his superiors for insisting on doing the right thing, a situation he immediately made good use of.
Two days later, the media became awash with reports that he was suspended for failing to succumb to pressure to stop the scheduled forensic audit of the embattled Oando Plc. In the reports, the Minister of Finance, Adeosun, was accused of undue interference in the probe of Oando Plc by SEC, a situation capable of sending the wrong signal to stakeholders in the Nigerian capital market about a firm hold of the state SEC as an independent regulator, thus weakening its authority.
Gwarzo alleged that following a petition and preliminary investigations that showed Oando Plc in numerous breach of the Investments and Securities Act (ISA), SEC, in compliance with its establishment laws and powers, decided to constitute a team led by Akintola Williams Delloitte to do a forensic audit of the company.
However on Monday 27th November just as the audit was to commence, he was allegedly invited by the Minister to another meeting in which she informed him verbally that the investigation should not be carried out but rather a penalty should be imposed on Oando.
Gwarzo also alleged that the next day Tuesday 28th of November, he wrote a letter addressed to the Minister of Finance highlighting implications of not carrying out the planned investigation and pronto, on Wednesday 29th November, the Ministry of Finance announced his suspension along with two other officers, ostensibly on the strength of allegations of financial impropriety against the him.
Minister of Finance, Adeosun was also swift to respond, accusing Gwarzo of blackmailing her through claims that his suspension from office was as a result of his “refusal to stop the forensic audit of Oando Plc.”
“The Federal Ministry of Finance would like to place on record that Gwarzo’s suspension is in line with the Public Service Rules (PSRs), to allow for an unhindered investigation of serious allegations of financial impropriety against him. Some of the allegations with documented evidence include the awards of contracts to companies related to him and members of his family,” Adeosun stated.
The finance ministry said Gwarzo was being suspended over allegations of financial impropriety bordering on the payment of N104 million to himself when he was promoted from an executive commissioner to the Director General of SEC in 2015, against the counsel of the former acting head of the commission’s legal department, Chukwuogor Frana.
She said suspending a very senior member of the financial regulatory agency must be taken seriously. “So, when there are grey areas in respect to what we have found out and what is on the files, we have to look at them before we took the step we took.”
The Minister had explained that given the degree of speculation and the potential impact on the capital market, there was a need for the record straight to be set straight.
“The integrity of the capital market is vital to the growth of the Nigerian economy and must be managed in an orderly and transparent manner to ensure investors’ confidence. Its leadership must maintain and be seen to maintain the highest standards of integrity,” she stressed.
And according to her, “The original decision taken by SEC on October 20, 2017 to suspend the shares of Oando Plc and conduct a forensic audit, was approved and endorsed by the Federal Ministry of Finance. The SEC team, led by Mounir presented adequate evidence to the Minister of Finance and her team, that Oando Plc had a clear case to answer with regard to infractions of the ISA.”
She added that, “No contrary evidence has been presented and thus, the investigative work on Oando and all other ongoing investigations being undertaken by SEC in the discharge of its statutory functions have continued. Indeed, our information is that the forensic auditors have resumed at Oando.”
Adeosun had emphatically pointed out that, “There was no directive whatsoever to discontinue investigation into Oando and this was reiterated to the current SEC leadership at the formal handover meeting. The fact that the investigation has continued further corroborates that this is the Minister’s position.”
Adeosun had also revealed that Gwarzo was reportedly queried by the Ministry on 3rd November and he responded on 7th November, 2017. His response to the query was deemed unsatisfactory and further investigation was ordered. Based on the evidence from that further work and creditable reports that documents were being unlawfully removed from SEC, as well as consultations with the Economic and Financial Crimes Commission (EFCC), the decision was taken to suspend Gwarzo, Adeosun said.
“Also, at the meeting on Monday, November 27, Gwarzo was asked to clarify some of his responses to the query issued, which were not consistent with documentary evidence. From that interaction, Gwarzo became aware of the strong likelihood of his suspension. It was thereafter that Gwarzo prepared the memo, which has been circulated in the media.”Adeosun noted.
“It is instructive to note that Gwarzo personally delivered the memo using SEC staff seconded to the office of the Minister, in breach of normal procedures for the receipt of mail. The copy of the memo in the possession of the Minister was delivered with a message that any action against Gwarzo would result in same being leaked to the press. It was this threat of blackmail that strengthened the resolve of the Minister to suspend Gwarzo and allow the Administrative Panel of Inquiry to proceed with its probe.”
The Minister restated at the briefing that that the insinuation of an instruction to discontinue with the Oando case is false and this can be corroborated by the other parties at that meeting and by subsequent events.
Sundata Post checks indicates that Mr Mounir Gwarzo’s tenure as director general of SEC was trailed by allegations of financial impropriety shortly after his appointment by former President Goodluck Jonathan for a first term of five years on May 22, 2015.
Four days after receiving his appointment letter, May 26,2015 to be precise, Gwarzo requested that he be paid the sum of N104.8 million as severance package in respect of the end of his appointment as Executive Commissioner, a position he occupied for two years and four months.
The request, made via a memo dated May 26, 2015, was referred to Mrs. Chukwuogor Frana, acting Head of the commission’s Legal Department at the time, for consideration and advice. However, responding in a memo dated May 27 2015, Mrs Chukwuogor advised against honoring the request made by the then DG, arguing that the fact that he remains in the employ of SEC disentitles him to a severance package.
Citing an extract of the SEC Board meeting held on July 11 2002, Mr. Gwarzo had argued that he was entitled to a severance package.
While offering advice matter, Chukwuogor wrote: “The extract, however, does not contain the term ‘severance benefits.’ Therefore, to give an opinion on this matter, it is impossible to determine the purpose and scope/application of this extract.”
She had also drew attention to the fact that opening line of the extract relied on by Mr. Gwarzo simply stated that the SEC management made submissions for the payment of retirement/resignation benefits to political appointees. He argued that while the policy specifies political appointees as Director-General and full-time commissioners, the words “resignation and retirement” appear to restrict the circumstances in which certain categories of persons could benefit from the policy.
The acting Head of the Legal Department argued that “retirement” refers to the expiration of the statutory tenures of beneficiaries, while resignation connotes the termination of services with the commission on account of resignation or other circumstances before the expiration of the stipulated statutory tenure.
“The usage of the terms, “resignation and retirement” can be interpreted to mean that the policy contemplates/assumes that the beneficiary has completed his or her service and has completely disengaged from the commission. Due consideration should, however, be given to the peculiarities of the appointment of the Director-General before the expiration of his term as Executive Commissioner. It is for this specific reason, therefore, that the Human Resources Department will need to provide the proper heading/articulation of the unique circumstances presented by the appointment. This is important because the use of the heading “Severance Benefits” in the payment request indicates that the beneficiary has left or is leaving the services of the commission through retirement or other contemplated ways,” she wrote.
Despite the advice, the severance package requested by Gwarzo was paid by SEC into his Guaranty Trust Bank account (0023868895). The fraudulent receipt of the sum, amounts to earning wealth illegally, an action in contravention of the Economic and Financial Crimes Commission (EFCC Act), the Criminal Code Act and the Code of Conduct for Public Officers.
But Gwarzo had just begun a tenure of sleaze and fraudulent activities that would see him dipping his hand into the coffers of the Commission at will.
In 2015, the year Gwarzo became SEC D-G, the commission bought three cars Stallion NMN Limited, manufacturers and distributors of Nissan automobiles, as project vehicles.
However, he diverted one to personal use and gave others to two Executive Commissioners at the time. This ensured that no member of staff or any project team has been able to use the vehicles since they were purchased, as they were kept at the personal residences of the then DG and the Executive Commissioners until the expiration of the former’s tenure in January 2017, when the vehicles were returned to the commission.
Gwarzo, up till date, is still in possession of the one he took away. He allows his Special Assistant, Mr. Daiyabu Kurfi, to use the vehicle as a status car despite the fact that his grade as Assistant Director entitles him to a monetized car grant/allowance (in lieu of car) and has been paid the amount to which he is entitled.
On June 8 2015, documents showed that the DG collected N84.4million as monetized car grant/allowance for four cars. According to the documents, the money was paid into Gwarzo’s bank Guaranty Trust Bank Plc account (No. 0023868895).
The DG would follow the diversion of government property up with fraudulent acquisition of wealth. This he has done through the cornering of contracts for himself, his family and other directors of the commission, who have interests in various companies to which contracts are routinely awarded.
A major beneficiary of contract awards, documents showed, is Outbound Investment Limited (RC No. 807317). A search at the Corporate Affairs Commission (CAC) showed that Mr. Gwarzo and his two brothers in-law, Messrs. Suleiman Mustapha and Kaloma Dahiru Mustapha, are the directors of the company. Since the assumption of office as D-G by Mr. Gwarzo, Outbound Investment Limited has exclusively supplied diesel to SEC.
The company has also supplied air conditioners to SEC’s zonal office in Lagos and refrigerators to the commission. Payments for jobs awarded to the company by SEC are made into its account (Number 1016723428) domiciled at the United Bank for Africa. Sources at the commission also disclosed that the company has executed numerous other contracts awarded by SEC.
Also creaming off at the commission is Medusa Investments Limited (RC No.326829), where CAC documents also showed that Mr.Gwarzo is a director along with his wife, Khadija Mustapher. The SEC D-G is also a signatory to the company’s Guaranty Trust account (No. 0023953920).
Another vehicle through which the Gwarzos are illegally amassing wealth is Northwind Environmental Services (Registration No. BN 2389176), which was registered in February 2016. A search at the CAC revealed the proprietor as Mr. Haris Haliru Gwarzo, younger brother to the SEC D-G.
Northwind is the sole provider of cleaning services to the commission’s zonal office in Kano since Mr. Gwarzo assumed office in addition to a variety of other contracts. The company gets paid for jobs executed through its account (No. 0095179297) held at Diamond Bank Plc.
Mr. Gwarzo’s personal interest in the identified companies is a clear contravention of the regulation, which explicitly prohibits public officers from being in situations that bring their personal interest into conflict with their public duties. Also, the use of the companies as suppliers to the commission, said government sources, amounts to earning wealth illegally and contravenes the EFCC Act as well as the Code of Conduct for Public Officers.
The DG is not the only SEC top shot having fun at the commission’s expense. Gwarzo has also erected a structure of gratification for his favorite staff in the commission by allowing them to companies that bid for contracts in the commission. Among these are Tida International which investigations at the CAC showed the directors as Mr. Abdulsalam H. Naif, SEC’s Head of Media Department, and his siblings and other members of his family. They include Abdusalam Habu, Abdusalam Jamai, Abdusalam Fuad, Abdusalam Alwan, Abdusalam Amar and Abdusalam Zawad. The company has been a major supplier of office equipment to the commission, in addition to numerous other meaty contracts since Mr. Gwarzo assumed office.
Other beneficiaries of Gwarzo’s dodgy kindness are his friends for whom other suppliers are overlooked in the commission’s wonky tender process. Gwarzo, said sources, also takes kick-backs from his supplier friends when the commission pays them for contracts executed. Kick-backs, disclosed sources, are paid into the account (No. 0023953920) of Medusa Investments Limited at Guaranty Trust Bank. The DG, investigations showed is a director of Medusa Investments Limited.
Companies in this category include Outlook Communication, which has Messrs. Ahmed Mohammad Jamila, Yahaya Karami Haulatu and Aisha Ahmad Aisha as directors. The company has benefited from a steady stream of contracts including publishing and media consultancy from SEC under Mr. Gwarzo. The company is paid for jobs executed through its account with Jaiz Bank (No. 0000642716).
Another company used to siphon funds is Acromac Nigeria Limited (RC No. 10687864), whose directors are Messrs. Abdulahi Dahiru, Mahmud Dahiru Barkindo and Nura Ali Rano.
With Mr. Gwarzo at the helm, Acromac has constantly received patronage through the execution of contracts, including the supply of photocopiers, office furniture and other office items to the Nigerian Capital Market Institute (NCMI), a subsidiary of SEC. Documents show that payments to the company are made through the company’s account (No.1013495360) with Zenith Bank. Yet another favorite of Mr. Gwarzo is Balfort International Investment Limited (RC No.109153). Its directors, SaharaReporters according to SaharaReporters findings are Messrs. Dahiru Abdullahi, Ali Nura Rano and Dahiru Halima Bello. The company is a major supplier of office items to SEC and the NCMI in addition to various other jobs it regularly gets. It is paid through its Zenith Bank account (No. 1013495377). Equally favored by the SEC DG is Interactive Worldwide Nigeria Limited (RC No. 779442), which has Messrs. Tukur Umar, Saratus Abubakar Sadiq and Uzoma Nwakuche as directors. The company has maintained a hold on contracts awarded for the fumigation of the SEC head office, NCMI and the Lagos Zonal Office in addition to many others.
The DG’s catalogue of misdeeds also contains activities carried out to siphon public funds. One of his preferred ways is the use of the commission’s annual staff training line his pockets and those of his friends. SEC sources discosed that before the DG assumed office, SEC regularly paid between N60,000 and N150,000 on each staff to top-tier training institutions such as the Institute of Chartered Accountants of Nigeria (ICAN), Nigerian Institute of Management (NIM), Financial Institutions Training Centre (FITC), Nigerian Institute of Advanced Legal Studies (NIALS), Lagos Business School (LBS) and the Centre for Management Development (CMD) to provide training for staff of the commission.
Curiously, under Gwarzo, SEC began paying amounts that range between N700,000 to N780,000 on each staff. The sums, sources added, are paid to quack training firms run by Mr. Gwarzo’s friends and associates. Some, added insiders, impersonate reputable foreign training organizations.
“The training institutions are evidently owned and managed by Nigerians and run locally. This unfortunately led to poor quality training programs for the commission’s staff, which implies that SEC paid much higher for lower quality,” explained a source.
Gwarzo’s fondness for living large at public expense is not restricted to diverting project cars to personal use. Documents show that in October 2016, he received about N6million from SEC as payment for business class air ticket fare to travel to Hong Kong, where he was to attend the International Organizations of Securities Commission (IOSCO) Board meetings. October 2016. The memo requesting for the sum, dated August 26 2016, was signed by one Mr. Naif Abdusalam. The money, documents also show, was paid into Mr. Gwarzo’s account (No. 0023868895) at Guaranty Trust Bank.
Gwarzo acted in clear disregard of the April 2016 directive of the Federal Government (Vide Circular Ref. No. SGF. 6/S.2/X/545 of March 31, 2016), which explicitly states that all Chief Executives, Directors-General and other officials of similar ranks in Federal Government parastatals and agencies must undertake local and international travels in economy class.
On October 10, 2017, Gwarzo also approved the sum of N2, 624,636.65 for a member of the House of Representatives Committee on capital market to travel on Business Class Ticket to IOSCO Board meeting in Madrid Spain from October 18-20. Similary, the SEC also bought Business Class Ticcket for Mr. Foster Ogala to attend the IOSCO Growth and emerging markets committee meeting and Annual Conference from September 20-21 in Sri Lanka.
SEC sources also disclosed that a few months after assuming office in 2015, the D-G blew the sum of N2 billion on staff of who voluntarily disengaged from the commission. The reason for their disengagement was to lower the commission’s overhead costs. However, the N2 billion spent was not captured in SEC’s approved budget for 2015, implying that it was not part of the Appropriation Act for the same year. And curiously, since the disengagement exercise was concluded, the DG has kept on hiring new staff without any advertisement of vacancies to be filled.
While the timing of the Gwarzo’s suspension may appear suspect in view of his accusations, market stakeholders are unanimous that the weighty allegations against him need to be due investigated he called to answer and clear his name in other to boost the confidence of stakeholders of the integrity of the apex capital market regulator.
