Akin Kuponiyi
Business mogul, Albert Okumagba, turns to the courts to upturn the suspension placed on his four companies by the Securities and Exchange Commission, SEC
Last month, the Nigeria’ Securities and Exchange Commission, SEC took a critical decision to suspend the BGL Group from the Capital Market. The Group comprising, BGL PLC, BGL Asset Management Limited, BGL Capital Limited and BGL Securities Limited is owned by business mogul, Albert Okumagba. SEC claimed that the four companies are highly indebted and have been running at a loss to the tune of over N48billion as at December 2014. SEC also justified its action on the ground that the group failed to pay over 40 investors who had applied to retrieve their investments. According to the Capital Market regulator, the total indebtedness to the investors as at 2 June 2015, is N5.8billion.
Some of the investors whom the group is indebted to and the amount involved includes; Rivers State Government N3,068,972,183.03, Kano State Government N5.7million, Professor Obumneme N500million, Dr Ikenga Metuh N9,255,205.48, Boundless Solicitors on behalf of First Motors N500millions, Nigerian Shippers Council N8,401,477.81. Others are Holy Family. Catholic Church N17,104,533.63, Justice Unagha N22,310635.61, Church of Nigeria Aghean Diocese N237,226,720.47, Professor Kolawole N23,359,567.74, G$B Marine Services N200million, Melrose Capital Management Ltd N107,121,115.62 and Abbey Mortgage Bank Plc N152,753.43.
Besides being indebted to these investors, the BGL Group is also accused of channelling funds received from the investing public to related companies, contrary to the law, rules and regulations for capital market operations. According to SEC, BGL Asset Management Ltd, contrary to its mandate to engage in funds/portfolio management, wholly transferred funds received from the investing public to BGL plc without engaging in any form of funds/portfolio management.
SEC also accused the group of seeking to return to the capital market to raise funds from the public to pay off the huge debt to the growing army of disaffected investors whose matured funds remain unpaid by the companies. Based on these allegations, SEC insisted that the group is no longer viable enough to continue to operate within the Nigerian Capital Market.
However, in a bid to upturn the decision of SEC and return to business, Okumagba and his companies have dragged the capital market regulatory body to court.
In an ex-parte application accompanied by motion on notice filed before a Federal High Court in Lagos by Professor Gbolahun Elias (SAN), the Group has applied for a reversal of all the steps taken by SEC and its officers, including but not limited to relinquishing and restoring the control of the affairs of the companies to its managements.
In an affidavit in support of the application sworn to by Mr Basit Olawoyin, the group averred that following the ex-parte orders obtained by SEC on 16 April, 2015 before the Investment and Securities Tribunal authorising it to take over the affairs and management of the companies and all its subsidiaries, pending the conclusion of the examination of the companies, it instituted a legal action in suit number FHC/L/CS/604/2015 vide originating processes dated 27 April, 2015, seeking the protective order of the court.
The group further averred that on 30 April, 2015 the court, presided over by Justice Mohammed Yunusa, ordered SEC to vacate the premises of the companies and restore the control of the companies back to their management. Notwithstanding the service of the orders of the court on the defendant, it remained in control of the companies until 20 May, 2015. Thereafter, a national newspaper, on the 21 May 2015, published a public notice issued by the purported “Executive Management Committee,” announcing the purported suspension of the companies from all capital market operations and directed Mr Albert Okumagba to cease to be registered sponsored individual with SEC.
Mr Olawoyin, averred further that he was not aware that SEC set up any administrative proceedings committee to look into the alleged complaints of investors, as the companies were never invited to any hearing, neither were they served with any hearing notices from SEC or the administrative proceeding committee before the purported sanctions by SEC though the purported “Executive Management Committee” was published in the newspapers. He claimed that the companies were never part of the alleged purported detailed investigation, neither were they availed copies of the report of the said purported investigation by the purported “Executive Management Committee” or given the opportunity of being heard.
Mr Olawoyin further contended that one of the companies, BGL Plc, is not a registered capital market operator with SEC and does not engage in capital market activities but is merely holding company for the other three companies, BGL Asset Management, BGL Capital Limited and BGL Securities Limited. He then stated that the purported “Executive Management Committee is unknown to law and does not have disciplinary powers to investigate, discipline, suspend or sanction capital market operations. He added that the purported decision by the purported “Executive Management Committee” was not within the purview of what is contemplated under the investment and security act.
Consequently, Olawoyin averred that by the actions of SEC, BGL Group’s reputation has been adversely affected while the source of livelihood of its staff and employees have been jeopardised. He claimed that the decision taken by SEC has caused some panic among prospective investors and clients some of whom have already begun to withdraw their investments with the companies. Olawoyin therefore claimed that the business and commercial interest of the companies would suffer irreparable jeopardy in terms of loss of customers and revenues by the action of SEC if the court does not intervene.
Apart from suit FHC/L/CS/6604/2015 between the group and Securities Tribunal presided over by Dr Ngozi Chiana Kwalam, as the Chairman/Chief Judge and Securities and Exchange Commission, pending before Justice Mohammed Yunusa, there is another suit FHC/L/CS/767/2015 between BGL Plc, BGL Capital Limited, BGL Securities Ltd, Albert Okumagba and Securities and Exchange Commission pending before Justice Saliu Saidu.
In the suit pending before Justice Saliu Saidu, the group is demanding for N50 billion as damages against SEC for the grave loss and injury occasioned by its decision to effect the decision of the purported Executive Management Committee by publishing same in the newspapers. The plaintiffs are also seeking about 13 orders of the court among which are; an order directing the Director General of SEC to publish a withdrawal of its earlier publication in three national newspapers; a declaration that the purported suspension/sanction of the plaintiffs by a purported “Executive Management Committee” is null and void and of no effect and an order of perpetual injunction restraining SEC from further interfering with the activities of the plaintiffs.
However in a counter affidavit, sworn to by Mrs Lilian Chukwuemeka, a Senior Manager with the Securities and Exchange Commission and filed before the court by Barrister Ifeoluwa Ojediran, the deponent in her deposition averred that from the management account of BGL management Ltd of December 2014, it channeled funds received by it from the investing public to “related companies contrary to the law, rules and regulations for capital market operations.” Mr Chukwuemeka claimed that the company, contrary to its mandate to engage in funds/portfolio management, wholly transfered funds received from the investing public to BGL plc without engaging in any form of funds/portfolio management.
She further averred that about 40 investors have so far complained to SEC concerning the various investments of the four companies which are currently indebted to the tune of N5.769,993,553.67 as at 2 June 2015. She said the companies have not been able to pay these complainants despite repeated and sustained demands.
Mrs Chukwuemeka further averred that the severe liquidity problems of the companies have prevented them from performing their obligations to their clients and investors. She said that the companies now seek to return to the capital market to raise funds from the public to pay off the huge debt to the growing army of disaffected investors whose matured funds remain unpaid by the companies. She also said that the plaintiffs are no longer liquid and are unable to meet their obligations and their continued operations in the capital market constituted a clear danger to capital market operations which required the immediate exercise of the SEC’S statutory powers to protect members of the public and the Nigerian capital market from the damaging operations of the plaintiffs. Mrs Chukwuemeka averred further that in consequence of the deluge of complaints received by SEC against Albert Okumagba and his four companies between 12 and 14 February 2015, it conducted a special examination of the affairs of the four companies and discovered huge non-payment of investors matured funds of over N11bn which indicated clearly that the four companies are in crisis and have failed in their business and operations. She noted that plaintiffs were intimated about this development, but Albert Okumagba the Group’s Managing Director appealled to SEC to be given two weeks to put their house in order. She however insisted that all the complaints were not resolved. According to her, the action taken by SEC, was not predicated on the order made by the Investment and Securities Tribunal which action has been withdrawn..
Consequently, SEC urged the court to refuse the orders of injunctions sought by the plaintiffs as they will not suffer any injury at all, rather, the grant of the reliefs being sought by the plaintiffs will directly undermine the regulatory powers of SEC and will cause irreparable damage to the capital market in Nigeria. The two parties are awaiting the decision of the court.