The Securities and Exchange Commission (SEC) has exonerated the immediate past chairman of Nigerian Aviation Handling Company Plc (NAHCO) Malam Yahaya Suleiman on allegations leveled against him.
This was contained in a response to the Acting Chairman Economic and Financial Crimes Commission (EFCC) Ibrahim Magu on a petition addressed to the President of the Federal Republic of Nigeria titled Saving Nigeria Aviation Handling Company Plc from the Stronghold of its Chairman Malam Yahaya Suleiman.
According to SEC, the allegations bothers on the failure to conclude the investigation of unauthorized sales of client shares and non-purchase of shares and other violations when Malam Yahaya was a director of Empire Securities Limited. The petitioner also raised corporate governance issues that have to do with service agreement with Rosehill Group and one of its subsidiaries RHG-MSA Limited.
Other allegations by the petitioner includes the appointment of the company secretary as an executive director, the disposal of Sabena Airlines and British Airways shares by the concerned parties. And the petitioner expectation that the company should have used proceed of N5 billion bond on the Cargo warehouse modernization project when there was a shortage of funds.
According to a response document signed by Mr E.A Okolo on behalf of the Director General of SEC Mr Mounir Gwarzo, which was obtained by Financial Edge. SEC said on the Empire Securities issues, its board and management were brought before the Administrative Proceedings Committee (APC) in 2010.
In May 2011, the decision of the APC was communicated to the parties. Malam Suleiman Yahyah and other Board Members were cleared of the allegations while the Managing Director was held responsible for the violations. On Yahaya been a class mate to SEC DG, the commission said the matter was concluded well before the DG was appointed Executive Commissioner by the president of the Federal Republic of Nigeria in 2013.
On the issues of breach of corporate governance, SEC explained in the document, that in order to forestall a situation where an 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.
SEC noted that Nahco complied with this provision, In an attempt to empower the Boards of Public companies to exercise appropriate overnight on Management, Section 4.3 of the SEC Code of corporate governance requires that non-executive directors should be in majority, Nahco compiled with this provision. For purposes of efficiency and effectiveness, the code requires that boards of Public Companies should operate through Committees, Nahco compiled with this requirement.
Concerning the issue of management service agreements with Rosehill Group and RHG-MSA Limited, SEC pointed out that in 2011 Nahco entered into a management service agreement with Rosehill Group, it was alleged that due to Malam Suleiman Yahyah interest in Rosehill Group, the process was not transparent.
However, documents show that the matter was presented by 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.
SEC said 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 of the Company every year.
While SEC was not comfortable with the management service agreement on RHG-MSA Limited, according to the apex regulator in the capital market in 2014, a new management service agreement was entered into between Nahco, its Subsidiaries and RHG-MSA Limited. However, we are not satisfied that adequate due diligence was observed in the processes leading to the signing of the second management agreement.
This is because the second management service agreement was not subjected to the transparent process as was the case in the first one. Therefore, the commission will direct the company to subject the second management service agreement through the governance process as they did with the first one. On the appointment of company secretary as an executive director, SEC noted that
These two positions cannot be effectively managed by one individual as the SEC Code of Corporate Governance provides distinct responsibilities for each of them. The Company should be advised to appoint a new Company Secretary following a rigorous recruitment process.
As regards the disposal of Sabena Airlines and British Airways shares by the concerned parties, SEC said We are yet to identify any rule breaches with respect to the disposal of Sabena Airlines and British Airways shares by the concerned parties. On the petitioner expectation that the company should have utilized part of the N5 billion bond proceeds on the cargo warehouse modernization project when there was a shortage of funds, SEC explained that since the warehouse modernization 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 utilization of issue proceeds on project not contained in the offer documents.
Meanwhile, citing urgent need to attend to his failing health, Malam Suleiman Yahyah, resigned from the board of Nahco last month October 2016. With his resignation, the Vice Chairman, Mr. Denis Hasdenteufel, has took over the leadership of the board in an acting capacity and will preside over all meetings of the board pending the approval of regulators and further announcements from stakeholders.
Yahyah, was appointed a director of the company in November 2006, became the chairman in July 2012. He, had in recent months, come under mounting pressures from his family to step down to enable him receive proper medical attention. Credited with the strategic re-organization of the company to its current modern status, Yahyah had been battling with an undisclosed health issue for a couple of years now.