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Published On: Mon, Dec 4th, 2017

Gwarzo: The many troubles of a regulator

 

By FELIX OLOYEDE

These are unpleasant times for Mounir Gwarzo, Chief Executive Office, of the Securities and Exchange Commission (SEC) as he was placed on suspension last week by a previously gun shy Minister of finance, Mrs. Kemi Adeosun. Gwarzo’s position as SEC boss became shaky as a nongovernmental organisation,   Centre for Anti-Corruption and Open Leadership (CACOL), sent a fiery petition to the House of Representatives accusing the top SEC chieftain of various issues of alleged corruption. By Wednesday November 29, 2017, Gwarzo had been yanked of his seat to await the outcome of investigations by the Independent Corrupt practices and other related Offences commission (ICPC).

The story which grabbed headlines on Thursday November 30, 2017 stated that Gwarzo, was suspended from office ‘to allow for an unhindered investigation of several allegations of financial impropriety leveled against the Director-General.’

According to a statement by Patricia Deworitshe, Deputy Director, Press, Federal Ministry of Finance, “the suspension is in line with the Public Service Rules (PSRs) 03405 and 03406.”

The statement further noted that, ‘The Honourable Minister has set up an Administrative Panel of Inquiry (API) to investigate and determine the culpability of the Director-General.’

‘She has directed the suspended SEC Director-General to immediately handover to the most senior officer at the Commission, pending the conclusion of investigation by the API.’

The Minister also suspeded two other officers of the Commission – Abdulsalam Naif Habu, Head of Media Division and Anastasia Omozele Braimoh, Head of the Legal Department – who were alleged to have engaged in financial impropriety .

The allegations

Since Gwarzo’s appointment as the Director General of SEC on May 22, 2015, the atmosphere of the capital market has been tense. A number of controversies have followed one another like lemmings dashing for the sea. Nevertheless, despite the occasional hint of maladministration and mismanagement, no serious attention has been given to the top management of the Commission.

However, recent reports which alleged financial impropriety have prompted petitions and a growing outcry of perceived highhandedness and insider abuse.

Gwarzo who has wielded steely control of the market regulator since assuming office in 2015 has been alleged to have collected severance pay in the sum of N104,851,154.94 while still in service.

SEC’s harried boss was previously an executive commissioner at the Commission between 2013 and 2015 when former President Goodluck Jonathan appointed him to head the body on May 22, 2015. On taking over leadership at SEC Gwarzo, allegedly paid himself a handsome package as entitlement for being an executive commissioner for two and a half years.

He is also was alleged to be a director in Medusa Investment Limited among other companies in violation of Public Service Rule 030424. The companies were alleged to have executed a number of contracts on behalf of Gwarzo and his family.

Gwarzo was also alleged to have awarded contracts to the same company and others to which he was related, thus resulting in a conflict of interest. These and other allegations of nepotism and victimisation were levelled against his regime since 2015. From the beginning of Gwarzo’s tenure some staffers of the commission have occasionally complained of Gwarzo’s excesses and unethical practices which were at variance with the structure and legacy of his predecessor which were more professional and work friendly.

Inside sources alleged that Gwarzo used virement (moving funds meant for one purpose to something else) to transfer funds from different departments of the Commission for personal use.

How trouble started

Gwarzo’s problem started when he insisted on collected a severance package which was meant for only for staffers who had ended their service and had completely disengaged their services from the commission. After allegedly forcing N104million out of the commission and paying same to himself as severance remuneration.

Worried by these activities, a group Known as Centre for Anti-Corruption and Open Leadership (CACOL), a human rights group, petitioned the authorities to investigate the matter. The group forwarded a petition to the lower legislative chamber, the House of Representative, over the alleged misdemeanour of SEC’s helmsman.

The group’s letter which was signed by its Executive Chairman, Debo Adeniran, frowned at some practices the group alleged to be unethical going on in SEC and described Gwarzo’s act as, “total disregard for standing rules in the civil service”.

The group explained that, “severance benefit can only be paid to an employee who has concluded his or her service and has completely disengaged from service and not to an employee who has been promoted within the commission as is in the case of Mr Gwarzo”.

CACOL insisted that the House of Representatives should probe the firms which the suspended SEC boss allegedly used in carrying out a number of transactions.

The group however, noted that the personal interest of Mr Gwarzo in the referred to companies contravened provisions of the Nigerian law which prohibits public officers from putting themselves in situations where their personal interest conflicts with that of their public duties.

CACOL insisted that Gwarzo’s actions as head of the capital market regulatory body was inconsistent with the high standards expected of such a sensitive body with the crucial responsibility for oversight of the Nigerian capital market.

“It is in view of these noted discrepancies that we urge you to institute a committee to beam searchlights on the activities of Mr Mounir Haliru Gwarzo’s as the Director General of the Securities and Exchange Commission.”

Those who have followed events in the capital market are beginning to peace some snippets of information which had made rounds about SEC before now.

Prior to this period, there have been reports alleging unethical issues in the operations of the apex regulatory office since 2015.

Analysts believe that Gwarzo’s suspension and the intervention by the Economic and Financial Crime Commission (EFFC) was necessary given the need to establish market transparency and maintain high standards of corporate governance.

A stockbroker who declined having his name mentioned in print for clear reasons of not wanting to be seen as arguing against a regulator, told Business Hallmark that Gwarzo has so far been professionally active and effective. But he added that SEC boss should definitely be investigated and prosecuted if found guilty.

However, many stakeholders still believe that Gwarzo has restored sanity to the capital market and maintained an enviable zero tolerance policy against market infractions.

Dr Adi Bongo of the Lagos Business School notes that the Director-General of SEC was supposed to be the epitome of good governance in the country, so, according Bongo flouting corporate governance rules shows that there is something critically wrong with the regulatory governance system. He added that the problem is the disposition of individuals and once they are bent on breaking the rules, there is nothing the system can do to stop them. ‘What happened with Gwazo shows that our rules are still very weak’ he observes.

As far as Emma Nwosu, a former bank Chief Executive Officer of now defunct ACB Bank, is concerned, Institutions in any country cannot operate above society’s cultural values. In Nigeria there is corruption, Nepotism among other cultural decays. According to him ‘there is no way this will not filter into the institutions, public offices and private sector.’

The man Gwarzo

Mounir H. Gwarzo became the Director General of the Securities and Exchange Commission (SEC) in May 2015 and Chairs the Africa Middle East Regional Committee (AMERC) of the International Organization of Securities Commissions (IOSCO). He had previously served on the SEC Board as Executive Commissioner in charge of Operations from January 2013 before being appointed Director General by the President. Prior to joining the SEC Mr. Gwarzo led the Capital Market initiatives of the Federal Mortgage Bank of Nigeria (FMBN) where he facilitated the issuance of Nigeria’s first ever mortgage-backed bond.

Mr. Gwarzo started his career at the Kano State Ministry of Trade and Commerce in 1988 and proceeded to garner a uniquely rich blend of experience as an operator and a regulator. He has worked in well-established institutions in Nigeria’s financial services industry including the Nigerian Stock Exchange (NSE), Century Merchant Bank, Empire Securities Limited and MTL Global Investment Limited. In 1999, he joined the SEC working directly with the then-Director General before heading the Commission’s Investment Division.

Mr. Gwarzo has attended Advanced Management programs at INSEAD and SAID Business School. He has is a fellow of the Chartered Institute of Stockbrokers (CIS) since 2000. He obtained a Post Graduate Diploma in Development Finance from the University of Birmingham, UK in 1991 and a Bachelors of Science Degree in Economics from Bayero University Kano in 1987.

In the course of his career, Mr. Gwarzo has delivered more than 25 papers at different seminars and workshops. He has served on about 20 high level Committees either as Chairman or Member receiving commendations for exemplary service and uncommon leadership. He devotes his time to pushing for greater visibility for African and Middle Eastern capital markets as well as pushing for greater financial inclusion for all Nigerians.

 

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