Forensic Report
38
On NSE Affairs
Day 1 Full text
Lagos trading floor of the Nigerian Stock Exchange
Status update/report on the investigation of
the affairs of the Nigerian Stock Exchange
T
he Securities and Exchange Com-
mission (hereinafter referred to
as “SEC”) received, allegations
which suggest that the affairs
of the Nigerian Stock Exchange.
(hereinafter referred to as “NSE” or
“the Exchange”) may have been man-
aged in a manner that is detrimental,
to the interest of the investing public”).
These allegations derive principally
from two sources that include (i) the
issues raised by a team of SEC Inspec-
tors in a report to SEC following the
annual investigation of the NSE carded
out between 14 to 18 September 2009
and (ii) allegations against the NSE
received from industry stakeholders
in general and notably the former
President of the Council.
Based on the gravity of these al-
legations and the necessary investiga-
tive steps that would be needed to
veryify the allegations, the allegations
requiring further investigation were
narrowed down to a little over 20
(twenty), namely:
• No evidence of meetings of the
committees of the Council;
• MEMART of NSE was altered by
resolution of 11 Nov 2006, the altera-
tion was not approved by the SEC and
copy cited was not certified by CAC;
• No evidence of disciplinary ac-
tion taken on the 2,715 complaints
(involving the unauthorized sale of
shares, withholding of proceeds of
sale) reported to the NSE;
• Lack of effective oversight mecha-
nism of quoted companies/ineffective
surveillance and appraisal of the internal
structure and operations of dealing mem-
bers (some members had liquidity ratios
of zero and negative values in breach of
Article 15(e) and section 32 of the ISA;
• No evidence/report indicating
the existence of a risk assessment
system for members as required by
Article 15(d) of the Exchange Rules;
• All the contributions to Inves-
tors’ Protection Fund were placed in
fixed deposit account with FBN with
average interest rate of 8 percent p.a;
• Moribund Companies were still
on the Daily Official List of NSE;
• Absence of policy and procedure
on listing and delisting of quoted com-
panies and absence of written policy
BUSINESSDAY Monday 08 November 2010 www.businessdayonline.com
on technical suspension and failure to
notify the SEC when companies are
placed on technical suspension;
• Exorbitant charges in the form of
10 percent management fees; profes-
sional audit fees of the Exchange were
also too high;
• Total expenses of the NSE are too
high 2006 to 2008 expenses consumed
more than 80 percent of income/
undisciplined spending and financial
imprudence;
• Present share capital of the
exchange is not in tandem with SEC
requirement of N500, 000,000.00 (Five
Hundred Million Naira) as the share
capital of the Stock Exchange;
• Wrong classification of Assets in
the financial statement. For example,
there was no distinction between of-
fice equipment, plant and computer/
software. These classes of assets were
lumped together into one class of assets;
• Despite the fact that the sum
of N1, 615,000,000 (One Billion, Six
Hundred and Fifteen Million) has been
expended on the Coral Properties
Project, the project has come to a halt;
• Failure to implement an effective
succession plan for the senior manage-
ment team of the NSE;
• Failure of NSE to present au-
dited accounts for the year ended
December 2009 and failure to produce
interim and financial statements for
the first and second quarters of 2010
Continues on page 39
BUSINESSDAY Monday 08 November 2010
...The investigation of the
affairs of the Nigerian
Stock Exchange
Continued from page 38
for consideration of the Finance and
General Purpose Committee;
• That NSE has substantial liability
in its pension scheme;
• That there has been sharing of
money among council members;
• That false returns have been
made to SEC;
• That the sum of N400, 000,000
(Four Hundred Million Naira) was paid
to the past president of the Council;
• That members of the Council
were receiving money from companies
for listing;
• That there was an illegal require-
ment by the Exchange that certain
specific companies must be used for
printing of listing documents; and
• That wages, training and IT ex-
penses were overstated.
Following a high level review of
the financial records of the NSE by
a team of experts from KPMG, the
following expense classifications were
flagg-ed for further consideration/
investigation: Salaries & Allowances;
Staff training costs; Medical allow-
ances; Public enlightenment; Vehicle
maintenance; Business travel; New
ATS/CSD; General Exp & Diesel; Soft-
ware upgrade; Market Dev. Expenses;
Maintenance - Staff quarters; Website
Hosting Expenses; Gratuity & Pension
Fund; Long Service Award; Conversion
of Shares and NSE Consult.
Our current investigation is there-
fore focused on the areas itemized
above in addition to the following
areas which were gathered from the
allegations made against the NSE: The
Investors Protection Fund; The Pen-
sions Contributions; and The Coral
Properties Project.
As at date, we have begun consid-
eration of all the above listed areas but
our current findings relate largely to
the following expense classifications:
Long Service Award; (ii) Overseas
Business Travels; Maintenance of Staff
Quarters; Staff training; Salaries & Al-
lowance and NSE Consult
In relation to investigations regard-
ing the above mentioned expense
classifications we have interviewed the
following members of staff:
• Fidelis Imiehiakhe, a Princi-
pal Manager in the Accounts Depart-
ment of the NSE
• Josephine Helen Igbino-
sun, an Assistant General Manager
in the Legal Department of the NSE
and Secretary to the National Council.
• David Oleka, a Manager in
the Accounts Department.
We have also conducted searches
at the Corporate Affairs Commission
(CAC) on some of the companies
which had dealings with the NSE in the
period under review and our observa-
tions from the searches are contained
in the latter part of this update. We
are also reviewing relevant legislation/
regulation to determine the specific
areas of contravention if any.
Our investigation so far has re-
vealed certain questionable transac-
tions which seem to suggest that some
of the allegations made may have merit;
www.businessdayonline.com
we have thus below provided a general
overview of the expense classifications
to which our current findings relate,
our finding on questionable transac-
tions and immediate steps to be taken
in further investigation.
Our investigation so far reveals
that the following allegations may
have merit:
• Total expenses of the NSE are
too high, 2006 to 2008 expenses
consumed more than 80 percent of
income/undisciplined spending and
financial imprudence;
• That there has been sharing of
money among council members.
• That the sum of N400, 000,000
(Four Hundred Million Naira) was paid
to the past president of the Council.
• That wages, training and IT ex-
penses were overstated.
Our findings on some of the ex-
pense classifications reveal that:
• There were questionable pay-
ments of productivity bonuses to
Council members and members of staff;
• Questionable business travel ex-
penses which were in some instances
reclassified to other expense lines;
• Questionable staff training ex-
penses which were in some instances
reclassified to other expense lines;
• Questionable market develop-
ment and public enlightenment ex-
penses which were in some instances
reclassified to other expense lines;
• Questionable contracts awarded
to companies owned by members of
staff (or companies in which members
of staff owned shares);
• Duplication of payments;
• Purchase of assets by the NSE
which either disappeared from the
books of the company or were sub-
sequently written off the books under
questionable circumstances;
• The use of funds belonging to the
NSE for the personal use/maintenance
of staff members and their residences.
Questionable
Transactions
• The Long Service Award
The Long Service Award does not
appear as a budget item in 2007 and
2009.The documents reviewed indicate
that the Long Service Award (lithe
Award’) took place in the year 2008.
Our review indicates that the sum of
N397, 974,573.82 (Three Hundred and
Ninety Seven Million, Nine Hundred and
Seventy Four Thousand, Five Hundred
and Seventy Three Naira and Eighty
Two Kobo) was reported as the actual
expenditure in respect of the Award.
However, upon reviewing the ledger
we observed that contrary to NSE’s
report, the sum of N592,974,573.82
(Five Hundred and Ninety Two Million,
Nine Hundred and Seventy Four Thou-
sand, Five Hundred and Seventy Three
Naira and Eighty Two Kobo)was actually
expended prior to reclassification of
N 195, 000,000.00 (One Hundred and
Ninety Five Million Naira) to market
development expenses.
The Corporate Affairs Department
of the NSE led by Yinka Idowu was
responsible for organizing the Award.
Our review also indicates that the
That a boat (yacht)
shown in the accounts
of the NSE to have
been purchased for
the sum of N37, 000,
000.00 (Thirty Seven
Million Naira) for the
stock exchange in
early 2008 was writ-
ten off the books
sum of N342, 378, 428 (Three Hundred
and Forty Two Million, Three Hundred
and Seventy Eight Thousand, Four
Hundred and Twenty Eight Naira) was
received by Candy Floss Limited. This
sum represented the budget of the NSE
for the Staff Long Service Award and
was paid as sundry expense in respect
of the Long Service Award. Our search
at the CAC reveals that Candy Floss
Limited is owned by Yinka Idowu.
Our review further shows the
following:
• That a boat (yacht) shown in the
accounts of the NSE to have been
purchased for the sum of N37, 000,
000.00 (Thirty Seven Million Naira)
for the stock exchange in early 2008
was written off the books at the end of
the same year by its allocation to the
Long Service Award account as a gift.
Currently we have not seen any
documentation which shows who
was presented with the said boat.
Our review of the Award Ceremony
documents shows no boat presenta-
tion, we enquired from Mr. Fidelis
Imiehiakhe and Mr. David Oleka (both
of whom attended the ceremony) if
there was such a presentation they
had no recollection that a boat was
awarded during the ceremony.
There are however indications
Full text
(which we are currently investigating)
that either Yinka Idowu or the former
DG was presented with the boat.
• That at the beginning of 2008
the NSE expended the sum of N45,
000,000.00 (Forty Five Million Naira)
in purchasing 64 Rolex watches for
presentation to employees who had
served the NSE for 10 years, that later
in the same year Candy Floss Limited
was given N95, 000,000.00 (Ninety
Five Million Naira) for an additional
purchase of 91 Rolex watches and sub-
sequently after the award cerem6ny
another 10 Rolex watches at the cost
of N46, 000,000.00 (Forty Six Million
Naira) were purchased.
We observed that the Award Cer-
emony document shows that only 73
out of the 1 65 Rolex watches pur-
chased were actually presented to the
awardees which means that 92 Rolex
watches valued at N99, 500,000.00
(Ninety Nine Million, Five Hundred
Thousand Naira) are unaccounted for.
We further observed that the
‘schedule containing the list of staff
members eligible for long service
awards only contains 63 names’ sug-
gesting that 10 additional and unautho-
rised people received presentations.
• In the same vein Candy Floss Lim-
ited was given N100, 000,000.00 (One
Hundred Million Naira), for the purchase
of 14 cars to be presented to employees
who had served the NSE for 25 - 30
years, at the same time 3 cars purchased
by the NSE in January and March 2008
for the total sum of N59,000,000.00
(Fifty Nine Million Naira) (1 land cruiser
jeep purchased “for” N30,000,000.00
(Thirty Million Naira) and 2 lexus cars
purchased for N29,000,000.00 (Twenty
Nine Million Naira) were written off
the books at the end of the same year
by their allocation to the Long Service
Award account as part of the gifts given
during the ceremony.
However, the Award Ceremony doc-
ument shows that only 7 people were
presented with cars compared to the
14 cars which were to be purchased by
Candy Floss Limited and the 3 additional
cars written off, meaning that 10 cars
39
valued at approximately N66, 142,857.00
(Sixty Six Million, One Hundred and
Forty Two Thousand, Eight Hundred and
Fifty Seven Naira) are unaccounted for.
• It was again noted that although
Candy Floss Limited was given the sum
of N50, 000,000.00 (Fifty Million Naira)
for the special presentation to employ-
ees who had worked with the NSE
for 25 - 30 years, another sum of N55,
000,000.00 (Fifty Five Million Naira) was
again disbursed in respect of the special
presentation which sum was to include
a luxurious jeep and a special gift of the
former Director General’s choice.
This suggests that there was a
duplication of payment and a double
purchase of a luxury car for the former
Director General’s choice.
• It was further noted that al-
though Candy Floss Limited was given
N6, 000,000.00 (Six Million Naira)
for the purchase of 20 plasma televi-
sions only 13 plasma televisions were
awarded whilst although Candy Floss
Limited was also given N5, 400,000.00
(Five Million, Four Hundred Thousand
Naira) for the purchase of 45 deep
freezers only 33 were awarded thus 7
televisions and 12 deep freezers valued
at N3, 540,000.00 (Three Million, Five
Hundred and Forty Thousand Naira
Only) are unaccounted for.
• Also noted is the fact that Articles
52 of the Employee Handbook for
Management and Senior Staff as well
Article 55 of the Employee Handbook
for Junior staff limit the value of gifts/
cash that can be given to employees
for the long service award.
We observed that the gifts awarded/
presented far exceeded the value stated
in these handbooks.These Articles fur-
ther stated that these awards should be
presented to only members of staff, but
we observed that former members of
staff were also given awards.
Further investigations to be carried
out in respect of the Long Service
Awdrd will focus on determining the
following among others:
• Whether any payments were
made by Candy Floss Limited or its
agent/officers to the accounts of of-
ficers of NSE including the former
D.G, ADG e.t.c;
• Whether the amount received by
Candy Floss was justified when com-
pared with the market value of services
rendered at the time under reference;
• Whether there was council
approval for the purchase and subse-
quent use of the boat as a long service
award gift;
• Whether the writing off of the
boat in this manner by the NSE was
in contravention of corporate gover-
nance principles, the code of conduct
in operation at the NSE and/or other
rules, regulations or legislation; and
• Whether the transaction was
in contravention of corporate gover-
nance principles, the code of conduct
in operation at the NSE and/or other
rules, regulations or legislation;
• Whether the 74 Rolex watches
were actually purchased by the NSE
and if there is any relationship between
the NSE and the companies from
whom they were allegedly purchased;
• What formed the basis for the
amounts spent on purchasing each of
the gifts presented;
• Why former staff members were
awarded gifts in breach of the provi-
sions of the Staff Handbook;
• Confirm whether the presented
items were ever purchased and if they
were where they are presently; and
• Possible causes of action, if any,
against Yinka Idowu and other associ-
ated persons.
Tomorrow: Business travels overseas
 Forensic Report
30 BUSINESSDAY Tuesday 09 November 2010 www.businessdayonline.com

On NSE Affairs
Day 2 Full text
Millions of naira disappear in questionable business
travels, maintenance of staff quaters, training...
Business Travels

I
Overseas
n the year 2007 the reported
expenditure for the expense
classification, Business Travels
Overseas (“BTO”) was N4S0,
000,000 (Four Hundred and Fifty
Million Naira) as agJainst an annual
budget of N60, 000,000 (Sixty Million
Naira) indicating that the sum of N390,
000,000 (Three Hundred and Ninety
Million Naira) i.e. 650% was expended
in excess of the annual budget. We
were unable to verify the actual ex-
penditure reported for 2007 as we
were informed by officers of the IT
department that the ledger accounts
had not been computerized in 2007.
In the year 2008, the reported ex-
penditure for BTO was stated to be
N615, 736,301.62 (Six Hundred and
Fifteen Million, Seven Hundred and
Thirty Six Thousand, Three Hundred
and One Naira, Sixty Two Kobo) after
reclassification.
Our investigations reveal that the to-
tal sum expended on BTO in 2008 prior
to reclassification was N 1, 900,000,000
(One Billion and Nine Hundred Million
Naira). The sum Nl, 300,000,000 (One
Billion andThree Hundred Million Naira)
was reclassified under different expense
description/classes.
For instance, the sum of
N953,000,000 (Nine Hundred and
Fifty Three Million Naira) was moved
to the expense classification “Software
Upgrade” and immediately expensed
as opposed to being capitalized.
In the year 2009 the reported
expenditure for BTO was stated to
be N297, 000,000.00 (Two Hundred
and Ninety Seven Million) after reclas-
sification as against the actual budget
of N321, 000,000.00 (Three Hundred
and twenty One Million).
Our investigations reveal that the
total sum expended on BTO in that
year prior to reclassification was N782, 2008 was approved by only the ADG supported by handwritten document Hundred and Twenty Six Million Naira) total sum expended on Maintenance
135,835.40 (Seven Hundred and Eighty while that of 14 May 2008 was ap- detailing the sums to be paid out to each indicating that the sum expended was of Staff Quarters in that year prior to
Two Million, One Hundred and Thirty proved by the DG alone. Our inquiries attendee of the road show, the second N 1, 000,000.00 (One Million Naira) reclassification was N 135, 067,773.39
Five Thousand, Eight Hundred and reveal that although each disburse- disbursement was only supported by a below the annual budget.We were un- (One Hundred and Thirty Five Million,
Thirty Five Naira, Forty Kobo) The sum ment may have been approved by only photocopy of the initial documents used able to verify the actual expenditure Sixty Seven Thousand, Seven Hundred
of N485, 034,833.74 (Four Hundred one of the two approving authorities, to support the first disbursement. reported under the expense classifi- and Seventy Three Naira, Thirty Nine
and Eighty Five, Thirty FoJr Thousand, it would have been impossible to issue We intend to conduct an interview cation in 2007 for the same reason Kobo), the sum of N64, 285,898.60
Eight Hundred and Thirty Three Naira, a cheque in respect of either payment with one of those nominated to attend stated in respect of the BTO in 2007. (Sixty Four Million, Two Hundred and
Seventy Four Kobo) was reclassified without the signature of both the DG the international road show and with In the year 2008 the reported ex- Eighty Five Thousand, Eight Hundred
under different expense heads. and ADG on the cheque. Our inquiries the officer that was responsible for penditure for MSQ was reported to be and Ninety Eight Naira, Sixty Kobo)
One of the questionable trans- also suggest that at the time of signing collecting and disbursing the funds on N239,521,403.16 (Two Hundred and was reclassified under different ex-
actions we observed in the 2008 the cheques, each of the signatories one occasion. Thirty Nine Million, Five Hundred and pense heads. For instance, the sum of
ledger was that the lump sum of would have had the opportunity of The immediate steps which we Twenty One Thousand, Four Hundred N45, 250,000.00 (Forty Five Million,
N65,670,360.00 (Sixty Five Million, Six sighting/reviewing documents support- intend to take in further investigation and Three Naira, Sixteen Kobo) In the Two Hundred and Fifty Thousand
Hundred and Seventy Thousand,Three ing the request for payment. of this transaction are to schedule an year 2009, the reported expenditure Naira) was reclassified to website
Hundred and Sixty Naira) was paid • The disbursements were in interview with Yinka Idowu and con- for MSQ was stated as N70,781 hosting expenses ledger.
out from NSE’s First Bank of Nigeria respect of the same event i.e. an in- duct a search on her accounts. ,874.79 (Seventy Million, Seven Hun- We have conducted a detailed
account on two separate occasions but ternational road show held between dred and Eighty One Thousand, Eight review of major expense items under
in respect of the same purpose. June 22 and 3 July 2008 Maintenance of Staff Hundred ond Seventy Four Naira, the MSQ ledger for the years 2008 to
The first disbursement was made • The internal memoranda by Quarters Seventy Nine Kobo) after reclassifica- 2009.We have also conducted an oral
on 29 April 2008 while the second dis- which the request for each of the In the year 2007, the reported tion as against the actual budget of N interview with an officer of the NSE
bursement was made on 14 May 2008. disbursement was made was issued by expenditure for Maintenance of 113,000,000 (One Hundred and Thirty in respect of this ledger account. Our
Upon reviewing the documentation in the same person - Yinka Idowu. Staff Quarters (“MSQ”) was N127, Million Naira) suggesting that actual inquiries to date reveal the following:
support of the two disbursements we • The same staff members were 000,000.00 (One Hundred and Twenty expenses were N39,000,000 (Thirty • Contrary to the title of this led-
noted the following: listed as attendees on both occasions. Seven Million Naira) as against an an- Nine Million Naira) below budget.
• The disbursement of 29 April • While the first disbursement was nual budget of N 126, 000,000.00 (One Our investigations reveal that the Continues on page 31
BUSINESSDAY Tuesday 09 November 2010
Millions of naira disappear...
Continued from page 30
ger, expenses recorded in this ledger
relate to private residences of the DG,
ADG and senior management;
• Sometimes, the expenses (es-
pecially in respect of diesel supplies)
were for houses of persons who were
not officers of the NS,E. Several sup-
plies were made to houses of former
staff of the NSE.
• The sums expended and record-
ed in this ledger were not deducted
from the allowances due to the DG or
ADG or other staff members on behalf
of whom the expenses were incurred.
• The alleged justification for these
purchases is that in the DG I S remu-
neration package, utility is “FREE”.
It is however questionable whether
the expenses incurred can be classified
as Utility. Our review of the actual ex-
pense vouchers reveals the following
in summary:
• In the month of January 2008,
diesel expense under this expense
classification was in the sum N10,
433,000.00 (Ten Million Four hundred
and Thirty Three Thousand Naira). Dur-
ing one of the interviews conducted, we
were informed that the diesel expenses
in respect of the NSE building are not
recorded in this ledger and that the
ledger only contains supplies made to
private residences. There is nothing
in the NSE records so far reviewed
that indicate the actual residences to
which the supplies were made.We have
requested to speak with the person
contracted by the NSE to supply diesel
to these “quarters”;
• In the same month, the sum of N2,
200,000.00 (Two Million Two Hundred
Thousand Naira) was spent on pur-
chasing a glass cabinet for the quarters.
We sighted an invoice in respect of
this expenditure indicatingg that the
kitchen cabinet purchased was for the
DG’s house. A treadmill was bought
at the cost of N347, 500.00 (Three
Hundred and Fourty Seven Thousand
Five Hundred Naira) from Mega Plaza
and we sighted the invioice to this effect
and same was authorised by the DG.
• In February 2008 the ledger
reveals that personal items such as du-
vets, bathroom accessories were pur-
chased on this account and in March
2008 the sums of N3,300,000 (Three
Million, Three Hundred Thousand
Naira) and N2,513,140 (Two Million
Five Hundred and Thirteen Thousand
One Hundred and Forty Naira) were
expended on the purchase of furniture
from Hereos Furniture and Leather-
world respectively.We were furnished
with the invoices for the expenditure
but we have not been able to confirm
who the furniture was purchased for
or if they were delivered.
• In April 2008, an additional sum of
N25,000,000.00 (Twenty Five Million
Naira) was spent on furniture for the
“quarters”. There are no documents
to support this expense. A Genera-
tor was also purchased for the sum
of N5,040,000.00 (Five Million and
Forty Thousand Naira). We sighted
an invoice issued by the Company
that supplied the generator (“Etco”).
The invoice reveals that the generator
was purchased for the residence of the
Assistant Director-General (“ADG”).
Diesel purchases for the “quarters”
in the month of April totalled N4,
771,500.00 (Four Million Seven Hun-
dred and Seventy One Thousand and
Five Hundred Naira).
www.businessdayonline.com
Ndi Okereke-Onyiuke, former DG NSE
• In the month of June, Mercilia Lim-
ited was paid the sum of N2,063,375.00
(Two Million, Six Three Thousand,Three
Hundred and Seventy Five Naira) for
the renovation of the ADG’s house in
Omole Phase 11. In the same month,
Mercilia Limited supplied the ADG’a
new 81 OKV A generator for the sum
of N3,861,600.00 (Three Million Eight
Hundred and Sixty One Thousand Six
Hundred Naira). There is however
no indication of where the generator
was supplied and installed. Mercilia
Limited was again paid the sum of
N2, 388,360.00 (Two Million Three
Hundred and Eighty Eight Thousand
Three Hundred and Sixty Naira) for the
renovation of a building. However, the
description and ownership of the build-
ing in respect of which the renovation
was made is not yet known. Further-
more, certain items were purchased
from Adam and Eve to the tune of N2,
087,400.00 (Two Million and Eighty
Seven Thousand Four Hundred Naira).
These items include beddings, toilet
items and window blinds.
• In the month of November 2008,
Mercelia Limited was paid the sum N5,
440,320.00 (Five Million Four Hundred
and Forty Thousand Three Hundred
and Twenty Naira) for the “electrical
installation and repair of generator”.
• In the month of December,
Adam and Eve was paid a total of
N7, 300,230.00 (Seven Million Three
Hundred Thousand.Two Hundred and
Thirty Naira). We sighted the invoice
for purchases totalling this amount.
The invoices relate to household
items and were approved by the
DG. We also sighted an invoice from
Liiyaz Dee Ventures for the sale of
Panasonic air conditioner for the sum
of N8, 500,000.00 (Eight Million Five
Hundred Thousand Naira). We have
not been able to verify where this air
conditioner was supplied.
Overall, we note that Mercilia Lim-
ited featured prominently in expenses
relating to this MSQ ledger. We are
currently conducting a search on the
said Company at the CAC and will
also review movements to and from its
accounts. Further investigations will fo-
cus on ascertaining the actual persons
to whom these items were delivered
where not already ascertained.
Staff Training
In the year 2007, the reported ex-
The expenses (es-
pecially in respect
of diesel supplies)
were for houses
of persons who
were not officers
of the NS,E. Sev-
eral supplies were
made to houses
of former staff
of the NSE
Full text
penditure on staff training was N463,
000,000.00 (Four Hundred and Sixty
Three Million Naira) as against a bud-
get of N80, 000,000.00 (Eighty Million
Naira) indicating that the sum of N383,
000,000.00 (Three Hundred and Eighty
Three Million Naira) was expended in
excess of the annual budget. We have
not been able to verify the actual ex-
penditure stated for 2007 for the same
reason stated above.
In the year 2008, the reported ex-
penditure for staff training was stated to
be N523,864, 125.30 (Five Hundred and
Twenty Three Million, Eight Hundred
and Sixty Four Thousand, One Hundred
and Twenty Five Naira,Thirty Kobo) af-
ter reclassification as against the actual
budget of N 123,864, 165.30 indicating
that the sum of N400,000,000.00 was
expended in excess of budget.
In the year 2009 the reported
expenditure for staff training was
stated to be N283, 000,000.00 (Two
Hundred and Eighty Three Million
Naira) after reclassification as against
the actual budget of N212, 000,000.00
(Two Hundred and Twelve Million
Naira) indicating that the sum of N71,
000,000.00 (Seventy One Million
Naira) was expended above budget.
We have reviewed all staff train-
ing expenses above the sum of N5,
000,000.00 (Five Million Naira) within
the year 2007 to date. Some of these
expenses include the following:
Asea Exco Meeting:
In a memo dated 5 February 2009,
captioned “Re ASEA Exco Meeting”
the following people were proposed
as delegates to attend the ASEA Exco
Meeting scheduled to take place in
Cairo, Egypt on 23-24 March 2009:
Prof Ndi Okereke Onyuike, Mr. Musa
Elakama; Mrs. Yinka Idowu and Mr.
Farooq Oreagba. The following en-
dorsements were made on the memo
as representing expenses for the trip:
DG/CEO:
R/ ticket $10,500
Estacode -$10,000
Warm clothing - $5,000
ADG:
R/Ticket $10,500
Estacode - $8,000
Warm Clothing - $3,000
2GMs:
R/Tickets $8,400
Estacode $5,000
Warm Clothing $1000
$14,200 x 2 = $28,400
Rate of conversion used was N 155 to $1
Total expenditure for this trip was
N11, 687,000.00 (Eleven Million Six Hun-
dred and Eighty Seven Thousand Naira).
The sum for the return ticket
for the delegates appears to be high
especially in view of the fact that it
was in respect of a trip to Cairo. In
view of this, further investigation will
focus on the following:
• Requesting for evidence of at-
tendance of this meeting;
• Interviewing the officer in charge
of NSE’s protocol/travels at the said
time; and
• Conducting a general survey to
determine the rate of air tickets to
Cairo, Egypt for the period of this trip.
Financial Training 15th - 19th
March, 2009, Dubai
A memo written by the GM/Head
of Corporate Affairs dated 2 Febru-
ary 2009 captioned “Financial Train-
ing 15th - 19th March 2009, Dubai,
states that the DG/CEO approved
31
the following to attend the attached
training in Dubai in March 2009: DG/
CEO; Asst. DG, GM (Corporate Af-
fairs and GM Compliance).
The figures expended on each
person including R/Ticket; Estacode
(and Misc for the DG) totalled
$56,505.00 (Fifty Six Thousand, Five
Hundred and Five Dollars) converted
at the rate of N170 -$1. We note
that the training was organized by
Terrapinn Financial.
In further investigation of this ex-
pense, we intend to contact Terrapin
Financial for (i) a list of delegates that
attended the training particularly
delegates from the NSE and for con-
firmation that the persons listed above
attended the training.
19 February 2010 transfer -
Public Private Partnership
- N5, 989,865.60
In the training and development
voucher file covering the period of this
payment we sighted a Sterling Bank
Debit Note No 0047339 dated 19
February 2010 evidencing the transfer
of EUR 27,859.84 (EUR 27,809.84
plus EUR 50 surcharge) at N215/EUR
1 to Class Construction and Property
Limited and the NSE’s Account No:
211/2111/212/110 was debited for
the said amount. We also sighted copy
of a letter dated 18 February 2010
from the NSE to Sterling Bank Plc
authorising the latter to transfer EUR
27,809.84 to Class Construction and
Property Limited and debit the NSE’s
account. During an interview with the
Principal Manager of NSE’s Accounts
Department we were informed that the
said Class Construction and Property
Limited is a bureau de change and that
the sum of EUR 27,859.84 paid to the
said company was meant for onward
transmission to the organizers of the
training, Terrapin Limited. We did not
sight any document in NSE’s records
which indicates that there was onward
transmission to Terrapin Limited.
An internal memorandum dated
16 February 2010 from the Head,
Strategy & Business Development
Directorate (Farooq Oreagba) to
the DG titled: “World Exchange
Congress” - Barcelona attached with
a Tax Invoice from Terrapinn Limited,
indicate that the following persons
were nominated for the Congress:
Mr. Lance Musa Elakama, Dr. On-
yewuchi Asinobi, Mr. Henry Onyekuru,
Mrs. Yinka Idowu, Mr. Binos Yaroe, Mr.
Farooq Oreagba, Mr. Bayo Egunbiyi and
Mrs. Onyenwe.
In further investigation of this ex-
pense our approach will be as follows:
• Conduct a search of Class
Construction Property Limited to
determine the nature of its business
and whether any member of the NSE
has an interest in the company;
• Confirm from Terrapin that it re-
ceived the sum of 27,809.84 Euros from
Class Construction Property Limited
on behalf of the NSE and in respect
of the World Exchange Congress held
in Barcelona in the year 2010. We will
alongside this, also request for a list of
ottendees/deleqotes at the conference.
• Require the nominees to provide
evidence of attendance of the training.
Tomorrow: 18 February 2010 FBN
1352689 - Training at Washington, DC, United
States - N10, 514,350.00 (Ten Million, Five
Hundred and Fourteen Thousand,Three
Hundred and Fifty Naira)
 Forensic Report
26 BUSINESSDAY Wednesday 10 November 2010 www.businessdayonline.com

On NSE Affairs
Day 3 Full text

The 12-day N10m

Washington training
18 February 2010 FBN US$15,000 per participant. The DG,
1352689 - Training at Wash- ADG, GM (RIT),Yaroe, Obaseki and
ington, DC, United States - J. Udoh were endorsed on the let-
N10, 514,350.00 (Ten Million, ter on 10 June 2008 by the DG to
Five Hundred and Fourteen attend the event.
Thousand, Three Hundred

W
and Fifty Naira)
e sighted a copy of a
leaflet for the above
referenced training.
The leaflet indicates
that the training was
organised by the Institute of Pub-
lic Private Partnerships, was titled
“Designing LegiSlative, Institutional,
and Regulatory Frameworks for Suc-
cessful Public - Private Partnerships”
and was scheduled to hold on March
1 - 12, 2010.
The DG, an AEM (Mr. Momoh)
and a Principal Manager (Mrs.
Ogambe) were nominated to at-
tend the training as shown in the
endorsements on the leaflet. The
total sum approved for disburse-
ment was US$68,275 at N154 to
$1 (i.e. N10, 514,350.00).
Further investigation of this ex-
pense will focus on the following:
• Contacting the organisers of
the training to confirm that the
above nominees attended the train-
ing /obtaining a list of attendees. The
contact details of the organisers are
as follows: (e-mail: training@ip3.org;
tel: 1 202 466-8930
• Requesting for evidence of at-
tendance from the nominees.
There was another disbursement
of the sum of N10, 514,350.00 in re-
spect of a training scheduled to take
place in Washington DC between
9th and 20th August 2010. The
disbursement was approved by the
DG on 25 January 2010 and refer-
ence was made to the leaflet for the
Ndi Okereke-Onyiuke, former DG NSE
expected to run for a period of nine
working days at the sum of N3.5
Million per delegate. From the said
letter, we note that the following
names were endorsed by the DG
to attend the training. They include:
Obaseki; Chinyere; Ezeju; Moham-
med Aliko N; and Lawrence. We
also sighted a Payment Voucher No.
0024467 dated 9 July 2008 indicat-
Administrators: Oracle 109”. In the
said letter, the training was expected
to run for a period of nine working
days at the sum of N3.5 Million per
delegate which will cover tuition
fees, course materials, tea and light
...The disburse-
refreshments, lunch and transport
between the hotel and the train-
ing centre. From the said letter, we
note that the following names were
endorsed by the DG to attend the
training: Obaseki; Chinyere; Ezeju;
Mohammed Aliko N; and Lawrence.
We sighted disbursements to
Obaseki, Chinyere, Ezeju, Moham-
med Aliko for the Oracle Training in
5 March 2008 - FBN 1089041 -
Asia Trading Convention - N25,
715,400
We sighted a Payment Voucher
dated 5 March 2008 in the sum of N25,
715,400.00 representing payment for
the Asia Trader & Investor Convention.
The Convention was held in
Malaysia between 22 and 23 March
2008. The delegates nominated to
attend the event include: President
of the Exchange and spouse (Con-
ference fee USD950 (Le. USD475
for each delegate), Cost of Ticket
USD44,200); DG/CEO (Ticket -
US$31,940); ADG (Ticket USD22,1
00); GM (C/A), GM (EM/SP), GM
(RIT) (Ticket - USD15,200 each); Dr.
(Mrs) Ogamba (Ticket - USD9,600);
One Council Member [Ticket -
USD22,100); Okezie Pascal (Ticket
- USD 11,430). The total sum ex-
pended on conference fee and ticket
were USD5,225 and USD209,070
respectively, and the naira equivalent
totalling the sum of N25,715,400.
Further investigation of this ex-
pense will focus on the following:
• Determining the average cost of
tickets to Malaysia around the period
in which this convention was held.
• Determining the actual par-
ticipants
• Confirming through interviews
that these sums were in fact paid to
the nominees.
• Requiring evidence of atten-
dance from those nominated to
attend and/or from the organisers
of the conference.

training scheduled for March 1 - 12,

2010 as per the endorsement dated
16 June 2010. The document used
in support of the disbursements
made for this training was a copy
of the document used to support
the training of March 1 -12 March
in Washington. Further steps which
shall be taken in investigating this
training will be largely the same as
those which will be taken in respect
of the March 2010 Washington DC
training.
9 July 2008 - Access Bank
345 - Oracle Training USA -
N17,500,000.00
We sighted a copy of Progenics’ let-
ter dated 11 June 2008 to the DG titled:
“Technical User Training for Sys-
tem Administrators: Oracle 109”.
In the said letter, the training was
ing that the sum N 17, 500,000.00
(Seventeen Million, Five Hundred
Thousand Naira) was paid to Pro-
genics in respect of this training.
We have already conducted a
search on Progenics at the CAC
and the outcome of this investiga-
tion will be discussed later in this
update. Further investigation of this
expense will focus on requesting for
evidence of attendance from the
nominees. We shall also be review-
ing the accounts held in the name
of Progenics to determine sources
of inflows and persons to whom
payments were made.
9 July 2008 - Sterl 1658 - Or-
acle Openworld Conference
- N10, 800,000.00
We sighted Progenics letter dated
11 June 2008 to the DG, NSE, titled:
“Technical User Training for System
ment was ap- USA; in the sum of US$228,200 (at N
120/US$1) with the Naira equivalent
proved by the DG as N27,384,OOO.00 added to the
course fee in the sum of N3,500,000
on 25 January 2010 per delegate.The total sum expended
was N44, 884,000.00; this was ap-
and reference was proved on 9 July 2008.
We also sighted disbursements
made to the leaf- to the DG/CEO, ADG, GM (RIT),
GM (Q), AGM (RIT), Consultant
let for the train- Tong Udo in the total sum of N27,
936,000.00 representing the costs
ing scheduled for of return tickets, estacode, miscel-
laneous, and course fees. This was
March 1 - 12, 2010 approved on 9 July 2008.
We also sighted a Progenics let-
as per the en- ter dated 11 June 2008 to the DG,
NSE titled:
dorsement dated “Oracle Open World Conference
- San Francisco 2008. This event was
16 June 2010 scheduled to hold in San Fronclsco.
USA on 21 - 25 September 2008
and the cost of the conference was
2004 Audit
We sighted documents which
indicate that certain tax consultants
from the Lagos State Government
came to audit NSE’s account in
2008. The tax consultants came to
the conclusion that NSE had been
under remitting taxes including
PAYE and VAT. Following the audit
conducted by the government
consultants, NSE’s tax liability was
revised to about N90, 000,000.00
(Ninety Million Naira).
We also sighted an internal
memorandum seeking approval for
payment of the sum of N14,000,000
(Fourteen Million Naira) to these
tax consultants for PR for their
agreement to reduce NSE’s tax li-
ability from over N90,000,000 to
Continues on page 27
BUSINESSDAY Wednesday 10 November 2010
The 12-day N10m Washington training
Continued from page 26
N12,970,000.
During an interview with the
Principal Accountant of the NSE we
were informed that the sum of N 14,
000,000.00 was given to the govern-
ment consultants in cash. We were
also informed that the cash payment
was made to the leader of the team,
Bamidele Nasiru.
We are currently making attempts
to contact the said Bamidele Nasiru.
Contracts
We obtained a list of contractors
from the Administrative Department
of the NSE.
We came up with an additional
list of Contractors based on contract
documents reviewed. Our approach
in respect of these contractors is as
follows:
• Conduct searches at the CAC to
determine whether there are any re-
lated party transactions. Our searches
will focus on the shareholders and
directors of the company.
• Where the search indicates that
the shareholders or directors of such
companies comprise of any Council
Member, NSE Management or Staff,
we shall check the bank accounts of
the NSE to determine the frequency
and quantum of payments to such
company and the purpose for which
the payments were made particularly
where such payments exceed the sum
of N5,QQQ,QQQ
• As an alternative or in addition
to the above, we shall also trace the
company accounts of those companies.
To date, we have conducted search-
es on the following companies;
• Progenics Corp Limited
• Harris AIB Associates Limited
• Pathway Communications Limited
• Sonex Clinics Limited
• AD Consulting Limited
• Coral Properties Limited
• Dimensions Data Limited
• Candy Floss Limited
• Avrosyn Data Systems Limited
• Global Outdoor Systems
• Kingdom Securities Limited
• KSL Consultants Limited
Searches are still ongoing in respect
of the following Companies/Business
names:
• Mercilia Electromech Limited
• Centric Industries Limited
• Ingita & Co.
• Primonsong Petroleum Limited; and
• Hailsham Nigeria Limited
• Class Construction and Property
Limited
• Dialink Limited
• Progenics Enterprises
• Liiyaz Dee Ventures
• Tahail Crystal Ltd
• Hadassa Investment Security Ni-
geria Ltd
• Quantum Classic Limited
As at date, our search at the CAC
reveals the following:
• That only Mrs.Yinka Idowu and
Mr. Emmanuel Adekoyeju Idowu are
the owners and directors of Candy
Floss Limited. Mrs. Yinka Idowu was
the former head of the Corporate
Affairs Services of the NSE and
she was principally responsible for
the international road shows, the
merits award, long service award
e.t.c. The said Candy Floss Limited
received the sum of over N342, 378,
428 (Three Hundred and Forty Two
www.businessdayonline.com
Million, Three Hundred and Seventy
Eight Thousand, Four Hundred and
Twenty Eight Naira in respect of
the Long Service Award organized
by the Exchange in 2008. We under-
stand that Mrs.Yinka Idowu was also
Head of Corporate Services and was
responsible for organizing the long
service award.
• Progenics Corp Limited: One of
the subscribers to the Memorandum
and Articles of Association of this
Company and Director as at incorpora-
tion was the former DG, Ndi-Okereke
Onyuike. At the time this company
was incorporated in 1996 she owned
250,000 shares of the 4.4m share capi-
tal of the company. However, her name
does not appear in the FORM CAC 2
for 2007 as one of the shareholders of
the company and CAC records also in-
dicate that she ceased to be director in
1997.We however note that Progenics
Enterprises appears as owning 651,000
shares.We intend to conduct a further
search to determine the owners of
Progenics Enterprises.
• That Kingdom Securities Lim-
ited and KSL Consultants Limited
are owned by Mr. Uzoma Henry
Onyekuruhe former General Man-
ager of the NSE’s Compliance Unit.
The said company was responsible
for the reactivation of the 2nd tier
and creation of the 3rd tier market
project between 2006 and 2007 and
received the sum of N125.750,000.00
(One Hundred and Twenty Five Million,
Seven Hundred and Fifty Thousand
Naira) from the NSE.
We are currently reviewing the
contract and investigating whether
the said services were rendered by
the company in question.
Surplus Sharing
In the year 2006, a total sum of
N402,000,000 (Four Hundred and Two
Million Naira) was paid out of which
both staff and management were paid
N241,200,000 (Two Hundred and,
Forty One Million Two Hundred Thou-
sand Naira) while Council members
At the time this com-
pany was incorporat-
ed in 1996 she owned
250,000 shares of the
4.4m share capital of
the company. Howev-
er, her name does not
appear in the FORM
CAC 2 for 2007 as
one of the sharehold-
ers of the company
and CAC records
also indicate that she
ceased to be director
in 1997
were paid N 160,800,000 (One Hun-
dred and Sixty Million Eight Hundred
Thousand Naira).
We sighted the position paper
which is attached as part of the sup-
porting documents for the payment.
Although the position paper was not
signed, we were informed by the Prin-
cipal Accountant that the same was
prepared by the ADG. This position
paper provides in part as follows:
“Position paper on surplus sharing
for 2006 The Management wishes
to recommend to the Council the
payment of N402 million as surplus
sharing for the year ended 31 st
December, 2006. This amount rep-
resents 20% of the pre-tax surplus
already reported to the Finance
and General Purpose Committee of
the Council. If this is approved by
the Council, the reported pre-tax
Full text
surplus will come to N.1608billion.”
Management is therefore seeking
the Council’s approval to make the
above payment and to reflect same
in the Management accounts hereby
presented for your kind consideration
and approval.”
The journal entry however re-
corded the payment to council as
“council expenses” and credited
sundry creditors.
In the year 2007, the sum of N1,
171,837,486 was paid to Staff Mem-
bers of the NSE as productivity bonus.
While the sum of N710,000,000 was
shared among 15 Council members
with Oba Otudeko, the former
President of the General Council
and the DG getting the highest i.e.
N 115,000,000 and N75,000,000
respectively.
In 2009, the sum of N720, 000,000
was paid to Staff members while
the sum of N480, 000,000.00 was
paid to Council Members. The de-
tails on the voucher for payment
dated 04/03/2009 of the sum of N720,
000,000.00 in 2009 read as follows:
“Being payment of surplus sharing to
Council Members and staff in respect
of 2008 financial year.”
The payment voucher dated 27
February 2009 of the sum of N480,
000,000 details of which read “Pay-
ment for surplus sharing, Council
Members for the year 2008 as per the
attached” was approved by the DG
and ADG and received by Josephine Ig-
binosun, the Secretary to the Council.
Although, these sums were paid
as part of staff remuneration they
were not reflected as a line item in
staff costs but were included in the
Sundry expenses.
In a memo prepared by the ADG,
Lance Musa Elakama, dated 4 March
2009 and written to the DG/CEO
stated as follows:
“2008 Surplus Sharing
You will recall that at the National
Council Meeting of 27 February 2009,
approval was given for the following
provisions to be made in the Unaudited
27
Management Accounts for the year
ended 31St December 2008 as follows:
Management &
Staff 720,000,000.00
Council Members 480,000,000.00
Others 500,000,000.00
1,700,000000.00
Please approve to enable us effect
the accruals in the account.
Signed
Lance Musa Elakama.”
At all relevant times to this sharing
of surplus, the NSE was registered as
a company limited by Guarantee.Thus,
the said surplus sharing appears to
be a contravention Sections 26 and
27(4) of CAMA and the clauses 6 of
the Memorandum and Articles of As-
sociation of the NSE.
During an interview with the Com-
pany Secretary, Josephine Igbinosun,
she stated in summary as follows with
regard to the surplus distributions:
• That the sums shared were pro-
ductivity bonuses for staff and formed
part of staff remuneration;
• That sums paid to Council Mem-
bers was not productivity bonus.
• That although the minutes of
March 2009 refer to productivity
bonus, she had simply recorded the
deliberations wrongly and the term
productivity bonus was only in rela-
tion to staff members. In respect of
Council Members, the sums they
received were for training and the
letter accompanying the cheques
forwarded to the Council Members
stated so explicitly.
• That she had never advised
the Council that the distribution of
surplus was a contravention of the
provisions of CAMA because she
was never consulted and even if she
had, it would not have changed their
decision to make the distribution.
The position paper and other sup-
porting documents attached to the
schedules of payment of the bonuses/
surplus do not support Josephine’s
position. First, the letters she refers
to as explicitly stating that the sums
were meant for training/visitation of
other stock exchanges were written
and forwarded to the Council Mem-
bers before the meeting in which she
alleges that the productivity bonus
was approved. Secondly, the said let-
ter refers to a meeting of Council
held in February where it was de-
cided that Council members be given
money for training/visitation of stock
exchanges. We have reviewed all the
minutes of meetings covering this
period, and there is no record that
such deliberations/resolutions were
made. There is nothing in the com-
pensation/remuneration package of
staff members of the exchange which
states that they may be paid bonuses.
The records so far reviewed there-
fore suggest, contrary to Josephine’s
assertion, that the sums distributed
to staff and council members was
a distribution of profit contrary to
clear provisions of statute.
With regard to the above, further
investigation will focus on the follow-
ing areas:
• Determining whether the· distri-
bution made to staff/council members
was subject to tax. If it was not, it fur-
ther buttresses the position that the
distribution was a sharing of profits;
• Conduct interviews with Council
Member.
Tomorrow: NSE Consult
 Forensic Report
28
On NSE Affairs
Day 4 Full text
NSE Consult under
investigation over
insider trading
NSE Consult
N
SE Consult is a wholly owned
subsidiary of the NSE and is
the investment and private
sector arm of the exchange
which takes proprietary trad-
ing positions on behalf of the NSE.
It was observed that the NSE
transferred money to NSE Consult
for the purpose of trading and in-
vesting on the stock exchange on its
behalf. Investigation is ongoing as to
whether NSE Consult was used as a
tool for insider trading in contraven-
tion of Section 112 of the Investment
and Securities Act.
Possible areas of contravention
In order to determine the possible
charges and causes of action against
the former/current officers of the
NSE and what form of jail term,
compensation/ restitution, if any, that
the NSE would be entitled to we are
reviewing the following legislation:
• The Investments and Securi-
ties Act;
• Companies and Allied Matters Act;
• The Corrupt Practices and
Other Related Act;
• The Economic and Financial Crimes
Commission (Establishment) Act;
• Miscellaneous Offences Act
Cap. M 17 Laws of the Federation
of Nigeria, 2004;
• Advance Fee Fraud and Other
Fraud Related Offences Act; and
• The Criminal Code Act.
Subject to our final findings on the
transactions being reviewed, some
sections of these legislations which
may form the basis of prosecution
are as follows:
• Section 1 of the Advance Fee
Fraud and Other Related Offences
Act and Section 419 of the
Criminal Code which respectively
provide for the offence of obtaining
by false pretence/ felony and obtain-
ing by false pretence/cheating;
These provisions could be used
with respect to the following ques-
tionable transactions highlighted
above:-
Transactions under the Long
Service Award;-
Receipt of money for the pur-
chase of items (Rolex watches, cars
e.t.c) for the Long Service Award,
which items are unaccounted for/
were not used for their purpose of
purchase/ seem not to have been
purchased;
Duplication of money paid for the
payment of the special presentation
to employees who had worked with
the NSE for 25 - 30 years.
Transactions under Business
Travels Overseas:-
Duplication of the payment of the
sum of N65, 670,360.00 (Sixty Five
Million, Six Hundred and Seventy
Thousand, Three Hundred and Sixty
Naira) for an international road
show.
Transactions under Mainte-
nance of Staff Quarters
Use of the NSE funds to purchase
diesel and other products for officers
of the NSE under the false pretence
that they are official residences;
Use of the NSE funds to purchase
diesel and other products for non
members of staff of the NSE.
Receipt of money for purchase of
products which were never supplied
Transactions under Staff
Training
Inflation of the ticket Costs
Receipt of Money for training and
not attending the said training
Duplication of payments in re-
spect of one Convention/ training
seminar
• Section 8 of the Advance Fee
Fraud and Other Related Expenses
Act and Section 422 of the Crimi-
nal Code which respectively provide
for the offence of conspiracy and
conspiracy to defraud.
Aside from those who actually
committed the offences all those
who were involved in various aspects
of the offence can be charged under
these sections.
• Section 18 and 46 of the
Economic and Financial Crimes
Commission (Establishment) Act
which provide that offences involv-
ing financial crimes such as fraud,
bribery, looting, embezzlement, tax
evasion and any form of financial
malpractices.
These provisions are very encom-
passing and thus cover all the
questionable transactions high-
lighted in this report.
• Section 8 and 9 of the Cor-
rupt Practices and Other Related Of-
fences Act, Section 427 of the Criminal
Code and Section 17 of the Economic
and Financial Crimes Commission
(Establishment) Act (EFCC Act) re-
spectively provide for the offence of
corruptly receiving or giving cash or
kind, receiving property stolen or
fraudulently obtained and retention of
proceeds of criminal conduct.
These provisions cover the fol-
lowing questionable transactions
highlighted above:
BUSINESSDAY Thursday 11 November 2010
Transactions under the
Long Service Award:
Receipt of money for the pur-
chase of items (Rolex watches, cars
e.t.c) for the Long Service Award,
which items are unaccounted fori
were not used for their purpose of
purchase/ seem not to have been
purchased;
Receipt of items (Rolex watches,
cars e.t.c) which value exceeded the
amount stated in Clause 5 of the
NSE Code of Conduct for Employees
(Senior Staff).
Duplication of money paid for the
payment of the special presentation
to employees who had worked with
the NSE for 25 - 30 years.
Presentation of the boat and 3
cars owned by the NSE during the
Long Service Award.
Accepting the presentation of the
boat as a long service award.
Transactions under Busi-
ness Travels Overseas:
Duplication of the payment of
the sum of N65, 670,360.00 (Sixty
Five Million, Six Hundred and Sev-
enty Thousand, Three Hundred and
Sixty Naira) for an international
road show.
Transactions under Main-
tenance of Staff Quarters
Use of the NSE funds to purchase
diesel and other products for officers
of the NSE under the false pretence
that they are official residences;
Use of the NSE funds to purchase
diesel and other products for non
members of staff of the NSE.
Receipt of money for purchase of
products which were never supplied
Transactions under
Staff Training
Inflation of the ticket Costs
Receipt of Money for training and
not attending the said training
Duplication of payments in re-
spect of one Convention/ training
seminar.
Transaction under the
2004 Audit
The approval and payment of N
14, 000,000.00 PR to officials of the
Lagos State Government for their
agreement to reduce NSE’s tax li-
ability.
• Section 37 f the Investment and
Securities Act places an obligation on
the NSE to keep and maintain proper
books of account and records relating
to its operations, Section 303 places
a penalty on any person who violates
or contributes to the violation of any
provisions of the ISA and Sections 436
and 438 of the Criminal Code make it
an offence for an ‘official of a company
www.businessdayonline.com
to engage in fraudulent/false accounting;
These provisions cover the clear
false accounting/ improper book
keeping in respect of the accounts
of the NSE.
• Section 33 of the Value Add-
ed Tax Act and Regulation 19 of the
P A YE Regulations 2002 state that
tax evasions, failure to remit taxes,
submission of false and incorrect
statements or returns are offences.
These provisions cover the clear
false accounting/ improper book
keeping in respect of the accounts of
the NSE, the false returns that were
made regarding the remuneration of
staff and the failure to pay tax with
respect to the bonus payments made.
In addition to the above,
possible civil claims include
the following:
(i) conversion
(ii) negligence &
(iii) Breach of the employment
obligations & duties imposed by the.
In each of these causes of action
possible reliefs that can be sought by
NSE include restitution of the monies
that were converted, monetary com-
pensation for damages and loss that
the NSE may have suffered as a result
of the breach of employee obligations
or negligent conduct.
Concluded