SEC clears NAHCO over corporate governance allegation

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Securities and Exchange Commission (SEC)

Nigeria’s securities market apex regulator, the Securities and Exchange Commission has cleared Nigerian Aviation Handling Company (NAHCO), its board and management of culpability with respect to corporate governance and capital market activities.

The SEC clearance followed the petition to President Muhammadu Buhari amongst other allegations , that NAHCO violated the corporate governance code and was involved in capital market related issues, a copy of which it received on July 21, 2016.

However, SEC in its response to the petition addressed to the acting Chairman of the Economic and Financial Crimes Commission (EFCC), Ibrahim Magu, signed by E.A. Okolo for its director-general, and copied President Buhari, Chairman of Independent Corrupt Practices and Other Related Offences Commission (ICPC), President of the Nigerian Stock Exchange, Managing Director of Asset Management Corporation of Nigeria and Chairman of NAHCO, disclosed that it “carried a thorough examination of the corporate governance and capital market related issues cited in the letter” and did not find NAHCO, its board and management wanting.

SEC in the letter dated August 26, 2016, obtained by THISDAY, revealed that, “In order to forestall a situation where one individual wields enormous powers, Section 5.1(b) of the SEC Code of Corporate Governance for Public Companies prohibits one individual from occupying the positions of Chairman and Chief Executive Officer, NAHCO complied with this provision.”

Also, the commission noted that, “In an attempt to empower the boards of public companies to exercise appropriate oversight on management, Section 4.3 of the SEC Code of Corporate Governance requires that non-executive directors should be in the majority, NAHCO complied with this provision.”

Besides, the commission stated that, “For the purposes of efficiency and effectiveness, the Code requires that boards public companies should operate through committees, NAHCO complied with this requirement.”

Furthermore, SEC disclosed that, “In 2011, NAHCO entered into a Management Service Agreement with Rosehill Group. It was alleged that due to Mal. Suleiman Yahyah’s interest in Rosehill Group, the process was not transparent.

However, documents show that the matter was presented by the management to the relevant board committee; the full board also considered the matter and finally an extra-ordinary general meeting of shareholders was convened to approve the agreement.

This process largely complies with good corporate governance practice especially where the interested directors were excused from the meetings when the decision was taken. This is in addition to the fact that detailed disclosure of the management service agreement as well as the value paid by NAHCO to Rosehill Group is made in the Annual Financial Statements (AFS) of the company every year. (Please refer to AFS of 21012, 2013, 2014 and 2015).”

In addition, the commission stated that, “We are yet to identify any rule breaches with respect to the disposal of Sabena Airlines and British Airways shares by the concerned parties. The petitioner expected that the company should have part of the N5 billion bond proceeds on the Cargo Warehouse Modernisation Project when there was a shortage of funds.

“Since the Warehouse Modernisation Project was not cited in the offer documents as one of the purposes of the offer, the company had no power to divert the funds as expected by the petitioner. This is in line with Rule 305 (6) of the SEC Rules which prohibits the utilisation of the issue proceeds on projects not contained in the offer documents”

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