By Gbenga Agbana

Monday, 15 Nov 2010

Though, the full report of the forensic audit of the accounts of the Nigerian Stock Exchange has not been officially presented to the public, experts privy to the auditors’ findings say there are some anomalies yet to be revealed. Gbenga Agbana reports.

As stakeholders in the capital market await the official presentation of details of the forensic audit of the accounts of the Nigerian Stock Exchange, there are strong indications that the exercise was not thorough enough.

Our correspondent gathered on Saturday that there were more unethical deals in the NSE that the audit did not unearth.

Some experts, who spoke to our correspondent in confidence, raised concerns that important items, such as “the over N500m” spent on the inauguration of the NSE modern trading floor by President Umaru Yar‘Adua, and the huge amount spent on publicity by the Exchange during the boom period, were not investigated.

A competent source within the NSE, who asked not to be named because he was not authorised to speak on the issue, said, based on facts available to him, the forensic auditors’ findings were scanty.

He said there was a need to repeat the audit exercise, paying attention to details left out in the first audit.

Another source told our correspondent on Sunday that the forensic auditors did not raise the issue of the Investors‘ Protection Fund, which raked in millions of naira, in their findings.

The source, who also asked not to be named, said nothing was said about the controversial monstrous amount that the NSE, under the former management, spent yearly to host the chief executive‘s meeting. According to him, this amounts to about N250m.

Findings by the forensic auditors appointed by SEC to audit the NSE’s accounts had revealed that five top officials of the Nigerian Stock Exchange allegedly shared N1.13bn productivity allowance between 2006 and 2008.

A copy of the auditors’ full report, obtained by our correspondents, alleged that the immediate past Director-General, NSE, Prof. Ndi Okereke-Onyiuke, was paid N592.55m in the three years, representing 52 per cent of the total amount shared.

The former DG was alleged to have collected N58.10m, N334.45m and N200m in 2006, 2007 and 2008, respectively, the report, prepared by KPMG and Aluko Oyebode and Co, said.

It added that a former Assistant Director-General of the Exchange, Alhaji Musa Elakama, was given N309m in the three-year period, amounting to 27 per cent of the total surplus shared.

According to the auditors, a former General Manager, NSE, Mrs. Yinka Idowu, allegedly got a total of N103.22m under the payment, categorised as ”Total Productivity/Surplus Sharing Paid to Management,” between 2006 and 2008.

Another former General Manager of the Exchange, Mr. Henry Onyekuru, was said to have been paid N108.6m, while the Secretary to the Council, Mrs. Josephine Igbinosun, allegedly got N21m in the review period. Staff members were also paid N1.2bn and N720m in 2007 and 2009, respectively, the report said.

The auditors also found out that, in 2008 alone, N1.9bn was spent on ”business travel overseas,” prior to reclassification, saying that after reclassification, N953m was classified as ”software upgrade” and ”immediately expensed as opposed to being capitalised.”

They added that the Exchange spent N450m in 2007 on BTO, as against the annual N60m budget, while N297m was spent for the same purpose in 2009, among other questionable spending.

But the House of Representatives Committee on Capital Market had reportedly raised concerns over what it suspected to be ‘bias’ in the report of the commission.

The committee, headed by Mr. Umar Jubril, faulted the report on the ground that the SEC did not give the affected NSE officials the benefit of fair hearing.

The committee observed that “the forensic report was ready by September 30, but the accused were invited to appear and defend themselves on October 4.’’

It noted further, “It is tantamount to using a legal means to effect an illegal action. The condition precedent as stipulated under sections 13,35,47,48,49 and 308 of the Investments and Securities Act 2007 and Section 62 of the Companies and Allied Matters Act have not been met.”

When contacted, the Interim Administrator of the NSE, Mr. Emmanuel Ikazoboh, said he was not in the country and would not be able to confirm whether the details of the report, including the issues raised by our correspondent, were made available to SEC on Friday.

He had earlier informed our correspondent that the full report would be submitted to the commission last Friday.

He noted that the audit process provided an opportunity for the public and workers at the NSE to make information available to the auditors on areas considered useful to their investigations.

”I am not in the country. I am not in the picture for now until I get to the country. Talk to the Securities and Exchange Commission on the issue,” Ikazoboh said.

The Director-General, SEC, Ms Arunma Oteh, did not respond to a text message sent to her phone at 12pm on Sunday. The Head, Media relations of the SEC, Mr. Lanre Oloyi, did not also confirm whether the report had been submitted to the commission.

However, the President of the Nigeria Shareholders Solidarity Association, Chief Timothy Adesiyan, said if there were other issues concerning the audit, it should be made public.

He added that if the accused persons felt that they had issues to raise on the audit report, they should go to court.

According to him, ”A forensic audit is not a judgment. It is like any audit. Anybody affected, who is not satisfied with thefindings can go to court. The duty of the auditors is to express their opinion. My personal observation is that the issue of the Investors Protection Fund, which runs into millions of naira, was not addressed in the report.”

The Chairman of the Ibadan Zone Shareholders Association of Nigeria, Chief Aderemi Oyepeju, said, ”If some insiders said there were other things that were not known or seen by the forensic auditors, they should make the information available to SEC. There should be no sacred cow and nobody should be covered.

”What the government did to other corrupt people should be considered for these people involved in the fraud at the NSE. The law should take its course.”

 

Source: Punch