Fresh Complaints Against BGL Flood SEC | Independent Newspapers Limited
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Fresh Complaints Against BGL Flood SEC

Posted: Mar 3, 2016 at 5:35 am   /   by   /   comments (0)
Tony Ezimakor and Nicholas Uwerunonye

Fresh indications emerged Wednesday that more litigious complaints have been made against the embattled BGL Group and Albert Okumagba, its Group Managing Director, on their dealings in the capital market. The complaints were lodged at the Securities and Exchange Commission (SEC), according to Independent’s investigations.

No less than 10 fresh separate complaints on alleged fraudulent dealings have been submitted to SEC against BGL. Specifically, an estimated N1.5 billion worth of fraud related shares has been made against the company, out of which over N600 million prima facie case of fraud has been established, according to a source at SEC.

Currently, BGL is awaiting rulings from the Administrative Proceedings Committee (APC) of the SEC on an earlier case of N2.9 billion alleged fraud. These matters have been a source of grave anxiety for stakeholders in the capital market on account of what is alleged as brazen acts of fraud on the part of BGL which may erode confidence in the capital market.

Investors are worried over the manner in which the matter has since dragged at SEC’s APC. The commission has since sat on the matter since February with no official declaration from SEC. But Independent learnt that the Administrative Proceedings Committee has indeed looked into the matter concerning the N2.9 billion fraud allegations.

An official at the stock market’s regulatory body said that reports have been received from the enforcement unit of SEC on the matter.
“The directors of the company have come and so have the complainants. The matter has been deliberated upon, but remember this a quasi judicial hearing and nothing can be gleaned until the committee comes out with its decision,” said the official.

The source explained that APC is quasi judicial body hence matters before it cannot be commented on. Though details on the fresh N1.5 billion fraud allegations were not made available to Independent, it was however learnt that the case follows similar pattern like that of the N2.9 billion case before SEC’s APC.

The commission received 10 complaints at various times from May 20, 2015 to November 10, 2015 of fraudulent activities in the sum of N2.9 billion. In the main, APC has decided on the culpability of BGL, that its subsidiaries and directors performed capital market functions without registration; promoted and marketed products not registered by the commission; failed and refused to resolve clients complaints; failed to file statutory returns; furnished the commission with false and misleading information; and was in violation of the Investments and Security Acts, 2007, SEC Rules and Regulations, the code of conduct for Capital market Operators and their Employees, and code of corporate governance for public companies.

Apart from private individuals allegedly defrauded by the company, ministries, state government and institutions, including NOUN Staff Cooperative Multipurpose Society Ltd; Ministry of Finance Delta State; Azort Nigeria and many others were equally allegedly defrauded.

For market watchers, especially the Chartered Institute of Stock brokers (CIS), the umbrella body of stockbrokers in the country, the BGL matter does not inspire confidence in the market. The seeming drag in dispensing justice on the matter, too, is believed to send the wrong signal.

“It is bad enough that investors are divesting from our stocks on account of economic downturn. How do we bolster confidence in prospective investors if matters such as serious as the Okumagba case is not dealt with decisively,” asked a bemused member of the CIS.

The capital market in the last one year has been hemorrhaging on account of divestment by investors. Though the trend is attributed to the economic crunch brought about by slump in oil revenue and increasing devaluation of the local currency against the dollar in the parallel market, observers say that insider abuse in stock management and trading constitute another problem that has put investors in flight from the market.

Apart from his troubles with SEC, Okumagba and BGL still have matters in court as the Economic and Financial Crime Commission has dragged them to court on another alleged N28.9 billion fraud.