Investors worried about N10 million fraud allegations against SEC

• Indictment may impede stock market growth
• Ex- DG seek reconstitution of board

Stock market investors have expressed concern over the alleged N104million fraud levelled against the Director General (DG), Securities and Exchange Commission (SEC), Mounir Gwarzo, saying that such crisis would definitely have a multiplier effect on market.

The shareholders, who spoke in an interview with The Guardian, noted that the regulatory supervision of the stock market is worrisome, especially now when the market is gradually recovering.

They called for proper investigations into the allegation, and urged the Federal Government to intensify efforts to tackle the crisis of confidence brewing in the nation’s capital market in recent times.

The President, Progressive Shareholders Association of Nigeria, Boniface Okezie, wondered why the SEC’s boss would receive severance package, while still in service.

“Why must he approve such benefit? If the allegation is substantiated that the DG received a severance benefit when he is not ready to leave office, the management must be queried,” he said, while blaming the absence of a Board for the Commission as given room for such malpractices.

“The Federal Government is not interested in the capital market. If this allegation flying is proven, it becomes more worrisome especially to the market. We are talking about restoring investors’ confidence, and all these corporate governance and accountability issues are coming up. These issues must be tackled to retain confidence in the market,” he added.

The President, Standard Shareholders Association of Nigeria, Godwin Anono, decried the high level of malfeasance and corporate governance lapses recorded in the market presently.

He cited the case of the recent over N10billion scandal, relating to diversion and misappropriation of funds by Partnership Securities Limited (PSL), and its sister companies – Partnership Investment Company Plc; Life Care Partners Limited; and SBDC Microfinance Bank Limited, where over 300 investors of Partnership Investment whose stocks worth N4.8billion were involved in a ‘shady’ deal.

According to him, there was need for the market to go through proper sanitisation process to get rid of the ‘bad eggs’ in the market and boost retail investors’ confidence.

“All these will affect the market; even the regulator is being accused. The market needs a general clean-up to get rid of all these fraudsters; it was not like this before. Nobody is buying shares because many people are broke.”

The President, Proactive Shareholders Association, Taiwo Oderinde said: “I believe this is the time every capital market stakeholder should work for the interest of our market, and to sustain investors’ confidence instead of destroying it. We should be careful of the information we carry because the market is information driven.”

Gwarzo has been accused of paying himself severance package worth N104 million. The SEC boss, allegedly received a severance package amounting to the tune of N104million, when he became DG in 2015 .Gwarzo reportedly requested for the money as severance package for his previous position as commissioner, despite opposition from the head of the SEC’s legal department.

The SEC DG was further accused of violating the rules guiding the SEC, by awarding contracts to his family and friends. A petition has been written to the House of Representatives, over the alleged fraudulent activities.

Efforts to get the Commission’s side of the story proved abortive, as its spokesman Naif Abdussalam, in an electronic mail said: “Our stand for zero tolerance to market infractions is the main reasons for character defamation we are witnessing. ‘When you fight corruption it fight back’, may our nation and institutions be strengthening to fight corruption to its logical end.”

In regards to the trending of the crisis on the online media about “‘How SEC Director-General Illegally Paid Self Severance Benefit, Awarded Contracts To His Companies’ and hereby state that it had been aware of the allegations contained in that article since January 2017, following the receipt of a petition.

“As a tradition, the Commission follows laid down rules and regulations in all its activities, and in this particular case, we ensured that no relevant policy was breached. However, the Commission is currently putting together an official response and will issue same shortly.”

Meanwhile, a former Director-General of the Commission, Wole Adetunji, has stressed the need for the Federal Government to urgently reconstitute a Board that would govern the affairs of the SEC.

According to Adetunji, “You cannot leave the activities of the capital market of Nigeria in the hands of one person. It is quite unfortunate that Nigeria pays more attention to the money market than capital market, but no economy can grow without a robust capital market.

“We must review the entire financial system of Nigeria. This is long overdue. There may be overlapping responsibilities but there should be some streamlining for it to work efficiently.”