Nigeria regulator orders that illegal N1.2 billion in bonuses be returned

Nigeria’s Securities and Exchange Commission (www.sec.gov.ng) has commissioned a forensic audit into affairs of the Nigerian Stock Exchange (www.nigerianstockexchange.com). The SEC released a statement on 6 October which says the members of the NSE Council, including the former CEO, paid themselves N 1.35 billion (US$8.93 million) in illegal “productivity/surplus” bonuses, according to local news reports.
The SEC has reportedly directed that the Interim Administrator of the NSE, Emmanuel Ikazoboh should take steps to recover all such shared “bonuses” from the Council members.
According to a report from the NSE Auditors, Messrs Akintola Williams Deloitte, who had wanted to qualify the NSE accounts for the year to December 2009 on the basis that “an accrued N1.2 bln had been distributed to employees and council members as bonuses and share of surplus respectively in the current year. This is contract to section 26(3) of Companies and Allied Matters Act, Cap C20 LFN 2004 and section 6 of the Memorandum and Articles of Association of the Exchange, which stipulated that the income and property of the exchange shall applied solely towards the promotion of the objects of the Exchange and no portion therefore shall be paid or transferred directly or indirectly by the way of dividend, bonus or otherwise.”
The SEC statement says similar payments had been made since 2006, through to 2008:
2006 – N160.8 mln was shared by 18 members of the members.
2007 – N710 million shared by 16 members.
2008 – N480 million was shared by 18 members of the council.
The immediate past president, Oba Otudeko, got the lion’s share of the bonus of N238 million followed by the former director general of the exchange, Ndi Okereke-Onyiuke with N146.8 million, Dr. Raymond Obieri N110 million, Erastus Akingbola N80 million, Alh. Mohammadu Koguna N67 million while Mr. Godwin Obaseki and B. E. Sobamowo, Nduka Nwonye got N64 million each. Billionaire Alhaji Aliko Dangote, ordered to stop acting as NSE Council President in August, has reportedly already returned N40 million in bonuses, the first to do so.
The SEC had appointed law firm Aluko & Oyebode and the accounting firm KPMG to investigate the allegations of financial mismanagement at the Exchange. Independent Investigators commenced work on Thursday August 5, 2010 by securing data and document sources.
The matter of bonuses had held up the audit of the accounts for the year to December 2009. NSE’s External Auditors, Messrs Akintola Williams Deloitte (Mr Ikazoboh was the former CEO) had eventually signed off an unqualified set of accounts after previously wishing to add a qualification based on the fact that an accrued sum of N1.2 billion was distributed to employees and council members as bonuses and shares of surplus respectively.
According to the SEC statement issued by Mr. Lanre Oloyi, Assistant Director/Head Media, SEC, the NSE Council approved the 2009 audited accounts of the NSE at its meeting on 28 September 2010. The Investment and Securities Act mandates that these be submitted to the SEC,which Mr Ikazoboh did on 30 September.

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