₦airaland Forum

atlwireles:
Where is the BGL scam?

The BGL Debacle

Last week, the Securities and Exchange Commission suspended BGL Group, owned by among other shareholders, the President of Chartered Institute of Stockbrokers, Mr. Albert Okumagba, from capital market operations over infractions. Goddy Egene traces the issues that led to the firm's suspension and its implications


He retired from the Nigerian Airforce about 14 years as an Air Vice Marshal and went into private business. He decided to invest part of his money in the stocks through a stockbroking and investment firm. But through a letter dated October 17, 2011, he requested that his investment be terminated and his funds returned to him. He gave the stockbroking firm, at least a month’s notice as contained in their initial agreement. The stockbroking firm failed to return his funds but pleaded to give them sometime, which he did. However, his funds were due again on January 18, 2012 and again they failed to return his funds.

The investor complained to the Nigerian Stock Exchange (NSE). The Disciplinary Committee of the NSE Council met on July 17, found out that the stockbroking collected the sum of N226 million from the investor pursuant to a guaranteed return on investment agreement contrary to the rules of the NSE. The exchange said the company engaged in “comingling of client and propriety funds contrary to the rules of NSE.”

Based on the findings, the NSE Disciplinary Committee directed that the stockbroking firm should immediately return the N226million to the investor and pay interest at the rate of two per cent above the prevailing Monetary Policy Rate (MPR) on the sum to the investor.

Unfortunately, the stockbroker failed to refund the money and the NSE did not compel the firm, which is owned by a former managing director of bank that is now part of Fidelity Bank Plc, to refund the more. The apex regulator of the capital market, the Securities and Exchange Commission (SEC) did not also do anything to assist the investor recover his money.


The investor has continued to lament the loss of his investment till today and has vowed not to return to the market. The retired Air Marshal is one of numerous investors who have been frustrated from the nation’s capital market due to the unethical practices of operators and weak enforcement of rules by regulators.

However, in what appears as a renewed move by the SEC to cleanse the market and instill discipline as part of efforts to restore investor confidence, the commission suspended BGL Group and all sponsored individuals from all market operations following complaints by its clients and investors.


The BGL’s Suspension

BGL, which is one of the foremost investment banking companies, offering financial advisory, corporate finance and securities trading among others, has Mr. Albert Okumagba as Group MD/CEO. Okumagba became President of the Chartered Institute of Stockbrokers (CIS) last year. The CIS is the professional body for stockbrokers in the country.

But last week, SEC announced the suspension of BGL Group (BGL Plc, BGL Securities Limited, and BGL Asset Management Limited) from all capital market activities. According to SEC in a statement, the BGL was suspended after the Executive Management Committee considered the report of detailed investigation into the various complaints received from investors against company.

Although there have been indications that all was not well with BGL Group, the official stamp on the challenges BGL Group was facing came when SEC appointed a seven-man Interim Management Team (IMT) led by a renown stockbroker, Mr. Oladipo Aina to manage the affairs of BGL Group of companies. SEC appointed the IMT after getting an order from Investment and Securities Tribunal (IST).

After considering the report of the IMT, SEC directed that BGL Plc and its subsidiaries be suspended from all capital market activities. Also, all Sponsored Individuals of the companies whose particulars are contained in the Commission's record as at December 2014 were suspended from performing any capital market activities.

“In addition, all suspicious transactions observed in the course of the investigation have been referred to the appropriate law enforcement agencies for further investigation. Again, the companies and all individuals involved in their management have been referred to the SEC Administrative Proceedings Committee (APC), which will give all parties to the cases a fair hearing,” the commission said.

BGL’s Move against Investigation

THISDAY checks revealed that the management of BGL moved against the IMT appointed by SEC by obtaining an order from Federal High Court. However, it was gathered that SEC did not comply with the Federal High Court order because it has the same coordinate jurisdiction with IST, which in the first place empower the regulator to move into BGL. Going by the mandate given to the IMT, an auditing firm of Messrs SIAO Partners was engaged to conduct a forensic audit into the affairs of the BGL Group of Companies from 2008 to 2015. But immediately the Auditors commenced its assignment, BGL management was said to have instructed its staff not to cooperate with the Auditors and IMT and specifically directed them not to release any document to the teams under any circumstance.

[b]BGL’s Problems
THISDAY checks revealed that BGL has been recording losses for the last five years, which has significantly eroded its shareholders funds. Besides, the company was said to have made questionable investments in companies such as Schartz Resources Limited, Peak Petroleum Resources (already declared bankrupt) and British Virgin Island in excess of N30 billion.

Apart from the above, market sources said there have been series of complaints against BGL within the last one year by clients with monetary value put at about N10 billion. These complaints bother on issues relating to the private placement exercise carried out by BGL Plc and the company's inability to liquidate the investment obligations at maturity.

It was gathered that commission, through its Enforcement Department engaged BGL on the complaints related to non-redemption of investment by clients, with consistent promise to pay these investors, which it did not adhere to.

As a result of its continued failure to redeem the clients’ investments, inability to file audited financial statements with the commission and some un-reconcilable figures in the financials of BGL, SEC suspected some kind of liquidity concerns.

Consequently, SEC directed a team of inspectors to carry out a joint target inspection with the NSE on BGL Group early last year. Sources close to NSE, who confirmed the result of the target inspection, said the result of the inspection revealed that: BGL Asset Management Limited offers investment products/schemes to the public that includes Guaranteed Premium Notes (GPN) and Guaranteed Consolidated Notes (GCN), which were not registered by the SEC; the operations of the GPN and GCN client’s investment scheme were not in line with the provisions of the SEC Rules and Regulations that specifies the maintenance of separate accounts for all clients’ funds.

According to sources, in spite of the company’s inability to redeem due investments in GCN and GPN, as observed by the numerous complaints received by the commission, the products were still being marketed and sold to investors.

“Besides, there was no clear distinction in the operations of BGL Securities Limited and BGL Asset Management Limited as it appears that BGL Securities Limited also carries out funds/ portfolio management function in respect of GPN and GCN products,” the source said.

Road to Illiquidity


Market operators who are familiar with BGL operations said the real problem of the once thriving investment bank that saw the merger of former Standard Trust Bank and United Bank for Africa Plc, began when Okumagba bought BGL from Mr. Tony Elumelu. Sources said as a shrewd businessman, Elumelu got full payment for the company and left it entirely for Okumagba to manage. It was gathered that Okumagba had hoped that the capital market would continue to thrive and would be able to make enough money to sustain the firm.

“With the market remaining in a poor state, the BGL boss had no option than to dip hands in the investment of clients to survive. This led to the series of complaints received from clients. Besides, Okumagba’s one time ambition to become the governor of Delta State, put some holes in his finances,” the source said.

According to sources, while the company was still going through financial challenges, its management was opening offices across the country, paying huge sums to rent offices and hiring staff even in places where there was no business to sustain its operations.

“Apart from opening offices that are not self sustaining, the company was hiring staff members with promises of mouth watering salaries and benefits. Unfortunately, in most cases, those promises were not fulfilled by BGL. Some of the employees had to leave with high level of disillusionment,” a source said.
BGL was equally heavily in debt through margin loans and benefitted from the bail-out package of Asset Management Corporation (AMCON).
[/b]

[b]Okumagba’s Emergence as CIS President

Realising that things were getting out of hand, Okumagba smartly thought of a way out. And the best way out was becoming the President and Chairman of Council of CIS. Ironically, before emerging the president, he was not on the Council. Okumagba came from nowhere, displaced the then first vice president, who was the rightful person to occupy the position, Mr. Emmanuel Ohanwusi, and became the boss of the professional body for stockbrokers.

THISDAY checks revealed that Ohanwusi, who had already been prepared for the position in line with the provisions of CIS, was displaced with the excuse that some allegations were made against him by his former company.

It was gathered that the Council of CIS told Ohanwusi the allegations against were being investigated and such he would could not become the CIS president until after the conclusion of the investigation into the allegations.

But rather than make the Second Vice President, Mr. 'Seyi Abe as the president until the conclusion of the investigation, the Council made Okumagba the president.

“It was unfortunate that the Council fell for the antics of Okumagba, who promised the Council members that he would use his clout and influence to help raise funds for the Institute. But one year after his emergence, the Council of CIS is ruing that decision to abandon its laid down rules and which has set the institute many years back and put a question mark on its integrity,” a broker said.

A senior broker, who admitted that the Institute made a mistake, said they realised very late that Okumagba wanted to use the influence of CIS to solve the challenges his company was going through.

“His thinking was that as President of CIS he would enjoy privileges and immunity that will shield him from the infractions. However, while he had enjoyed that opportunity and privilege last year, the game is over with SEC’s action,” the broker said.[/b]
Commendation for SEC

Considering the fact that the complaints filed by investors have lingered for quite a while, market operators and some stakeholders have hailed the management of SEC under the leadership of the DG, Mr. Mounir Gwarzo, for taking such bold move towards bringing sanity to the market.

“This issue has been festering for some time now and there are similar ones that deserve equal treatment. But I believe SEC should be commended for being bold enough to take this action, especially against a firm and persons considered as sacred cows in the market,” an operator said.

Speaking on the development, Mr. Olufemi Timothy of Renaissance Shareholders Association said SEC‘s action implies that the regulator cannot only bark but can also bite now.

“It is a good development and this gives hopes to investors who have suffered losses in the hands of many market operators. It is obvious that SEC is now waking up to its responsibilities and this must be sustained as a way of restoring investor confidence in the market,” Timothy said.

Analysts' Comments

According to analysts at Proshare Nigeria Limited, the BGL issue brought to the fore, the apparent lack of political will on the part of the SEC and NSE, hence the matter lingered for so long.

The analysts said while SEC took acted by appointing the IMT in the first instance, the NSE was silent.
“Why is the NSE not talking? What are they waiting for,” Proshare queried.

The analysts also considered the timing of the takeover of BGL management, saying that from all indications, the matter leading to the recent regulatory move against the company did not happen overnight.

“It had festered over the years, which rightly raises the questions of why the authorities failed to act before now and why they are acting at this moment. Was it a case of regulatory inertia or another of those cases of regulatory accommodation of institutional misbehavior that has continued to ravage the capital market in spite of the changes of 2010 in the leadership of the market, or a case of selective enforcement of the rules? Who is next? What was the rationale used here as a basis for market learning?,” they said.

atlwireles:
Why not tell us what this's about, before making your ridiculous noise.

Why not ask before making outlandish erroneous comments?

naija celebrities and forming.
so with all the razzmatazz, Kate Henshaw is still a tenant in Lekki?

jerseyboy:
Gay thingsz

That is not what i am referring to.
Jimi Lawal has enough bad press for his business dealings in the past.
I am not interested in who adults sleep with as long as it is consensual and I AM NOT FORCED TO ACCEPT IT IS NATURAL.

Associating with Jimi Lawal is enough to induce satanic attacks.

ceejay4real:
The ediot and him brother Charles follow 4 pple wey kill defunct Oceanic Bank. They and one useless Charles Mekwunye were the people that corrupted Madam Cecilia Ibru and made her go astray. I still miss that Bank, I swear! God will punish all of una one by one!

Your head dey there. These are the boys that opened the woman's eyes to evil.

atlwireles:
“The company, whose subsidiaries include BGL Capital, BGL Private Equity, BGL Security and BGL Asset Management, allegedly lured 50 investors from across the country into subscribing to the company’s shares, promising them options of liquidity and exit within two years.”

It was stated that the investors were not able to liquidate their assets contrary to the promise made to them and that an alleged promise that BGL would be listed on the Securities and Exchange Commission two years after the offer in 2008 was not fulfilled"


I hope these 50 investors read the fine print on their contracts, before going to court. You invested in an option trade with a 24 months exit. Every trade comes with its risk, stop crying and deal with it.. The market has two sides, up or down. When you lose money like many did between 2006-2010, take it in stride and move on. Many have lost almost N4 trillion in last 120 days, who should they sue

stop talking crap. SEC investigated the case before taking up BGL. This is not even about the 50 investors.

onomeasike:
What about DAAR plc,IGI plc,Acorn petroleum and other broking firms who swindled Nigerians during that era of mad love for IPO/Private placement scams.
Okumagba and his co travellers in these companies should be arrested.
I learnt Jonathan nearly made this man who got those criminally minded stockbrokers to elect him their president of Chartered Institute of Stockbrokers (CIS) the D.G of Securities Exchange Commission

Your head dey there.
That IGI issue seems must have died with the death of the owner.
Why any sane person will buy shares from a company run by Dokpesi beats me. A man who has never run his company well enough to pay salaries regularly.
I am sure BGL have been into these scams in the past. Those covering him have departed,so he can now be exposed.

who took the pic?

coast2calm:
One of our correspondents gathered that people on the list included mainly those who worked with Buhari when he was in the military and during his stint as the chairman of the defunct Petroleum Trust Fund.

/

This is my biggest problem with Buhari.
He has a very myopic view of talent deployment.
Most of the people who worked with him in this times referred to above are simply insufficient and unequipped for the complicated task of governance in this day.

Former Enterprise Bank, now Heritage Bank, has apologised to Mr. Sam Nda-Isaiah for erroneously including his name, his wife’s (Zainab) and company, Banana Republic, in the list of debtors published by the bank in two national dailies.

Nda-Isaiah is the chairman of Banana Republic Limited.

The bank, in a letter to Nda-Isaiah, dated August 31, 2015, stated unequivocally that it erred.

“We wish to state regretfully that the inclusion of Banana Republic Limited, your name and that of your wife on the list was done in error”

The bank said it “holds you, your family and Banana Republic in high esteem. Again, we regret whatever insinuation or public harm done to your persons,” the signed statement observed.

The apology is coming on the heels of a petition by Nda-Isaiah to the Governor of the Central Bank of Nigeria (CBN) over the defamation of his character by Enterprise Bank Limited.

The commercial bank had on Monday, August 10, published Banana Republic Limited among its delinquent debtors.

But Nda-Isaiah, in a petition to the CBN Governor, called for an investigation into the loan granted to him by the bank.

He explained that in 2013, the food and hospitality firm, where he is the chairman, approached Enterprise Bank for a facility for the expansion of its business into Maitama District of Abuja and the construction of a five-star hotel in Guzape, Abuja, on a 1.4 hectare hilltop prime location.

According to the politician and chairman of Leadership Group, the bank then advised that the firm should apply for a facility to enable the company to expand into Maitama first before proceeding with a different application for the 5-star hotel.

The petition explained extensively how Banana Republic Limited applied for a facility of N80 million for the new branch in Maitama and then engaged an international consultancy company to commence a feasibility study on the five-star hotel project.

“We placed the 1.4 hectare hilltop land in Guzape worth more than N2billion as security for the N80 million facility since it was the same bank that would also handle the hotel project anyway. The loan was promptly approved by the bank because it was considered a good project.

“But that was when our problem started. It was at this point that our account officers started behaving strangely and unprofessionally. Sometimes they even showed signs of incompetence. The breakdown of the approved facility was N67.5million for the purchase of equipment and N12.5million for working capital to operate the restaurant.

“Upon approval, our account manager opened an escrow account in our name without our knowledge and deposited N67.5million and started charging interests right away from July 25, 2013, on the entire N80million sum, without any form of notification to us,” he explained.

Continuing, he stated that it was only several weeks later that the management of his food and hospitality outfit knew that an unusual banking practice had happened, alleging that they were not allowed to draw the equipment facility even though they had started charging us interest on the entire approved sum.

“The first drawdown of N18,647,500.00 in August was only allowed nearly one month after they had started charging interest on the entire loan sum. The next drawdown of N43,372,500.00 in September 2013, was only allowed nearly two months after commencement of interest charges to us.

“The total sum we were allowed to draw from the N80million facility was only N61,920,000.00 even though they were charging interest on the entire N80million approved,” he said.

According to Nda-Isaiah, when there seemed to be no headway, he then instructed the group managing director of his holding company to intervene, which he promptly did by travelling to Lagos, the head office of the bank.

He noted that the failure of the bank to allow drawdown of the N12.5million working capital, which was part of the N80 million facility, complicated the dispute further.

He added: “Banana Republic informed the bank clearly that they were not going to pay interests on the amount that had not been disbursed. Even as I write this, Governor, the entire N80 million has still not been disbursed to the company but interest charges are going on.

“Because there was a dispute, we stopped paying money into Enterprise Bank as their practices became similar to a Ponzi scheme or at best a strange strain of voodoo banking.

“About three months ago when communication was re-established with Mr. Lekan Busari, the head of the Abuja operations of the bank, it appeared that we were at last making a headway.

“Because of that, we promptly paid in N5.6 million on June 3, 2015, into the account in good faith, pending the resolution of the dispute.

“We also agreed to pay N5 million every week for three weeks starting from last week to bring down the indebtedness as we expected them to pay the balance of the N80 million immediately and redress the voodoo interest rate schemes they had been engaged in since 2013 even before we started operating the facility.

“Busari assured us that he would handle the matter and he agreed to restructure the loan on the understanding that Banana Republic’s facility is a disputed facility, not a bad loan or a defaulting facility. The facts are clear.

“He assured the group managing director of our holding company of a quick resolution, only for us to wake up on Monday, August 3, 2015, to see the name of Banana Republic on the list of loan defaulters.

“With the publication, the agreement to pay N5 million every week abruptly collapsed and I started a conversation with my lawyers.”

He insisted that Enterprise Bank had impugned his reputation and that of his family, stressing that all his life, he had tried to be very careful.

“I have built a public image and a brand, which I cherish and protect jealously. I will not just sit by and watch such a brand rubbished because of the incompetence and unfathomable motives of some people.

“I am therefore suing Enterprise Bank. They are going to have their day in court and I promise to give the proceedings maximum exposure as they unfold. But I also request that you investigate my claims. I shall be available for further details,” he said.

toltee4real:
Please lets all follow the ETHIC of every things or otherwise Follow the DUE PROCESS. 4get about whatever pple are saying, I am very sure that you are psychologically disturbed.
If you are a MUSLIM.........................Ask your Imam for ISLAMIC ETHICS ON SEXUALLITY.
If you are a CHRISTIAN.....................Ask your Pastor/Bishop for advise.

FOLLOW DUE PROCESS next time you want to do it.

what crap??

but he has received security vote?

MadCow1:
Oby :: Amaechi, I hear Wike is probing you.


Amaechi: *Bursts out laughing*

your signature makes me LOL all the time.

crap story.
Playing for the Super Eagles has zero impact on his career.
Let us stop deluding ourselves.

Ishilove:
Interesting. However, if you know you can't conform, don't go to such schools. I as a Christian will not go to a school where the hijab is enforced, and I'm sure the vice versa pertains to the muslims.

If you can't conform, find an alternative because most private schools in Nigeria are built on the foundation of their own unique ideologies.

Even as a Christian, I will not go to a school where attending chapel is compulsory and with attached punishments.

This narcissistic fellow will hug the limelight irrespective of whether the publicity is good or bad.

ZeroSumxxx:
Stop whipping up destructive sentiments. We don't need solidarity or unity of the south just in order to protect the corruption of a few because everybody pays the price. I want corruption to stop in my State and my country so that the resources can be used for the development of my State. If the man from Kano decides to keep quiet about corruption that is his business. Tell me how does it benefit a vulcanizer in Uyo if Godswill Akpabio is not held to account for corruption because Rabiu Kwakwanso was not. Is Godswill Akpabio going to give the vulcanizer part of his loot? These divide and rule argument is sponsored by the corrupt elite in order for us to give their corruption a free pass, and unfortunately many gullible readers here are buying that as valid argument.

Blessed is the womb that bore you.

thundafire:
always plan 4 dy future but dy man no get children or him pple dy play koso with am but hw abt his pension

Unless I am mistaken he had an only child who died of SS during his time in uniport.

kennyman2000:
Bro, most of all those things u see in nollywood in regards to money ritual is very real.. Very real i say bro..

I once lived in an apartment where our room is opposite to an apartment of an alfa, that does all sorts of spiritual works for people. I learnt alot from him bro..

There used to be alot of Yahooboys that do comes to him then for spiritual help.

He once told me of a type of money ritual that comes in form of contract

I hope this alfa was a billionaire?

fromnigeria:
DEDICATED to those seeking secured job.

Not even a government job is secured.

Are the self-employed secure?
Guy, security is in God.
So carry your sermon go next door.

Our civil service on all levels is bloated beyond reasoning.
The reason why retrenchment and salary reduction will never be acceptable is because the Governors and those at the federal level have not reduced embezzlement.
Can Ajimobi swear with if that the security vote has been reducing since the cash crunch began?
How many of his aides is he going to let go?
How many aides does his wife have?
Any official cat attached to his children?
Is he willing to cancel security vote as a monthly stipend?
When he has answers to this, then I will champion the long overdue rationalization of our civil service.
A situation where state civil services have messengers is unacceptable in 21st century.
Until then, let the masses enjoy their salaries, even if delayed. It is the only dividend of democracy most know.

Firefire:
You are absolutely right, you must give something to take something.

May God deliver His own from the snare of the fowlers.

Leave God out of your illogical ramblings.
So there were no deaths before APC govt?

lilmizwierd:
Come let me hug u
Those people loot more than governors and they don't do anything. I don't know How to chase the one in my local government sef
Uncle Jonathan complain about their 3 month caretakers tenure

Your head dey there.
It is a complicated mess.
Most times the LGA is an appendage if the state governors. I know a state where the governor just asks for the LG caretaker committee chairman to submit the payroll at the end of every month and the salary is paid by the state government, then LGA chairman is given like 200k to paint a school or change roof in a village market etc.
The rest of the allocation ends in the Governors pocket and the chairman dare not ask.
Imagine this happening in a state with 25 LGAS?
When you hear such governors asking for bailout, you can see why I feel like bathing them with spittle.

otijah:
wetin be all dis one sef, dis man is just ruling the country the way that pleases him,

he has scammed every Apc members that voted him in, even the jagagbam himself, Amaechi, Fashola, rochas and the rest are regretting it, you can't even give him an advice because he is not gonna listen

This is no more Democracy but Mono and Northocracy joined together

I guess Amaechi is looking for a way to collect his money for campaign but he won't dare or else kirikiri will be joints and hangout for next 300yrs
#100wasteddays

I don Laff tire.
The result is that next time, godfathers themselves will contest. No more sponsoring others. Does not mean things will be better.

Curvinus:
The South is educated and well advanced in their thought process so no basis for comparison here. It would be plain silly to try to compare a technology driven people to a bunch of religious book memorising jihadists who say western education haram.

Your crass generalization negates the education and advancement you allude to.

This country is sinking into depths of ethnic and tribalists jingoism never seen before.
I blame Buhari largely bit his critics and supporters are not without blame.
Such display of reckless mediocrity is cringe worthy.

Adikam:
sister u always hide from paying ur tyts.dats y ur head lack jesus.send me GLO 1K let me pray 4u &use it to clear ur tyt dept.(yesss i can see ur hair growing)after doing dis.rehcivitt...b fast man of god waiting

See hustle!!

This unstable Aribisala and his incoherent ramblings.
Even when I have no regards for APC, I still struggle to appreciate the ramblings of this man.

There should be a retirement age in Nigerian politics.
That way we want ll be spared the crap that these octogenarians spew. The likes of ezeife and his Afenifere mates.
Even Buhari himself should have retired by now. Unfortunately, the younger one we had before him was a clueless failure.

Why should a state have more workers than it can afford?