Mournir Gwarzo: Nigeria’s SEC and the challenge of market regulation


Abayomi Obabolujo

Sacked SEC boss Mounir Gwarzo


  • With or without Gwarzo, Investors call for forensic audit of Oando’s operations and why?

Between 2000 and 2017, Mournir Gwarzo, would be the third Director General of Nigeria’s Securities and Exchange Commission, SEC that would be unceremoniously removed from office, by the powers that be. The tag of such removal is another issue entirely.

The first was Mallam Sulleyman Ndanusa, the then no nonsense Economist who was SEC DG between 1999 and 2004. While he held sway, when Ndanusa sneezes, the market shakes. George Akamiokor, his immediate predecessor was seen as a stooge to the then Managers of the Nigerian Stock Exchange. Ndanusa came to exert the utmost authority of the apex capital market regulatory body- SEC. He was bold enough to place the then all powerful Ndi Okereke-Onyiuke on suspension as the Director General of the Nigerian Stock Exchange. To break the monopoly of the Nigerian Stock Exchange, Ndanusa instructed on name change to Lagos Stock Exchange while he promoted the establishment of the then Abuja Stock Exchange. Under the management of Mallam Suleiman Ndanusa, every capital market operators sat up as sanity returned to the market space in just few years. He was a school teacher who never spared the rod but alas, they got rid of him. Though Ndanusa was allowed to complete his tenor, the hope of a renewal was dashed as he was said to have heard of his removal from office in the news while he was out of the country training. Guess what? Same Ndanusa was appointed as the Chairman of the commission years later.

The soft spoken, gentle looking Mallam Musa Al-Faki was believed to have been preferred by same forces that got Ndanusa out of office. As a matter of reference, Al-faki’s appointment, as well as the removal of Ndanusa was celebrated on the floor of the Nigerian Stock Exchange. Alas, though there were no reports of corrupt allegations against Al-faki, the question is, why did the celebrated Al-faki ‘resign’ in just ten months to the expiration of his tenure? Did he willingly resign or asked to resign such that he will be disgraced if he failed to do so? Of all the gentility and maturity of Al-faki, no matter how well he seemed to have taken a cue from the manner of exit of his predecessor, it took just one unpleasant but firm action against the son of one of the then powers that be in the country, who owned a stock broking firm and the gentle looking DG was gone. There was the case of proven illegal price manipulations of the stock of the then African Petroleum plc (now Forte oil plc) on the floor of the Nigerian Stock Exchange. Al-faki had wielded the big stick as the overall head or the Ombudsman of the capital market by placing a one year ban on the stockbrokerage firm and five years ban on the major promoter of the firm so involved. Pronto! Al-faki lost his job and that ended the entire pronounced ban, either on the erring firm or the individual involved. Oando

The case with Nigeria’s Securities and Exchange Commission is the more you look, the less you see. The technicality in managing SEC seems more complicated than what ordinary eyes can see or rational mind fathom. How come that not just one of the four DGs in the last seventeen years was able to secure an approval for a second term? Aruma Oteh fought tooth and nail for her entire five years’ stay as SEC DG. She escaped by a whisker despite all the known allegations levelled against her. These allegations included opening of accounts and collections of funds due to the commission in personal name and strategically protection of market operators who should have been sanctioned for infractions. How then did she escape? There are reports that Aruma Oteh had the backings of the then Secretary to the Federal Government and the Finance Minister. It thus suggests that in Nigeria, there is a way not to be SEC DG and there is a way to be a successful one.

We live in an information age, history will not be on the side of Mounir Gwarzo for being described as the regulator without probity, the supposed judge without character upon which his suspension was hinged. Could that be true? What really happened?

The coordinating ministry had issued a query to the now suspended DG, Mounir Gwarzo on the N104million severance allowance paid to self. According to the ministry of finance, the payment was illegal in the sense that Gwarzo was still within the system but that he only left his former post within the commission and thus not entitled to the payment. The exact period the payment was made must be in the early days of the Buhari administration in 2015. It suffices to state that Gwarzo was between January 2013 and May 2015, the Executive Commissioner in charge of operations at SEC before being appointed as the Director General hence, the argument for the  justification of the payment because, seeing that a new government that might not probably retain his services, being the norm in Nigeria, might terminate his contract and because he would not have been two years on the saddle, he would not be entitled to a meaningful several allowance as DG. The wise decision was to access his severance allowance as a commissioner which was what he did as stated by insiders. According to Market Watchers and legal practitioners, there is nothing wrong in what Gwarzo did.  But then, there are those on the other side of the divide who are of the opinion that he should have refunded the said N104million since the Buhari administration did not tamper with his appointment. A twist was even aded on the fact that the immediate past head of legal at SEC was sent off by Gwarzo on an advice against the severance allowance in question.

The humongous N104million severance package just after two years of service is an issue of concern to market watchers and operators alike. A cross section of investors in the Nigerian market expressed ill-feelings stating that it is baffling that in a third world country like Nigeria, where minimum wage is just N18,000 monthly, if an employment of just twenty eight months period would fetch the sum of N104million as severance allowance to the holder, Nigeria’s SEC might just be one of the best institutions to work for globally.

Current plight of Mounir Gwarzo as SEC DG is an indictment on the President Muhammadu Buhari administration. How? The Securities and Exchange Commission is an institution that by constitution should run with a Chairman as the head, the DG as the administrative/executive head with three other executive Commissioners as the top management staff. Mounir Gwarzo has none. A quick click on the commission’s website revealed Gwarzo as the only board member. How did this come to be? Gwarzo, before his appointment as SEC DG was just one of three executive commissioners, his appointment left two others who eventually retired in December 2016. Similar structure is found in quite a number of Federal government agencies and parastatals. It is generally believed that Gwarzo would have performed far better than he has done so far if the Federal Government had constituted a board. Nonetheless, the suspended DG took certain critical steps, touched some seeming untouchables and brought a number of changes and sanity to the market. He might not have initiated the recapitalisation exercise of capital market operators but he excellently coordinated same to perfect conclusion.


BGL group was a leading capital market operator up until February 2017 when Gwarzo’s SEC cancelled the licenses of BGL Assets Management Plc and BGL Securities Ltd. It should be recalled that the Albert Okumagba led companies had raised about N7billion in private placement shortly before the market crash in 2008. With the withdrawal of the operating licenses of the companies, all the investors who participated in the private placement also became net losers. A segment of the market had opined that SEC shouldn’t have thrown away the child with the bath water. In other words, SEC should have put retail investors who invested with BGL Group into consideration in wielding the big stick against, stating that the life ban on Okumagba and other promoters of BGL could be said to be appropriate. These individuals are still arraigned in the law court.


Just three months ago, another bigwig in the Nigerian capital market, Victor Ogemwonyi who was till September 2017 the CEO of Partnership Investment Plc was banned from all capital market activities for life by Gwarzo’s SEC. Other business partners of Ogemwonyi were also handed various ban terms by the Mounir Gwarzo’s led SEC.

Notably, these high profile decisions by Gwarzo’s SEC which have been highly commended for its capacity to ensuring sanity in the market place went without bruises or the raise of eyebrow except within the cycle of friends of affected operators. Mounir Gwarzo was becoming a czar among regulators until the last straw that broke the camel’s back.


Perhaps, Gwarzo would have acted differently if there was a constituted board that coordinates affairs at SEC. Perhaps, opinions of higher authorities would have been sought and counselling adhered to in the process of moving against one of Nigeria’s largest indigenous oil outfit, OANDO PLC. From the very day that Gwarzo attempted delicate scrutiny of OANDO, how much prepared he- Gwarzo was as a ‘sole regulator’ is not known, how well his actions were guided by historical knowledge on managing Nigeria’s SEC can’t also be ascertained but being who we are in Nigeria, touching the ‘untouchables’ is always an act of war hence, it is either that Wale Tinubu and Oando will see the end of Gwarzo as SEC DG or Gwarzo brings the Managers of Oando to book and subsequently supervise their exit and prosecution.

If for anything, either for bad or good reasons, Oando is always in the news.

In 2002 when the then Unipetrol bought 60% stake in the then Agip Nigeria Plc, it was controversial as shareholders of both companies rose against the deal. At the end, Wale Tinubu and his friend, Omamofe Boyo prevailed, the deal was sealed. The company became bigger and name subsequently was changed to O-AND-O, coined from Ocean and Oil. How well the company has lived to this expectation is a case for another day.

Wale Tinubu’s led Oando has the knack for high profile deals as much as raising funds anywhere it is available, the Nigerian capital market being the primary source. The company’s management will always give comprehensive analysis of deals or purpose for each capital raising, Nigerian investors and market operators will jump in only to come out scratched. As far as number of primary market activities is concerned among Nigerian quoted companies, give it to Oando. From N15.9 billion raised via the primary market in 2004 to N21.1billion in 2010, Nigerian investors never bothered to raise eyebrow on the losses incurred in price in the company when another N55.2 billion was again raised in 2012/2013. In less than two years in 2014/2015, this same company was back in the market and yet succeeded with N48.7billion from same market thus bringing the funds raised by Oando in the Nigerian market between 2004 and 2015 to well over N140billion. Please note that some of these funds were coughed during lull in the market and after terrific losses by many. Investment in Oando could be said to have subsisted to erode funds and not to add value as the company’s management would have wanted the general public to believe.

Despite these facts and realities with all the acquisitions and capital raisings to fund them while Nigerian investors never emerged as beneficiaries either in cash dividend or sustainable price performances on the floor of the Nigerian Stock Exchange, public life of the company’s managers has been on the robust side. When Wale Tinubu and his team were cajoling investors in 2004 to invest in their company, it was with a slogan of well over 500% capital appreciation it generated between 2001 and 2004. Expectedly, investors had rushed in to generate similar returns, going forward. Of course, the market in the process, became bullish with Oando’ stock price touching N290 in March 2008 but five years after, its price had plummeted to something in the region of N16, not necessarily because of market crash only but for lack of investors’ confidence. There was a price surge hitting about N36 at the announcement of Conoco Phillip’s acquisition and the listing on JSE, guess what? Those who shunned the announcement were better off, the noise soon died down and the price began a roller coaster descent. One year after, Oando’s price was hovering around N15 and by 2016 June, it sold at N4.50. From a high of N290 in March 2008, the same company, now bigger via acquisitions and all sorts but now sells on the floor of the Nigerian Stock Exchange at N5.99? Stock market is not a respecter of persons or names. If you perform well, you are compensated; otherwise, you are hit with a rod. The market had only appropriately dealt with Oando. But why?

Oando is one company that will flagrantly disobey listing rule by not submitting accounts as at when due, preferring to pay fines instead. What kind of management is that? Performances of Oando plc is in fact, a case study in the history of Nigeria’s capital market. How can a company that paid cash dividend to subscribers to its rights issues in 2014 come back to declare N184 billion loss in its 2014 full-year report and N48 billion in the first nine months of the year 2015?

Ernst and Young in its reports on the accounts in question under the headline, ‘Emphasis of Matter’ have this to say. ‘We draw attention to Note 47 to the financial statements which indicate that the group reported comprehensive loss for the year of N37.8 billion (2014: loss N116.5billion) and as at that date, its current liabilities exceeded current assets by N247.9 billion (2014: N329billion). The company also incurred comprehensive loss of N56.6billion for the year ended 31 December 2015 (2014: loss N66.5 billion) and as at that date, its current liabilities exceeded current assets by N32.8billion (2014: N34.7billion).

The note indicates that these conditions, along with other matters, indicate the existence of a material uncertainty which may cast significant doubt on the group’s ability to continue as a going concern’.

The leading audit firm further states that ‘we also draw attention to Note 46 to the financial statements which indicate the corresponding figures were restated due to an error which occurred in the 2013 and 2014 financial years.’ Simply stated, the accounts as published by the company in the 2013 and 2014 financial years contained errors which unfortunately had to a large extent, influenced investment decisions as at when published.

In view of the above therefore, a segment of market operators and investors alike are of the opinion that SEC ought to have acted on the issue of OANDO earlier than it did. To them, the probe of OANDO is in the right direction and the best for investors in the market.

In conclusion, virtually all the investors and market operators spoken with were less concerned with the issue between the ministry of finance and Mounir Gwarzo. If Mounir is found culpable of the offences as alleged, he should suffer the consequences, with or without Mounir as SEC DG however, for the sake of sanity within the Nigerian capital market, the forensic audit of OANDO should be conducted they all opined. Discontinuity of Oando’s forensic audit will amount to an abuse of President Buhari’s stance on integrity.



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