Mounir Gwarzo: When a whistle-blower is blown away

Dateline November 27, 2017: In the cosy office of Nigeria’s minister of Finance, Kemi Adeosun, a meeting was held at the instance of the minister, with the Director-General of Securities and Exchange Commission (SEC), Mounir Gwarzo, the Permanent Secretary of the ministry Dr Mahmoud Isa Dutse and the Director, Legal, Mr. Christopher Gabriel in attendance. […]

Dateline November 27, 2017: In the cosy office of Nigeria’s minister of Finance, Kemi Adeosun, a meeting was held at the instance of the minister, with the Director-General of Securities and Exchange Commission (SEC), Mounir Gwarzo, the Permanent Secretary of the ministry Dr Mahmoud Isa Dutse and the Director, Legal, Mr. Christopher Gabriel in attendance.

The agenda of the meeting and the minister’s directive to the SEC boss was lucid and crystal clear: STOP the forensic audit of Oando. 

Gwarzo’s major crime as a regulator was insisting on forensic audit on the erring company after comprehensive review of its books exposed massive corruption, theft and gross breaches of the provisions of the Investments & Securities Act and the SEC Code of Corporate Governance for Public Companies.

As a regulator, what is criminal in taking action that would protect the interest of the 274,400 shareholders of the company, exposing insider dealings such as the sale of 1.21billion shares amounting to N21.5billion and uncovering a series of related party transactions mostly involving the CEO of Oando Wale Tinubu in which the company paid between 2012 and 2016 for 7 out of the 27 the sum of over N200billion?

In a sane clime, Gwarzo deserves accolades for uncovering impairment losses of N838 million and N493 million on goodwill from acquisition of Churchill, which were recognized in Oando’s accounts for the years 2013 and 2014 respectively. Impairment normally occurs when there is a sudden and large decline in the fair value of an asset below its carrying amount and the impairment write-down carried out by the company from 2012 to 2016 amounted to approximately N202.7 billion!

But on 29th November, 2017, exactly two days after Gwarzo’s refusal to play ball, the minister arbitrarily suspended him, undermining Nigeria’s regulatory independence in the eyes of the world, causing unimaginable tremors in the market and eroding investor confidence.

The travails, witch-hunt and victimisation of Mounir Gwarzo, aptly depict the contemporary maxim of “corruption fighting back”. The dictum, popularized by the Buhari administration to show how corrupt officials fight back the government, is ironically playing out against the government. 

To prove his innocence in the case of severance package payment, Gwarzo has appeared before an administrative panel set up by the Minister of Finance which indicted him, and severally before an investigative committee of Independent and Corrupt Practices Commission (ICPC) which has now arraigned him in court on allegations of payments of severance package.

In the memorandum he submitted to the Public Hearing before the House Committee on Capital Markets held on 30th January, 2018, Gwarzo presented the following explanations on the issue of the payment of the severance package:

Section 9(1) Investments and Securities Act 2007 clearly provides that “The Director-General and the three full time commissioners shall be paid such remuneration and allowances as may be determined by the Board of the Commission”.

At its 8th meeting, held on 11th July 2002, the Board of SEC approved the payment and the extract clearly stated that a Permanent Commissioner who spent a minimum of two years in SEC is entitled to certain benefits which included the payment of 150% annual emoluments to the Permanent Commissioner.

Mr. Gwarzo was appointed a Permanent Commissioner on the 7th of January, 2013 and later appointed Director General on May 22nd, 2015 thus he spent two years and five months as Permanent Commissioner.

The then acting Commissioner in charge of the Legal and Enforcement Directorate, Mr. Eric Elujoukor recommended for the payment which the Commissioner in charge of Corporate Services Directorate, Mr. Zakawanu Garuba approved.

If really Gwarzo had skeletons in his cupboard, he would not have constituted a committee comprising the SEC’s Board Secretary, and Heads of Legal, Human Resources, Procurement and Finance and Accounts Departments in May 2017 following a petition against him. The committee reviewed the issue of severance package, and its report indicated that he was duly entitled to the payment.

It is instructive to equally note that from 2002 till date, about 12 Permanent Commissioners and DG’s have left the services of the SEC and collected their severance packages in line with the same Board Extract which Mr. Gwarzo relied on, and in each case approval was not sought either from the SEC’S Board, Minister of Finance or Head of Service of the Federation. As such, why should his own be different?

In addition, he explained in details the issue of the severance package including institutions that pay similar benefits to their executives while still in service based on their policies.

Paragraph 2 of his letter of appointment vide reference F./.2261/S.3/11/71/41 clearly stated that the appointment was governed by the provisions of the Investments and Securities Act 2007.  Section 5(1) Investments and Securities Act 2007 provides that “The Director General and the three full time commissioners shall be appointed by the President upon the recommendation of the Minister and confirmation by the Senate”

In effect, this was a political appointment, by the President, not a promotion or ‘transition’ from one level of public service to the other within SEC. Why then should Gwarzo’s case be different? Isn’t this akin to prosecuting a deputy governor who served for four years for receiving his severance package just because he becomes governor or as in the case of the members of the National Assembly who receive severance packages at the end of each term served whether or not they are re-elected?

From the foregoing, one concludes that Gwarzo’s latest trial is aimed at edging him out of the SEC completely in order for his tormentors and vested interests to have a field day. While the minister claims that she did not order for the lifting of the technical suspension of Oando, it is surprising that she called for the maintenance of the status quo – thereby achieving her initial aim of stopping the forensic audit. Four months after the minister’s claim during the public hearing that the forensic audit has commenced, the general public are yet to hear about the report. Among the five investigators appointed by SEC, why were four of them dropped along the line? 

Also in an interview granted by the Minister of Finance to Chika Amanze-Nwachuku of ThisDay Newspaper of 16th April, 2018, she stated that “I am certain some officials of SEC had been induced and went behind my back while I was at the FEC meeting and incommunicado to lift that suspension, and when they heard I had been informed, they rushed again to reinstate it”. 

In a serious environment, the Minister of Finance would have by now queried the Management of SEC on the matter and the findings released to the public instead all she did was to remove the then Acting DG Mr. Abdul Zubair and replace him with one of the Management team she had accused of being compromised. With this weighty accusation still hanging over them, how then can the present Management of SEC be expected to produce a credible forensic report and even if a credible report is produced how is the public sure that the findings will be implemented judiciously? The more one asks questions, the less answers you get.

From all of the above it is obvious that if at all there is a lacuna with respect to the payment of the severance package that lacuna lies in the SEC policy and not with the beneficiary of the severance package therefore what needs to be done is for the policy to be reviewed and amended if it is found lacking and not for a beneficiary to be made to suffer for the lacuna.

I pity Gwarzo not for the pains of undergoing the trial but the pains of image damage and presumption of guilt by the public court.

Sanda, a financial analyst, wrote this piece from Abuja.