Forensic Report on NSE Affairs

8/8/2019 Forensic Report on NSE Affairs

1/7

Status update/report on the investigation ofthe affairs of the Nigerian Stock Exchange

OnNSE Affairs

www.businessdayonline.comMonday 08 November 2010BUSINESSDAY38

ReportReportForensic

The Securities and Exchange Com-mission (hereinafter referred toas SEC) received, allegationswhich suggest that the affairsof the Nigerian Stock Exchange.

(hereinafter referred to as NSE orthe Exchange) may have been man-aged in a manner that is detrimental,to the interest of the investing public).These allegations derive principallyfrom two sources that include (i) theissues raised by a team of SEC Inspec-tors in a report to SEC following theannual investigation of the NSE cardedout between 14 to 18 September 2009and (ii) allegations against the NSEreceived from industry stakeholdersin general and notably the formerPresident of the Council.

Based on the gravity of these al-legations and the necessary investiga-tive steps that would be needed toveryify the allegations, the allegationsrequiring further investigation werenarrowed down to a little over 20(twenty), namely:

No evidence of meetings of thecommittees of the Council;

MEMART of NSE was altered byresolution of 11 Nov 2006, the altera-tion was not approved by the SEC andcopy cited was not certied by CAC;

No evidence of disciplinary ac-tion taken on the 2,715 complaints(involving the unauthorized sale ofshares, withholding of proceeds ofsale) reported to the NSE;

Lack of effective oversight mecha-

nism of quoted companies/ineffectivesurveillance and appraisal of the internalstructure and operations of dealing mem-bers (some members had liquidity ratiosof zero and negative values in breach ofArticle 15(e) and section 32 of the ISA;

No evidence/report indicatingthe existence of a risk assessmentsystem for members as required byArticle 15(d) of the Exchange Rules;

All the contributions to Inves-tors Protection Fund were placed inxed deposit account with FBN withaverage interest rate of 8 percent p.a;

Moribund Companies were stillon the Daily Ofcial List of NSE;

Absence of policy and procedureon listing and delisting of quoted com-panies and absence of written policy

on technical suspension and failure tonotify the SEC when companies areplaced on technical suspension;

Exorbitant charges in the form of10 percent management fees; profes-sional audit fees of the Exchange werealso too high;

Total expenses of the NSE are toohigh 2006 to 2008 expenses consumedmore than 80 percent of income/undisciplined spending and nancialimprudence;

Present share capital of theexchange is not in tandem with SECrequirement of N500, 000,000.00 (FiveHundred Million Naira) as the sharecapital of the Stock Exchange;

Wrong classication of Assets inthe nancial statement. For example,

there was no distinction between of-ce equipment, plant and computer/software. These classes of assets werelumped together into one class of assets;

Despite the fact that the sumof N1, 615,000,000 (One Billion, SixHundred and Fifteen Million) has beenexpended on the Coral Properties

Project, the project has come to a halt; Failure to implement an effectivesuccession plan for the senior manage-ment team of the NSE;

Failure of NSE to present au-dited accounts for the year endedDecember 2009 and failure to produceinterim and nancial statements forthe rst and second quarters of 2010

Continues on page 39

Lagos trading oor of the Nigerian Stock Exchange

Full textDay 1


2/7

for consideration of the Finance andGeneral Purpose Committee;

That NSE has substantial liabilityin 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 paidto the past president of the Council;

That members of the Councilwere receiving money from companiesfor listing;

That there was an illegal require-ment by the Exchange that certainspecic companies must be used forprinting of listing documents; and

That wages, training and IT ex-penses were overstated.

Following a high level review ofthe nancial records of the NSE bya team of experts from KPMG, thefollowing expense classications wereflagg-ed for further consideration/investigation: Salaries & Allowances;

Staff training costs; Medical allow-ances; Public enlightenment; Vehiclemaintenance; Business travel; NewATS/CSD; General Exp & Diesel; Soft-ware upgrade; Market Dev. Expenses;Maintenance - Staff quarters; WebsiteHosting Expenses; Gratuity & PensionFund; Long Service Award; Conversionof Shares and NSE Consult.

Our current investigation is there-fore focused on the areas itemizedabove in addition to the followingareas which were gathered from theallegations made against the NSE: TheInvestors Protection Fund; The Pen-sions Contributions; and The CoralProperties Project.

As at date, we have begun consid-eration of all the above listed areas butour current ndings relate largely tothe following expense classications:

Long Service Award; (ii) OverseasBusiness Travels; Maintenance of StaffQuarters ; Staff training; Salaries & Al-lowance and NSE Consult

In relation to investigations regard-ing the above mentioned expenseclassications we have interviewed thefollowing members of staff:

Fidelis Imiehiakhe, a Princi-pal Manager in the Accounts Depart-ment of the NSE

Josephine Helen Igbino-sun, an Assistant General Managerin the Legal Department of the NSEand Secretary to the National Council.

David Oleka, a Manager inthe Accounts Department.

We have also conducted searchesat the Corporate Affairs Commission(CAC) on some of the companieswhich had dealings with the NSE in theperiod under review and our observa-tions from the searches are containedin the latter part of this update. Weare also reviewing relevant legislation/regulation to determine the specicareas of contravention if any.

Our investigation so far has re-vealed certain questionable transac-tions which seem to suggest that someof the allegations made may have merit;

...The investigation of theaffairs of the NigerianStock Exchange

we have thus below provided a generaloverview of the expense classicationsto which our current ndings relate,our nding on questionable transac-tions and immediate steps to be takenin further investigation.

Our investigation so far reveals

that the following allegations mayhave merit: Total expenses of the NSE are

too high, 2006 to 2008 expensesconsumed more than 80 percent ofincome/undisciplined spending andnancial imprudence;

That there has been sharing ofmoney among council members.

That the sum of N400, 000,000(Four Hundred Million Naira) was paidto the past president of the Council.

That wages, training and IT ex-penses were overstated.

Our ndings on some of the ex-pense classications reveal that:

There were questionable pay-ments of productivity bonuses toCouncil members and members of staff;

Questionable business travel ex-penses which were in some instances

reclassied to other expense lines; Questionable staff training ex-penses which were in some instancesreclassied to other expense lines;

Questionable market develop-ment and public enlightenment ex-penses which were in some instancesreclassied to other expense lines;

Questionable contracts awardedto companies owned by members ofstaff (or companies in which membersof staff owned shares);

Duplication of payments; Purchase of assets by the NSE

which either disappeared from thebooks of the company or were sub-sequently written off the books underquestionable circumstances;

The use of funds belonging to theNSE for the personal use/maintenanceof staff members and their residences.

QuestionableTransactions

The Long Service AwardThe Long Service Award does not

appear as a budget item in 2007 and2009. The documents reviewed indicatethat the Long Service Award (litheAward) took place in the year 2008.

Our review indicates that the sum ofN397, 974,573.82 (Three Hundred andNinety Seven Million, Nine Hundred andSeventy Four Thousand, Five Hundredand Seventy Three Naira and EightyTwo Kobo) was reported as the actualexpenditure in respect of the Award.However, upon reviewing the ledgerwe observed that contrary to NSEsreport, the sum of N592,974,573.82(Five Hundred and Ninety Two Million,Nine Hundred and Seventy Four Thou-sand, Five Hundred and Seventy ThreeNaira and Eighty Two Kobo)was actuallyexpended prior to reclassication ofN 195, 000,000.00 (One Hundred andNinety Five Million Naira) to marketdevelopment expenses.

The Corporate Affairs Departmentof the NSE led by Yinka Idowu wasresponsible for organizing the Award.

Our review also indicates that the

sum of N342, 378, 428 (Three Hundredand Forty Two Mill ion, Three Hundredand Seventy Eight Thousand, FourHundred and Twenty Eight Naira) wasreceived by Candy Floss Limited. Thissum represented the budget of the NSEfor the Staff Long Service Award andwas paid as sundry expense in respectof the Long Service Award. Our searchat the CAC reveals that Candy FlossLimited is owned by Yinka Idowu.

Our review further shows thefollowing:

That a boat (yacht) shown in theaccounts of the NSE to have beenpurchased for the sum of N37, 000,000.00 (Thirty Seven Million Naira)for the stock exchange in early 2008was written off the books at the end ofthe same year by its allocation to theLong Service Award account as a gift.

Currently we have not seen anydocumentation which shows whowas presented with the said boat.Our review of the Award Ceremonydocuments shows no boat presenta-tion, we enquired from Mr. FidelisImiehiakhe and Mr. David Oleka (bothof whom attended the ceremony) ifthere was such a presentation theyhad no recollection that a boat wasawarded during the ceremony.

There are however indications

(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 forpresentation to employees who hadserved the NSE for 10 years, that laterin the same year Candy Floss Limitedwas given N95, 000,000.00 (NinetyFive Million Naira) for an additionalpurchase of 91 Rolex watches and sub-sequently after the award cerem6nyanother 10 Rolex watches at the costof N46, 000,000.00 (Forty Six MillionNaira) were purchased.

We observed that the Award Cer-emony document shows that only 73out of the 1 65 Rolex watches pur-chased were actually presented to theawardees which means that 92 Rolexwatches valued at N99, 500,000.00(Ninety Nine Million, Five HundredThousand Naira) are unaccounted for.

We further observed that theschedule containing the list of staffmembers eligible for long serviceawards 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 (OneHundred Million Naira), for the purchaseof 14 cars to be presented to employeeswho had served the NSE for 25 - 30years, at the same time 3 cars purchasedby the NSE in January and March 2008for 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 carspurchased for N29,000,000.00 (TwentyNine Million Naira) were written offthe books at the end of the same yearby their allocation to the Long ServiceAward account as part of the gifts givenduring the ceremony.

However, the Award Ceremony doc-ument shows that only 7 people werepresented with cars compared to the14 cars which were to be purchased byCandy Floss Limited and the 3 additionalcars written off, meaning that 10 cars

valued at approximately N66, 142,857.00(Sixty Six Million, One Hundred andForty Two Thousand, Eight Hundred andFifty Seven Naira) are unaccounted for.

It was again noted that althoughCandy Floss Limited was given the sumof N50, 000,000.00 (Fifty Million Naira)for the special presentation to employ-ees who had worked with the NSEfor 25 - 30 years, another sum of N55,000,000.00 (Fifty Five Million Naira) wasagain disbursed in respect of the specialpresentation which sum was to includea luxurious jeep and a special gift of theformer Director Generals choice.

This suggests that there was aduplication of payment and a doublepurchase of a luxury car for the formerDirector Generals 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 wereawarded whilst although Candy FlossLimited was also given N5, 400,000.00(Five Million, Four Hundred ThousandNaira) for the purchase of 45 deepfreezers only 33 were awarded thus 7televisions and 12 deep freezers valuedat N3, 540,000.00 (Three Million, FiveHundred and Forty Thousand NairaOnly) are unaccounted for.

Also noted is the fact that Articles52 of the Employee Handbook forManagement and Senior Staff as wellArticle 55 of the Employee Handbookfor Junior staff limit the value of gifts/cash that can be given to employeesfor 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 bepresented to only members of staff, butwe observed that former members ofstaff were also given awards.

Further investigations to be carriedout in respect of the Long ServiceAwdrd will focus on determining thefollowing among others:

Whether any payments weremade by Candy Floss Limited or itsagent/ofcers to the accounts of of-cers of NSE including the formerD.G, ADG e. t.c;

Whether the amount received byCandy Floss was justied when com-pared with the market value of servicesrendered at the time under reference;

Whether there was councilapproval 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 wasin contravention of corporate gover-nance principles, the code of conductin operation at the NSE and/or otherrules, regulations or legislation; and

Whether the transaction wasin contravention of corporate gover-nance principles, the code of conductin operation at the NSE and/or otherrules, regulations or legislation;

Whether the 74 Rolex watcheswere actually purchased by the NSEand if there is any relationship betweenthe NSE and the companies fromwhom they were allegedly purchased;

What formed the basis for theamounts spent on purchasing each ofthe gifts presented;

Why former staff members were

awarded gifts in breach of the provi-sions of the Staff Handbook;

Conrm whether the presenteditems were ever purchased and if theywere where they are presently; and

Possible causes of action, if any,against Yinka Idowu and other associ-ated persons.

Continued from page 38

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

www.businessdayonline.comMonday 08 November 2010BUSINESSDAY 39

Tomorrow: Business travels overseas

Full text


3/7

Business Travels

Overseas

In the year 2007 the reportedexpenditure for the expenseclassification, Business TravelsOverseas (BTO) was N4S0,000,000 (Four Hundred and Fifty

Million Naira) as agJainst an annualbudget of N60, 000,000 (Sixty MillionNaira) indicating that the sum of N390,000,000 (Three Hundred and NinetyMillion Naira) i.e. 650% was expendedin excess of the annual budget. Wewere unable to verify the actual ex-penditure reported for 2007 as wewere informed by ofcers of the ITdepartment that the ledger accountshad not been computerized in 2007.

In the year 2008, the reported ex-penditure for BTO was stated to beN615, 736,301.62 (Six Hundred andFifteen Million, Seven Hundred andThirty Six Thousand, Three Hundredand One Naira, Sixty Two Kobo) afterreclassication.

Our investigations reveal that the to-tal sum expended on BTO in 2008 priorto reclassication was N 1, 900,000,000(One Billion and Nine Hundred MillionNaira). The sum Nl, 300,000,000 (OneBillion and Three Hundred Million Naira)was reclassied under different expensedescription/classes.

For ins tance , the sum o f N953,000,000 (Nine Hundred andFifty Three Million Naira) was movedto the expense classication SoftwareUpgrade and immediately expensedas opposed to being capitalized.

In the year 2009 the reportedexpenditure for BTO was stated tobe N297, 000,000.00 (Two Hundredand Ninety Seven Million) after reclas-sication as against the actual budgetof N321, 000,000.00 (Three Hundredand twenty One Million).

Our investigations reveal that thetotal sum expended on BTO in thatyear prior to reclassication was N782,135,835.40 (Seven Hundred and EightyTwo Million, One Hundred and ThirtyFive Thousand, Eight Hundred andThirty Five Naira, Forty Kobo) The sumof N485, 034,833.74 (Four Hundredand Eighty Five, Thirty FoJr Thousand,Eight Hundred and Thirty Three Naira,Seventy Four Kobo) was reclassiedunder different expense heads.

One of the questionable trans-actions we observed in the 2008ledger was that the lump sum ofN65,670,360.00 (Sixty Five Million, SixHundred and Seventy Thousand, Three

Hundred and Sixty Naira) was paidout from NSEs First Bank of Nigeriaaccount on two separate occasions butin respect of the same purpose.

The rst disbursement was madeon 29 April 2008 while the second dis-bursement was made on 14 May 2008.Upon reviewing the documentation insupport of the two disbursements wenoted the following:

The disbursement of 29 April

Millions of naira disappear in questionable businesstravels, maintenance of staff quaters, training...

OnNSE Affairs

www.businessdayonline.comTuesday 09 November 2010BUSINESSDAY30


2008 was approved by only the ADGwhile that of 14 May 2008 was ap -proved by the DG alone. Our inquiriesreveal that although each disburse-ment may have been approved by onlyone of the two approving authorities,it would have been impossible to issuea cheque in respect of either paymentwithout the signature of both the DGand ADG on the cheque. Our inquiriesalso suggest that at the time of signingthe cheques, each of the signatorieswould have had the opportunity ofsighting/reviewing documents support-ing the request for payment.

The disbursements were inrespect of the same event i.e. an in-ternational road show held betweenJune 22 and 3 July 2008

The internal memoranda bywhich the request for each of thedisbursement was made was issued bythe same person - Yinka Idowu.

The same staff members werelisted as attendees on both occasions.

While the rst disbursement was

supported by handwritten documentdetailing the sums to be paid out to eachattendee of the road show, the seconddisbursement was only supported by aphotocopy of the initial documents usedto support the rst disbursement.

We intend to conduct an interviewwith one of those nominated to attendthe international road show and withthe ofcer that was responsible forcollecting and disbursing the funds onone occasion.

The immediate steps which weintend to take in further investigationof this transaction are to schedule aninterview with Yinka Idowu and con-duct a search on her accounts.

Maintenance of StaffQuarters

In the year 2007, the reportedexpenditure for Maintenance ofStaff Quarters (MSQ) was N127,000,000.00 (One Hundred and TwentySeven Million Naira) as against an an-nual budget of N 126, 000,000.00 (One

Hundred and Twenty Six Million Naira)indicating that the sum expended wasN 1, 000,000.00 (One Million Naira)below the annual budget. We were un-able to verify the actual expenditurereported under the expense classi-cation in 2007 for the same reasonstated in respect of the BTO in 2007.

In the year 2008 the reported ex-penditure for MSQ was reported to beN239,521,403.16 (Two Hundred andThirty Nine Million, Five Hundred andTwenty One Thousand, Four Hundredand Three Naira, Sixteen Kobo) In theyear 2009, the reported expenditurefor MSQ was stated as N70,781,874.79 (Seventy Million, Seven Hun-dred and Eighty One Thousand, EightHundred ond Seventy Four Naira,Seventy Nine Kobo) after reclassica-tion as against the actual budget of N113,000,000 (One Hundred and ThirtyMillion Naira) suggesting that actualexpenses were N39,000,000 (ThirtyNine Million Naira) below budget.

Our investigations reveal that the

total sum expended on Maintenanceof Staff Quarters in that year prior toreclassication was N 135, 067,773.39(One Hundred and Thirty Five Million,Sixty Seven Thousand, Seven Hundredand Seventy Three Naira, Thirty NineKobo), the sum of N64, 285,898.60(Sixty Four Million, Two Hundred andEighty Five Thousand, Eight Hundredand Ninety Eight Naira, Sixty Kobo)was reclassied under different ex-pense heads. For instance, the sum ofN45, 250,000.00 (Forty Five Million,Two Hundred and Fifty ThousandNaira) was reclassified to websitehosting expenses ledger.

We have conducted a detailedreview of major expense items underthe MSQ ledger for the years 2008 to2009. We have also conducted an oralinterview with an ofcer of the NSEin respect of this ledger account. Ourinquiries to date reveal the following:

Contrary to the title of this led-

Continues on page 31

Day 2 Full text


4/7

The expenses (es-pecially in respect

of diesel supplies)

were for houses

of persons who

were not ofcers

of the NS,E. Sev-eral supplies were

made to houses

of former staff

of the NSE

www.businessdayonline.comTuesday 09 November 2010BUSINESSDAY 31

ger, expenses recorded in this ledgerrelate 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 werenot ofcers of the NS,E. Several sup-plies were made to houses of formerstaff of the NSE.

The sums expended and record-ed in this ledger were not deductedfrom the allowances due to the DG orADG or other staff members on behalf

of whom the expenses were incurred. The alleged justication for these

purchases is that in the DG I S remu-neration package, utility is FREE.

It is however questionable whetherthe expenses incurred can be classiedas Utility. Our review of the actual ex-pense vouchers reveals the followingin summary:

In the month of January 2008,diesel expense under this expenseclassification was in the sum N10,433,000.00 (Ten Million Four hundredand Thirty Three Thousand Naira). Dur-ing one of the interviews conducted, wewere informed that the diesel expensesin respect of the NSE building are notrecorded in this ledger and that theledger only contains supplies made toprivate residences. There is nothingin the NSE records so far reviewed

that indicate the actual residences towhich the supplies were made. We haverequested to speak with the personcontracted by the NSE to supply dieselto these quarters;

In the same month, the sum of N2,200,000.00 (Two Mil lion Two HundredThousand Naira) was spent on pur-chasing a glass cabinet for the quarters.We sighted an invoice in respect ofthis expenditure indicatingg that thekitchen cabinet purchased was for theDGs house. A treadmill was boughtat the cost of N347, 500.00 (ThreeHundred and Fourty Seven ThousandFive Hundred Naira) from Mega Plazaand we sighted the invioice to this effectand same was authorised by the DG.

In February 2008 the ledgerreveals that personal items such as du-vets, bathroom accessories were pur-

chased on this account and in March2008 the sums of N3,300,000 (ThreeMillion, Three Hundred ThousandNaira) and N2,513,140 (Two MillionFive Hundred and Thirteen ThousandOne Hundred and Forty Naira) wereexpended on the purchase of furniturefrom Hereos Furniture and Leather-world respectively. We were furnishedwith the invoices for the expenditurebut we have not been able to conrmwho the furniture was purchased foror if they were delivered.

In April 2008, an additional sum ofN25,000,000.00 (Twenty Five MillionNaira) was spent on furniture for thequarters. There are no documentsto support this expense. A Genera-tor was also purchased for the sumof N5,040,000.00 (Five Million andForty Thousand Naira). We sightedan invoice issued by the Companythat supplied the generator (Etco).The invoice reveals that the generatorwas purchased for the residence of theAssistant Director-General (ADG).Diesel purchases for the quartersin the month of April totalled N4,771,500.00 (Four Million Seven Hun-dred and Seventy One Thousand andFive Hundred Naira).

In the month of June, Mercilia Lim-ited was paid the sum of N2,063,375.00(Two Mil lion, Six Three Thousand, ThreeHundred and Seventy Five Naira) forthe renovation of the ADGs house inOmole Phase 11. In the same month,Mercilia Limited supplied the ADGanew 81 OKV A generator for the sumof N3,861,600.00 (Three Million EightHundred and Sixty One Thousand SixHundred Naira). There is howeverno indication of where the generatorwas supplied and installed. Mercilia

Limited was again paid the sum ofN2, 388,360.00 (Two Million ThreeHundred and Eighty Eight ThousandThree Hundred and Sixty Naira) for therenovation of a building. However, thedescription and ownership of the build-ing in respect of which the renovationwas made is not yet known. Further-more, certain items were purchasedfrom Adam and Eve to the tune of N2,087,400.00 (Two Million and EightySeven Thousand Four Hundred Naira).These items include beddings, toiletitems and window blinds.

In the month of November 2008,Mercelia Limited was paid the sum N5,440,320.00 (Five Million Four Hundredand Forty Thousand Three Hundredand Twenty Naira) for the electricalinstallation and repair of generator.

In the month of December,Adam and Eve was paid a total ofN7, 300,230.00 (Seven Million ThreeHundred Thousand. Two Hundred andThirty Naira). We sighted the invoicefor purchases totalling this amount.The invoices relate to householditems and were approved by theDG. We also sighted an invoice fromLiiyaz Dee Ventures for the sale ofPanasonic air conditioner for the sum

of N8, 500,000.00 (Eight Million FiveHundred Thousand Naira). We havenot been able to verify where this airconditioner was supplied.

Overall, we note that Mercilia Lim-ited featured prominently in expensesrelating to this MSQ ledger. We arecurrently conducting a search on thesaid Company at the CAC and willalso review movements to and from itsaccounts. Further investigations will fo-cus on ascertaining the actual personsto whom these i tems were delivered

where not already ascertained.

Staff TrainingIn the year 2007, the reported ex-

penditure on staff training was N463,000,000.00 (Four Hundred and SixtyThree Million Naira) as against a bud-get of N80, 000,000.00 (Eighty MillionNaira) indicating that the sum of N383,000,000.00 (Three Hundred and EightyThree Million Naira) was expended inexcess of the annual budget. We havenot been able to verify the actual ex-penditure stated for 2007 for the samereason stated above.

In the year 2008, the reported ex-penditure for staff training was stated tobe N523,864, 125.30 (Five Hundred andTwenty Three Million, Eight Hundred

and Sixty Four Thousand, One Hundredand Twenty Five Naira, Thirty Kobo) af-ter reclassication as against the actualbudget of N 123,864, 165.30 indicatingthat the sum of N400,000,000.00 wasexpended in excess of budget.

In the year 2009 the reportedexpenditure for staff training wasstated to be N283, 000,000.00 (TwoHundred and Eighty Three MillionNaira) after reclassication as againstthe actual budget of N212, 000,000.00(Two Hundred and Twelve MillionNaira) indicating that the sum of N71,000,000.00 (Seventy One MillionNaira) was expended above budget.

We have reviewed all staff train-ing expenses above the sum of N5,000,000.00 (Five Million Naira) withinthe year 2007 to date. Some of theseexpenses include the following:

Asea Exco Meeting:In a memo dated 5 February 2009,

captioned Re ASEA Exco Meetingthe following people were proposedas delegates to attend the ASEA ExcoMeeting scheduled to take place inCairo, Egypt on 23-24 March 2009:Prof Ndi Okereke Onyuike, Mr. MusaElakama; Mrs. Yinka Idowu and Mr.Farooq Oreagba. The following en-dorsements were made on the memoas representing expenses for the trip:

DG/CEO:R/ ticket $10,500Estacode -$10,000Warm clothing - $5,000

ADG:R/Ticket $10,500Estacode - $8,000Warm Clothing - $3,000

2GMs:R/Tickets $8,400Estacode $5,000Warm Clothing $1000$14,200 x 2 = $28,400

Rate of conversion used was N 155 to $1Total expenditure for this trip was

N11, 687,000.00 (Eleven Million Six Hun-dred and Eighty Seven Thousand Naira).

The sum for the return ticketfor the delegates appears to be highespecially in view of the fact that itwas in respect of a trip to Cairo. Inview of this, further investigation willfocus on the following:

Requesting for evidence of at-tendance of this meeting;

Interviewing the ofcer in chargeof NSEs protocol/travels at the saidtime; and

Conducting a general survey to

determine the rate of air tickets toCairo, Egypt for the period of this trip.

Financial Training 15th - 19th

March, 2009, DubaiA 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

the following to attend the attachedtraining in Dubai in March 2009: DG/CEO; Asst. DG, GM (Corporate Af-fairs and GM Compliance).

The gures expended on eachperson including R/Ticket; Estacode(and Misc for the DG) totalled$56,505.00 (Fifty Six Thousand, FiveHundred and Five Dollars) convertedat the rate of N170 -$1. We notethat the training was organized byTerrapinn Financial.

In further investigation of this ex-pense, we intend to contact TerrapinFinancial for (i) a list of delegates that

attended the training particularlydelegates from the NSE and for con-rmation that the persons listed aboveattended the training.

19 February 2010 transfer -Public Private Partnership- N5, 989,865.60

In the training and developmentvoucher le covering the period of thispayment we sighted a Sterling BankDebit Note No 0047339 dated 19February 2010 evidencing the transferof EUR 27,859.84 (EUR 27,809.84plus EUR 50 surcharge) at N215/EUR1 to Class Construction and PropertyLimited and the NSEs Account No:211/2111/212/110 was debited forthe said amount. We also sighted copyof a letter dated 18 February 2010from the NSE to Sterling Bank Plc

authorising the latter to transfer EUR27,809.84 to Class Construction andProperty Limited and debit the NSEsaccount. During an interview with thePrincipal Manager of NSEs AccountsDepartment we were informed that thesaid Class Construction and PropertyLimited is a bureau de change and thatthe sum of EUR 27,859.84 paid to thesaid company was meant for onwardtransmission to the organizers of thetraining, Terrapin Limited. We did notsight any document in NSEs recordswhich indicates that there was onwardtransmission to Terrapin Limited.

An internal memorandum dated16 February 2010 from the Head,Strategy & Business DevelopmentDirectorate (Farooq Oreagba) tothe DG titled: World ExchangeCongress - Barcelona attached with

a Tax Invoice from Terrapinn Limited,indicate that the following personswere 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 andMrs. Onyenwe.

In further investigation of this ex-pense our approach will be as follows:

Conduct a search of ClassConstruction Property Limited todetermine the nature of its businessand whether any member of the NSEhas an interest in the company;

Conrm from Terrapin that it re-ceived the sum of 27,809.84 Euros fromClass Construction Property Limitedon behalf of the NSE and in respectof the World Exchange Congress heldin Barcelona in the year 2010. We will

alongside this, also request for a list ofottendees/deleqotes at the conference. Require the nominees to provideevidence of attendance of the training.

Millions of naira disappear...Continued from page 30

Ndi Okereke-Onyiuke, former DG NSE

Tomorrow:18 February 2010 FBN1352689 - Training at Washington, DC, United

States - N10, 514,350.00 (Ten Million, FiveHundred and Fourteen Thousand, Three

Hundred and Fifty Naira)

Full text


5/7

Day 3

The 12-day N10m

Washington training

...The disburse-ment was ap-

proved by the DGon 25 January 2010and reference wasmade to the leaf-let for the train-

ing scheduled forMarch 1 - 12, 2010

as per the en-dorsement dated

16 June 2010

OnNSE Affairs

www.businessdayonline.comWednesday 10 November 2010BUSINESSDAY26


1 8 Fe b r u a r y 2 0 1 0 FB N1352689 - Training at Wash-ington, DC, United States -N10, 514,350.00 (Ten Million,Five Hundred and FourteenThousand, Three Hundredand Fifty Naira)

We sighted a copy of aleaflet for the abovereferenced training.The leaflet indicatesthat the training was

organised by the Institute of Pub-lic Private Partnerships, was titledDesigning LegiSlative, Institutional,and Regulatory Frameworks for Suc-cessful Public - Private Partnerships

and was scheduled to hold on March1 - 12, 2010.

The DG, an AEM (Mr. Momoh)and a Pr inc ipal Manager (Mrs.Ogambe) were nominated to at-tend the training as shown in theendorsements on the leaflet. Thetotal 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 ofthe training to confirm that theabove nominees attended the train-ing /obtaining a list of attendees. Thecontact details of the organisers areas follows: (e-mail: [email protected];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 takeplace in Washington DC between9th and 20th August 2010. Thedisbursement was approved by theDG on 25 January 2010 and refer-ence was made to the leaflet for thetraining scheduled for March 1 - 12,2010 as per the endorsement dated16 June 2010. The document usedin support of the disbursementsmade for this training was a copyof the document used to supportthe training of March 1 -12 Marchin Washington. Further s teps whichshall be taken in investigating thistraining will be largely the same asthose which will be taken in respectof the March 2010 Washington DCtraining.

9 July 2008 - Access Bank345 - 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 Continues on page 27

Full text

expected to run for a period of nineworking days at the sum of N3.5Million per delegate. From the saidletter, we note that the followingnames were endorsed by the DGto attend the training. They include:Obaseki; Chinyere; Ezeju; Moham-med Aliko N; and Lawrence. Wealso sighted a Payment Voucher No.0024467 dated 9 July 2008 indicat-ing that the sum N 17, 500,000.00(Seventeen Million, Five HundredThousand Naira) was paid to Pro-genics in respect of this training.

We have already conducted asearch on Progenics at the CACand the outcome of this investiga-tion will be discussed later in thisupdate. Further investigation of thisexpense will focus on requesting forevidence of attendance from thenominees. We shall also be review-

ing the accounts held in the nameof Progenics to determine sourcesof inflows and persons to whompayments were made.

9 July 2008 - Sterl 1658 - Or-acle Openworld Conference- N10, 800,000.00

We sighted Progenics letter dated11 June 2008 to the DG, NSE, titled:Technical User Training for System

Administrators: Oracle 109. In thesaid letter, the training was expectedto run for a period of nine workingdays at the sum of N3.5 Million perdelegate which will cover tuitionfees, course materials, tea and light

refreshments, lunch and transportbetween the hotel and the train-ing centre. From the said letter, wenote that the following names wereendorsed by the DG to attend thetraining: Obaseki; Chinyere; Ezeju;Mohammed Aliko N; and Lawrence.

We sighted disbursements toObaseki, Chinyere, Ezeju, Moham-med Aliko for the Oracle Training inUSA; in the sum of US$228,200 (at N120/US$1) with the Naira equivalentas N27,384,OOO.00 added to thecourse fee in the sum of N3,500,000per delegate. The total sum expendedwas N44, 884,000.00; this was ap-proved on 9 July 2008.

We also sighted disbursementsto the DG/CEO, ADG, GM (RIT),GM (Q), AGM (RIT), ConsultantTong Udo in the total sum of N27,936,000.00 representing the costs

of return tickets, estacode, miscel-laneous, and course fees. This wasapproved on 9 July 2008.

We also sighted a Progenics let-ter dated 11 June 2008 to the DG,NSE titled:

Oracle Open World Conference- San Francisco 2008. This event wasscheduled to hold in San Fronclsco.USA on 21 - 25 September 2008and the cost of the conference was

US$15,000 per par ticipant. The DG,ADG, GM (RIT) , Yaroe, Obaseki andJ. Udoh were endorsed on the let-ter on 10 June 2008 by the DG toattend the event.

5 March 2008 - FBN 1089041 -Asia Trading Convention - N25,715,400

We sighted a Payment Voucherdated 5 March 2008 in the sum of N25,715,400.00 representing payment forthe Asia Trader & Investor Convention.

The Convention was held inMalaysia between 22 and 23 March2008. The delegates nominated toattend the event include: President

of the Exchange and spouse (Con-ference fee USD950 (Le. USD475for each delegate), Cost of TicketUSD44,200); DG/CEO (Ticket -US$31,940); ADG (Ticket USD22,100); 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 ticketwere USD5,225 and USD209,070respectively, and the naira equivalenttotalling the sum of N25,715,400.

Further investigation of this ex-pense will focus on the following:

Determining the average cost oftickets to Malaysia around the periodin which this convention was held.

Determining the actual par-

ticipants Conrming through interviews

that these sums were in fact paid tothe nominees.

Requiring evidence of atten-dance from those nominated toattend and/or from the organisersof the conference.

2004 AuditWe sighted documents which

indicate that certain tax consultantsfrom the Lagos State Governmentcame to audit NSEs account in2008. The tax consultants came tothe conclusion that NSE had beenunder remitting taxes includingPAYE and VAT. Following the auditconducted by the governmentconsultants, NSEs tax liability wasrevised to about N90, 000,000.00

(Ninety Million Naira).We also sighted an internal

memorandum seeking approval forpayment of the sum of N14,000,000(Fourteen Million Naira) to thesetax consultants for PR for theiragreement to reduce NSEs tax li-ability from over N90,000,000 to

Ndi Okereke-Onyiuke, former DG NSE


6/7

www.businessdayonline.comWednesday 10 November 2010BUSINESSDAY 27

N12,970,000.During an interview with the

Principal Accountant of the NSE wewere informed that the sum of N 14,000,000.00 was given to the govern-ment consultants in cash. We werealso informed that the cash paymentwas made to the leader of the team,Bamidele Nasiru.

We are currently making attemptsto contact the said Bamidele Nasiru.

ContractsWe obtained a list of contractorsfrom the Administrative Departmentof the NSE.

We came up with an additionallist of Contractors based on contractdocuments reviewed. Our approachin respect of these contractors is asfollows:

Conduct searches at the CAC todetermine whether there are any re-lated party transactions. Our searcheswill focus on the shareholders anddirectors of the company.

Where the search indicates thatthe shareholders or directors of suchcompanies comprise of any CouncilMember, NSE Management or Staff,we shall check the bank accounts ofthe NSE to determine the frequencyand quantum of payments to such

company and the purpose for whichthe payments were made particularlywhere such payments exceed the sumof N5,QQQ,QQQ

As an alternative or in additionto the above, we shall also trace thecompany 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 respectof the following Companies/Businessnames: Mercilia Electromech Limited Centric Industries Limited Ingita & Co. Primonsong Petroleum Limited; and Hailsham Nigeria Limited Class Construction and PropertyLimited 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 CACreveals the following:

That only Mrs. Yinka Idowu andMr. Emmanuel Adekoyeju Idowu are

the owners and directors of CandyFloss Limited. Mrs. Yinka Idowu wasthe former head of the CorporateAffairs Services of the NSE andshe was principally responsible forthe international road shows, themerits award, long service awarde.t.c. The said Candy Floss Limitedreceived the sum of over N342, 378,428 (Three Hundred and Forty Two

Million, Three Hundred and Seventy

Eight Thousand, Four Hundred andTwenty Eight Naira in respect ofthe Long Service Award organizedby the Exchange in 2008. We under-stand that Mrs . Yinka Idowu was alsoHead of Corporate Services and wasresponsible for organizing the longservice award.

Progenics Corp Limited: One ofthe subscribers to the Memorandumand Articles of Association of thisCompany and Director as at incorpora-tion was the former DG, Ndi-OkerekeOnyuike. At the time this companywas incorporated in 1996 she owned250,000 shares of the 4.4m share capi-tal of the company. However, her namedoes not appear in the FORM CAC 2for 2007 as one of the shareholders ofthe company and CAC records also in-dicate that she ceased to be director in

1997. We however note that ProgenicsEnterprises appears as owning 651,000shares. We intend to conduct a furthersearch to determine the owners ofProgenics Enterprises.

That Kingdom Securities Lim-ited and KSL Consultants Limitedare owned by Mr. Uzoma HenryOnyekuruhe former General Man-ager of the NSEs Compliance Unit.The said company was responsiblefor the reactivation of the 2nd tierand creation of the 3rd tier marketproject between 2006 and 2007 andreceived the sum of N125.750,000.00(One Hundred and Twenty Five Million,Seven Hundred and Fifty ThousandNaira) from the NSE.

We are currently reviewing thecontract and investigating whetherthe said services were rendered by

the company in question.

Surplus SharingIn the year 2006, a total sum of

N402,000,000 (Four Hundred and TwoMillion Naira) was paid out of whichboth staff and management were paidN241,200,000 (Two Hundred and,Forty One Million Two Hundred Thou-sand Naira) while Council members

were paid N 160,800,000 (One Hun-dred and Sixty Million Eight HundredThousand Naira).

We sighted the position paperwhich is attached as part of the sup-porting documents for the payment.Although the position paper was notsigned, we were informed by the Prin-cipal Accountant that the same wasprepared by the ADG. This positionpaper provides in part as follows:

Position paper on surplus sharing

for 2006 The Management wishesto recommend to the Council thepayment of N402 million as surplussharing for the year ended 31 stDecember, 2006. This amount rep-resents 20% of the pre-tax surplusalready reported to the Financeand General Purpose Committee ofthe Council. If this is approved bythe Council, the reported pre-tax

surplus will come to N.1608billion.

Management is therefore seekingthe Councils approval to make theabove payment and to reect samein the Management accounts herebypresented for your kind considerationand approval.

The journal entry however re-corded the payment to council ascouncil expenses and creditedsundry 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 wasshared among 15 Council memberswith Oba Otudeko, the formerPresident of the General Counciland the DG getting the highest i.e.N 115,000,000 and N75,000,000respectively.

In 2009, the sum of N720, 000,000

was paid to Staff members whilethe sum of N480, 000,000.00 waspaid to Council Members. The de-tails on the voucher for paymentdated 04/03/2009 of the sum of N720,000,000.00 in 2009 read as follows:Being payment of surplus sharing toCouncil Members and staff in respectof 2008 nancial year.

The payment voucher dated 27February 2009 of the sum of N480,000,000 details of which read Pay-ment for surplus sharing, CouncilMembers for the year 2008 as per theattached was approved by the DGand ADG and received by Josephine Ig-binosun, the Secretary to the Council.

Although, these sums were paidas part of staff remuneration theywere not reected as a line item instaff costs but were included in the

Sundry expenses.In a memo prepared by the ADG,

Lance Musa Elakama, dated 4 March2009 and written to the DG/CEOstated as follows:

2008 Surplus SharingYou will recall that at the National

Council Meeting of 27 February 2009,approval was given for the followingprovisions to be made in the Unaudited

Management Accounts for the yearended 31St December 2008 as follows:Management &Staff 720,000,000.00Council Members 480,000,000.00Others 500,000,000.00

1,700,000000.00Please approve to enable us effect

the accruals in the account.SignedLance Musa Elakama.At all relevant times to this sharing

of surplus, the NSE was registered asa company limited by Guarantee. Thus,the said surplus sharing appears to

be a contravention Sections 26 and27(4) of CAMA and the clauses 6 ofthe 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 withregard to the surplus distributions:

That the sums shared were pro-ductivity bonuses for staff and formedpart of staff remuneration;

That sums paid to Council Mem-bers was not productivity bonus.

That although the minutes ofMarch 2009 refer to productivitybonus, she had simply recorded thedeliberations wrongly and the termproductivity bonus was only in rela-tion to staff members. In respect ofCouncil Members, the sums theyreceived were for training and the

letter accompanying the chequesforwarded to the Council Membersstated so explicitly.

That she had never advisedthe Council that the distribution ofsurplus was a contravention of theprovisions of CAMA because shewas never consulted and even if shehad, it would not have changed theirdecision to make the distribution.

The position paper and other sup-porting documents attached to theschedules of payment of the bonuses/surplus do not support Josephinesposition. First, the letters she refersto as explicitly stating that the sumswere meant for training/visitation ofother stock exchanges were writtenand forwarded to the Council Mem-bers before the meeting in which shealleges that the productivity bonus

was approved. Secondly, the said let-ter refers to a meeting of Councilheld in February where it was de-cided that Council members be givenmoney for training/visitation of stockexchanges. We have reviewed all theminutes of meetings covering thisperiod, and there is no record thatsuch deliberations/resolutions weremade. There is nothing in the com-pensation/remuneration package ofstaff members of the exchange whichstates that they may be paid bonuses.The records so far reviewed there-fore suggest, contrary to Josephinesassertion, that the sums distributedto staff and council members wasa distribution of prot contrary toclear provisions of statute.

With regard to the above, furtherinvestigation will focus on the follow-

ing areas: Determining whether the distri-

bution made to staff/council memberswas subject to tax. If it was not, it fur-ther buttresses the position that thedistribution was a sharing of prots;

Conduct interviews with CouncilMember.

The 12-day N10m Washington trainingContinued from page 26

At the time this com-pany was incorporat-ed in 1996 she owned250,000 shares of the4.4m share capital ofthe company. Howev-er, her name does notappear in the FORMCAC 2 for 2007 as

one of the sharehold-ers of the company

and CAC recordsalso indicate that sheceased to be director

in 1997

Full text

Tomorrow:NSE Consult


7/7

Day 4

NSE Consult underinvestigation overinsider trading

OnNSE Affairs

www.businessdayonline.comThursday 11 November 2010BUSINESSDAY28


NSE Consult

NSE Consult is a wholly ownedsubsidiary of the NSE and isthe investment and privatesector arm of the exchangewhich takes proprietary trad-

ing positions on behalf of the NSE.It was observed that the NSE

transferred money to NSE Consultfor the purpose of trading and in-vesting on the stock exchange on itsbehalf. Investigation is ongoing as towhether NSE Consult was used as a

tool for insider trading in contraven-tion of Section 112 of the Investmentand Securities Act.

Possible areas of contraventionIn order to determine the possiblecharges and causes of action againstthe former/current ofcers of theNSE and what form of jail term,compensation/ resti tution, if any, thatthe NSE would be entitled to we arereviewing 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 Federationof Nigeria, 2004;

Advance Fee Fraud and OtherFraud Related Offences Act; and

The Criminal Code Act.Subject to our nal ndings on the

transactions being reviewed, somesections of these legislations whichmay form the basis of prosecutionare as follows:

Section 1 of the Advance FeeFraud and Other Related Offences

Act and Section 419 of theCriminal Code which respectivelyprovide for the offence of obtainingby false pretence/ felony and obtain-ing by false pretence/cheating;

These provisions could be usedwith respect to the following ques-tionable transactions highlightedabove:-Transactions under the LongService Award;-

Receipt of money for the pur-chase of items (Rolex watches, carse.t.c) for the Long Service Award,which items are unaccounted for/were not used for their purpose ofpurchase/ seem not to have beenpurchased;

Duplication of money paid for thepayment of the special presentationto employees who had worked with

Concluded

Full text

the NSE for 25 - 30 years.Transactions under Business

Travels Overseas:-

Duplication of the payment of thesum of N65, 670,360.00 (Sixty FiveMillion, Six Hundred and SeventyThousand, Three Hundred and Sixty

Naira) for an international roadshow.Transactions under Mainte-nance of Staff Quarters

Use of the NSE funds to purchasediesel and other products for ofcers

of the NSE under the false pretencethat they are ofcial residences;Use of the NSE funds to purchase

diesel and other products for nonmembers of staff of the NSE.

Receipt of money for purchase ofproducts which were never supplied

Transactions under StaffTraining

Ination of the ticket CostsReceipt of Money for training and

not attending the said trainingDuplication of payments in re-

spect of one Convention/ trainingseminar

Section 8 of the Advance FeeFraud and Other Related ExpensesAct and Section 422 of the Crimi-nal Code which respectively providefor the offence of conspiracy andconspiracy to defraud.

Aside from those who actuallycommitted the offences all thosewho were involved in various aspectsof the offence can be charged underthese sections.

Section 18 and 46 of theEconomic and Financial CrimesCommission (Establishment) Actwhich provide that offences involv-ing nancial crimes such as fraud,bribery, looting, embezzlement, taxevasion and any form of nancialmalpractices.

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 CriminalCode and Section 17 of the Economic

and Financial Crimes Commission(Establishment) Act (EFCC Act) re-spectively provide for the offence ofcorruptly receiving or giving cash orkind, receiving property stolen orfraudulently obtained and retention ofproceeds of criminal conduct.

These provisions cover the fol-lowing questionable transactionshighlighted above:

Transactions under theLong Service Award:

Receipt of money for the pur-

chase of items (Rolex watches, carse.t.c) for the Long Service Award,which items are unaccounted foriwere not used for their purpose ofpurchase/ seem not to have beenpurchased;

Receipt of items (Rolex watches,cars e.t.c) which value exceeded theamount stated in Clause 5 of theNSE Code of Conduct for Employees(Senior Staff).

Duplication of money paid for thepayment of the special presentationto employees who had worked withthe NSE for 25 - 30 years.

Presentation of the boat and 3cars owned by the NSE during theLong Service Award.

Accepting the presentation of theboat as a long service award.

Transactions under Busi-

ness Travels Overseas:Duplication of the payment of

the sum of N65, 670,360.00 (SixtyFive Million, Six Hundred and Sev-enty Thousand, Three Hundred andSixty Naira) for an internationalroad show.

Transactions under Main-tenance of Staff Quarters

Use of the NSE funds to purchase

diesel and other products for ofcersof the NSE under the false pretencethat they are ofcial residences;

Use of the NSE funds to purchasediesel and other products for nonmembers of staff of the NSE.

Receipt of money for purchase ofproducts which were never supplied

Transactions underStaff Training

Ination of the ticket CostsReceipt of Money for training and

not attending the said trainingDuplication of payments in re-

spect of one Convention/ trainingseminar.

Transaction under the2004 Audit

The approval and payment of N14, 000,000.00 PR to ofcials of theLagos State Government for theiragreement to reduce NSEs tax li-ability.

Section 37 fthe Investment andSecurities Act places an obligation onthe NSE to keep and maintain properbooks of account and records relatingto its operations, Section 303 placesa penalty on any person who violatesor contributes to the violation of anyprovisions of the ISA and Sections 436and 438 of the Criminal Code make itan offence for an ofcial of a company

to engage in fraudulent/false accounting;These provisions cover the clear

false accounting/ improper book

keeping in respect of the accountsof the NSE.

Section 33 of the Value Add-ed Tax Act and Regulation 19 of theP A YE Regulations 2002 state thattax evasions, failure to remit taxes,submission of false and incorrectstatements or returns are offences.

These provisions cover the clearfalse accounting/ improper bookkeeping in respect of the accounts ofthe NSE, the false returns that weremade regarding the remuneration ofstaff and the failure to pay tax withrespect to the bonus payments made.

In addition to the above,possible civil claims includethe 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 byNSE include restitution of the moniesthat were converted, monetary com-pensation for damages and loss thatthe NSE may have suffered as a resultof the breach of employee obligationsor negligent conduct.

Documents

Forensic Report on NSE Affairs