SEC responds to EFCC on petition against NAHCO chairman

The Securities and Exchange Commission (SEC) has responded through the Acting Chairman Economic and Financial Crimes Commission (EFCC) on a petition addressed to the President of the Federal Republic of Nigeria titled “Saving Nigeria Aviation Handling Company Plc from the Stranglehold of its Chairman— Alhaji Yahaya Sulaiman”.

The response signed by Mr. E.A. Okolo on behalf of the Director-General, Securities and Exchange Commission (SEC) said in furtherance of the on-going collaborative efforts between our organizations,  I consider if necessary to update you on our findings so far.

“Upon receipt of the petition, the Commission carried out a thorough examination of the Corporate Governance and capital market related issues cited in the letter and wishes to report the following”.

Failure to Conclude the Investigation of Empire Securities Limited

“The petitioner alleged that Malam Suleiman Yahyah should have been barred by the SEC from occupying the position of director of a public company. This was premised on the grounds that Mal. Suleiman Yahyah, through Empire Securities Ltd was accused of unauthorized sale of clients’ shares, non purchase of shares and other violations. The petitioner further claimed that the matter, which was brought before the administrative proceedings Committee of the Commission, was yet to be concluded due to the fact that accused was a classmate to the DG of SEC.

“The facts of the matter are that Empire Securities Limited, its Board and Management were brought before the Administrative Proceedings Committee in 2010 for unauthorized sale of shares, non purchase of shares and other violations. In May 2011, the decision of the Administrative Proceedings Committee was communicated to the parties. Malam Suleiman Yahyah and other Board Members were cleared of the allegations while the Managing Director was held responsible for the violations.  (A certified true copy of the decision is attached to your reference).

“This matter was concluded well before the DG was appointed Executive Commissioner by the president of the Federal Republic of Nigeria in 2013”.

Corporate Governance Issues

“In order to forestall a situation where enormous powers, section 5,1 (b) of the SEC Code of Corporate Governance for Public Companies priorities of Chairman Chief Executive Officer, Nahco compiled with this provision.                                                                                                                                                                                                                               “In an attempt to empower the Boards of Public companies to exercise appropriate overnight on Management, Section 4.3 of the SEC Code of corporate governance requires that non-executive directors should be in majority, Nahco compiled with this provision.

“For purposes of efficiency and effectiveness, the Code requires that boards of Public Companies should operate through Committees, Nahco compiled with this requirement.

“In 2011 Nahco entered into a Management Service Agreement with Rosehill Group, it was alleged that due to Malam Suleiman Yahyah’s interest in Rosehill Group, the process was not transparent. However, documents show that the matter was presented by Management to the relevant Board Committee; the Full Board also considered the matter and finally an Extra Ordinary General meeting of Shareholders was convened to approve the agreement.  This process largely complies with good corporate governance practice especially where the interested directors were excused firm the meetings when the decision was taken. This is in addition to the fact that detailed disclosure of the management service agreement as well as the value paid by Nahco to Rosehill Group is made in the Annual Financial Statements (AFS) of the Company every year. (Please refer to AFS of 2012,2013,2014 and 2015).

“Similarly, in 2014, a new Management Service Agreement was entered into between Nahco, its Subsidiaries and RHG-MSA Limited. However ,we are not satisfied that adequate due diligence was observed in the processes leading to the signing of the second management agreement .this is because the second management service agreement was not subjected to the transparent process as was the case in the first one.  Therefore, the commission will direct the Company to subject the second management service agreement through the governance process as they did with the first one.

“The Company Secretary was appointed an Executive Director. These two positions cannot be effectively managed by one individual as the SEC Code of Corporate Governance provides distinct responsibilities for each of them. The Company should be advised to appoint a new Company Secretary following a rigorous recruitment process.

“We are yet to identify any rule breaches with respect to the disposal of Sabena Airlines and British Airways shares by the concerned parties.  The petitioner expected that the company should have utilized part of the N5 billion bond proceeds on the Cargo Warehouse Modernization Project when there was a shortage of funds.

“Since the Warehouse Modernization Project was not cited in the offer documents as one of the purposes of the offer, the Company had no power to divert the funds as expected by the petitioner, This is in line with Rule 305 (6) of the SEC Rules which prohibits the utilization of issue proceeds on project not contained in the offer documents”.                                                                                                                                                                                                                      SEC promises to update EFCC with any further developments on the issue.