The last time the Securities and Exchange Commission (SEC) Nigeria published its annual financial reports was in 2013, a development which contravenes the provisions of Corporate Governance Codes, BusinessDay investigations show.
This development is rather aided by the Federal Government’s delays in taking critical market related decisions that could have saved the apex regulator’s image.
The last published financial report of the SEC was five years ago when Arunma Oteh was Director General of the Commission under the Board chairmanship of Suleyman .A. Ndanusa.
Nigeria, as an economic entity, competes with other countries for investment capital; and investors will be attracted to where international standard and corporate governance codes are observed.
As a regulator, SEC requires all public companies to submit: corporate governance score card; quarterly (unaudited) financial statements within a month of the end of each quarter; and annual audited financial statements within three months of the end of each financial year.
On October 17, 2016, the Financial Reporting Council of Nigeria (FRCN) issued a three -in-one National Code of Corporate Governance (NCCG) which seeks to provide regulations on corporate governance as it relates to public, private companies registered under Nigerian law as well as Nigerian public entities.
“The failure of one poorly managed financial institution can put the entire system in jeopardy. Accordingly, adherence to the principles of corporate governance is key to safe business and that is how sound system and financial stability can be achieved and sustained,” said Daniel Asapokhai, Executive Secretary/CEO, Financial Reporting Council of Nigeria (FRC) in his presentation of the Nigerian code of corporate governance 2018.
“Today’s domestic and international investors are likely to shy away from countries that do not: guarantee investor right; provide for adequate corporate disclosures; and ensure sound Board practices.”
Before his suspension, Mounir Gwarzo was a substantive Director General but his regime was without a constituted Board. Abdul Zubairu, who relieved Gwarzo also acted as SEC Director General before Mary Uduk, who is now the latest in the cycle of acting heads of SEC.
Aside Oteh who was under the watch of SEC Board, other SEC DGs never had a constituted Board but were at liberty to spend the Commission’s money.
This is an unimpressive development in Africa’s largest economy, analysts say.
While many fault the Federal Government for its inability to take critical decision like forming a Board for the Commission, others say such lacuna encourages financial indiscipline, as evidenced in the allegations against a past DG, Gwarzo.
“The accounts of the Commission are only signed by the Chairman of the Commission. The SEC is a very law abiding organisation and for us to be able to enforce our rules and regulations, we have to hold up ourselves and do the things that people want us to do,” Uduk said on the side-line of a press briefing after the Capital Market Committee (CMC) meeting in Lagos.
“We cannot punish a company for not filing quarterly, half year and annual returns properly audited and the Commission will not do it. We cannot publish something (that is the accounts) that has not been signed. It is only the chairman of the board that has the right to sign the account and now we do not have a board,” she said.
Investment and Securities Act (ISA) provides that “The Commission, shall not later than three months after the end of each year, submit to the Minister and the National Assembly, a report on the activities and administration of the Commission during the immediately preceding year and, shall include in such reports, audited accounts of the Commission and the report of the Auditor on the accounts.”
Gwarzo, who replaced Oteh as the DG of SEC was suspended by the minister of finance Kemi Adeosun over allegations of financial misappropriation.
Other allegations include violation of corporate governance procedures, which include granting himself severance package worth N105million and awarding contracts to companies of interest. Also, he is being investigated for collecting a car benefit of N10million, among others.
Tajudeen Yusuf, chairman, House of Representatives Committee on Capital Market and other Related Institutions admit, and the non-constitution of the Board is a reputational issue to the apex regulator.
“The non-constitution of the Board for over two years is posing both regulation and reputational challenges to SEC, creating delay in approvals from supervising Ministry of Finance, causing non-formalisation of broad-economic, financial, operational and administrative guidelines and targets for the commission as well as lacking in streamlined monitoring of performance and evaluation of institutional projects and programmes,” he said.
Iheanyi Nwachukwu, Oghogho Edosomwan & Cynthia Ikwuetoghu
