Justice Husseini Baba Yusuf of the Federal Capital Territory (FCT) High Court, on Wednesday, April 16, 2019, discharged and acquitted Mounir Gwarzo and Zakawanu Garuba, suspended Director-General and Executive Commissioner (Corporate Services), respectively at the Securities & Exchange Commission (SEC) of the five-count charge brought against them by the Independent Corrupt Practices and Other Related Offences Commission (ICPC).
The charges against Gwarzo bordered on fraud relating to the tune of about N115m severance benefits and N10m excess car grant, he received even though he was not entitled to such, in addition to awarding contracts to companies owned by him and his wife’s family, thereby committing a breach of trust having conferred a corrupt advantage upon himself while in office.
Reacting, the ICPC, on Thursday expressed dissatisfaction with the judgment saying it plans to file a “Notice of Appeal” very soon to challenge the ruling on the ‘No Case Submission’ in the trial.
According to a statement by its spokesperson, Rasheedat Okoduwa, the commission argued that the board resolution relied on by the trial judge did not focus on severance benefit, because it was limited to ”retirement and resignation benefits”.
Okoduwa said the court upheld the ‘No Case Submission’ of the defendants ”because the prosecution had failed to prove the elements of the offence,” adding that the commission’s board was the highest authority and had by resolution approved the severance benefit and the car grant.
“Garuba was accused of allegedly conniving with Gwarzo to commit the fraud because he approved the monies for him as an Executive Commissioner, Corporate Services in SEC then.
“The defence counsel A.U. Mustapha (SAN) and Robert Emukpoeruo filed for a ‘No Case Submission,’ after the prosecuting counsel had brought forward witnesses, but the defence urged the court to hold that the prosecution was unable to prove its case against their client,” the ICPC stressed.
Gwarzo and Garuba were tried by the ICPC before they were arraigned at the FHC.
Recall that former Minister of Finance, Mrs. Kemi Adeosun, suspended Gwarzo in November 2017 over allegations of corruption and set up a panel to investigate the alleged issues, after which the ICPC arraigned them in court.

Administrative Panel of Inquiry
Recall that soon after suspension of Gwarzo and co., an Administrative Panel of Inquiry headed by the Permanent Secretary of the Federal Ministry of Finance, Mahmoud Isa-Dutse, was set up to look into allegations of violations of public service Rules, Financial Regulations and other Extant Rules and Regulations and come up with recommendations by Mrs. Kemi Adeosun, the then Finance Minster.
Specifically, the panel had such Terms of Reference of including: to investigate allegations that Gwarzo collected severance package in the sum of N104,851,154.94, while still in service; just as he served as director in Medusa Limited, while still in public service, thereby violating PSR (Public Service Rule) 030424, prohibiting public officers from holding office as director in private companies. Members of the panel also investigated allegations that the suspended SEC boss used his position as DG of the commission to award contracts to Medusa wherein he was serving as director, resulting in a conflict of interest; as well as that he expended about N2bn without appropriation, contrary to extant financial regulations; among others.
In its report, which the ICPC would seek to convince the appellate court about include the panel’s findings, including among others, that the severance package paid to Gwarzo was wrongly collected since he did not exit the services of the SEC and recommended that he refunds the amount.
On the second allegation of Gwarzo’s directorship in Medusa Limited while still serving as DG, the report stated that inquiry made and documents obtained by the panel at the Corporate Affairs Commission revealed that Gwarzo was still a director of the company as well as a major shareholder with a shareholding of N1.2m as at the time of the search.
“His purported letter of resignation dates 19th December 2012 was not part of CAC’s records as at the date of the inquiry. It was equally discovered from the account opening mandate obtained from Guaranty Trust Bank that Gwarzo was, at the date of the inquiry, a signatory to account No 322324264/1/110 maintained by the company with the bank.
The panel was also furnished with a letter dated 24th July 2015, addressed to the bank signed by Gwarzo as director of the company, requesting for a change of account Officer on the basis of a resolution passed and signed by the directors of the company to that effect.
The report also took note of a letter dated 16th August 2016 signed by Gwarzo as a director of the company requesting for the issuance of a credit card in relation to the said account.
“When Gwarzo was confronted with the above letters, he admitted to having authored and signed them, but claimed that it was a regrettable action” the report added.
On Outbound Investments Limited which benefitted from contracts awarded by SEC, while Gwarzo remained a director and shareholder, to the tune of N33,736,596, he claimed the company belongs to his wife’s family and that he was only representing his wife on the board.
Based on revelations, the panel opined that Gwarzo’s status as a director in both Medusa Investment Limited and Outbound Investment Limited, while he was DG of SEC, raised and established a fundamental issue of conflict of interest against him, which the ICPC may further rely on in its impending appeal.

Shareholding, yes: Board Seat, No
The ICPC may also rely on the specific provision of PSR 030424, which expressly says that although public officers can be shareholders in both public and private companies operating in Nigeria or abroad, they must not be directors in public companies. They may however only be directors in public companies if nominated by the government.
Also, Section 6 of the Investment and Securities Act 2007 states that: the SEC DG and full-time commissioners shall devote, full time, their service to the commission, and shall while holding office not hold any other office or employment, except where appointed by virtue of their office in the commission into the membership of the board of any agency of the government in Nigeria or any International Organisation to which the Commission is a member of in affiliate.
Given his directorship in both companies, the panel opined that Gwarzo was in breach of PSR 030424 and PSR 030402 (divided loyalty, which is classified as an act of serious misconduct).
The panel also opined that being a shareholder of Outbound Investment Limited, Gwarzo used his position as DG to influence the award of contracts to the company which amounts to a conflict of interest.

Unlawful Handshake
On the issue of Golden handshake, the panel said Gwarzo violated the provisions of Paragraphs 313 and 316 (4) of the Financial Regulations by not seeking the approval of the Finance Minister, before engaging in extra-budgetary expenditure and virement.
Based on the gravity of the findings, the panel recommended that Gwarzo be directed to refund the sum of N104,851,154.94, which he allegedly collected as severance package; and that he be dismissed from the public service of the Federal Government for holding the position of a Director in private companies while in service as the DG of SEC in breach of PSR 030424 and Section 6 of the Investment and Securities Act 2007.
The panel equally recommended Gwarzo’s dismissal from Public Service in relation to the allegation of Golden handshake, “having breached paragraphs 313 and 316(4) of the Financial Regulations (Government Notice No. 219 of 27th October 2009)(engaging in extra-budgetary expenditure without appropriate approval).”
Thereafter, the panel also recommended that Gwarzo be referred to the ICPC to further investigate the allegation of using his position as DG to influence the award of contracts to Outbound Investment Limited in view of the Provisions of Sections 58 (12) (b) and 58 (5) of the Public Procurement Act 2007.

Reorientation Staff
The Panel also recommended that the cases of Mrs. Anastasia Omozele Braimoh and Abdulsalam Naif, two management officers of the Commission, be referred to SEC for appropriate disciplinary action in line with the provisions of the Staff Manual of SEC.
The Panel advised the Federal Government to re-orientate public servants to the very fact that the Public Service Rules and Financial Regulations are ground norms of every Government Service Contract, be it at the Federal, State or Local Government levels.
It added: “Accordingly, all Government Extra-Ministerial Departments and Agencies should be made to understand that the PSR and FR are superior to whatever specific legislation and domestic arrangements that guide their operations, except when such issues were not covered by any provision of the PSR.”

The Crux of the Matter
The challenge of the Nigerian capital market, however, goes beyond Gwarzo and his also suspended colleagues at the SEC. As we have noted repeatedly, this matter could not have ensued in the first place, if the Federal Government had immediately appointed one, after dissolving the Peter Obi-led new board of the commission put in place by the then outgoing Goodluck Jonathan administration.
It is unfortunate that in all of four years, the government has left the SEC to operate with ad-hoc management, while the commission relies on the “body language” and belief of a single person for board-level decisions.
Beyond all else, this is a glaring case of scant regard for the nation’s capital market, which in most climes is unthinkable and can only be compared to a situation where the board of the Central Bank of Nigeria (CBN), or its Monetary Policy Committee (MPC) are not fully constituted. We recall the hysteria that greeted lack of quorum by the MPC when the Nigerian Senate would not approve new nominees put forward by the President.
It is, therefore, necessary that the 9th National Assembly should immediately begin the process of enacting an Act that prohibits the current ad hoc arrangement at Nigeria’s SEC and insists on full-fledged board and management team.
It is noteworthy also that Binos Yaroe, a former General Manager at the Nigerian Stock Exchange (NSE), was elected on February 23, 2019, as Senator to represent Taraba State in the 9th NASS and would serve as a veritable resource person for the Committee on Capital Market.
Investdata expects that with Yaroe, the Nigerian capital market will experience a new lease of life, but beyond him, the Federal Government must begin to appreciate and treat the market in “truth and spirit,” the engine room of this nation’s economy.