By Nike Popoola

The National Insurance Commission, on Thursday, announced the suspension of the management of the Investment and Allied Assurance Plc, for the mismanagement of N26.6bn among other misconducts.

In the course of an on-site inspection exercise, NAICOM said in a statement on Friday that it discovered a number of fundamental weaknesses in the management of the company, including poor corporate governance structure practices, weak management and internal control, non-payment of outstanding claims and failure to account for the sum of N26.6bn, being proceeds of private placements.

Besides the routine inspection by NAICOM, the Securities and Exchange Commission also had cause to investigate the activities of IAA following series of complaints by subscribers over the company’s private placement, the commission added.

Whereas the company claimed that the amount realised from the private placement was N11.1bn, the statement said records available at the registrar’s office indicated that the total sum realised from the placement was N26.6bn. The offer proceeds of N26bn were paid directly into the IAA account with Home Trust Savings and Loans Limited.

The statement said that the Vice-Chairman and another non-executive director of IAA were the Managing Director and Deputy Managing Director, respectively, of Home Trust Savings and Loans Limited. The balance of N15.6bn from the proceeds has not been, accounted for by the company, according to NAICOM.

The statement said, “It was also discovered that four companies where the vice-chairman and his family members held majority shares bought shares worth N9.92bn of IAA through private placement. The managing director and the Assistant General Manager, Finance of IAA reported that all financial transactions in the company were solely handled by the vice-chairman, while records of the transactions were being kept by him in Home Trust Savings and Loans Limited.

“These observations and others were communicated to the company through a letter, dated January 28, 2009. The company responded by a letter dated March 10, 2009.”

Following the company’s response and the revelations from the SEC report, the commission with the approval of its Governing Board, ordered a special inspection of the activities of the company, which was conducted between February 2 and 10, 2010.

The report of the special inspection confirmed the revelations contained in the SEC report and made other specific findings, the statement said.

It said, “For instance, key officers of the company at the executive level lacked the capacity to take responsibility for anything and consequently not answerable for anything. The audited financial statement for 2008 contained several errors and there was deliberate falsification of figures. The annual return for 2009 was not filed until early 2011.

“Material amounts of investments in the balance sheet could not be substantiated and certain guarantees and pledges of the company’s assets as security for the borrowing of another entity were not disclosed. An example of the latter was the pledge of the company’s asset as security for a loan taken by Home Trust Savings and Loans from Access Bank, which is currently the subject of court proceedings.”

 

Source: Punch