As Impunity Reigns At PenCom

By Ikechukwu Amaechi

The Pension Reform Act (PRA), which established the National Pension Commission (PenCom), was enacted by the National Assembly (NASS) in 2004 to create a body that would regulate, supervise and ensure the effective administration of pension matters. Before then, pension schemes in the country were bedeviled by many problems, including the fact that the public service operated an unfunded Defined Benefits Scheme. Though the payment of retirement benefits was budgeted annually, most times there were no funds to execute the scheme.

The situation was even worse in the private sector where many employees were not covered by the pension schemes put in place by their employers, and even where they were covered, many of the schemes were not funded.

So, the PRA was hailed as pragmatic, just like PenCom, the regulatory body that would formulate, direct and oversee the overall policy on pension matters by establishing standards, rules and regulations for the management of pension funds.

But what the PRA did not envisage in setting up PenCom was the establishment of a regulatory agency that would see itself as being above the law or which would go out of its way to undermine the same organisations it was set up to nurse to good health.
Unfortunately, that seems to be the situation now.

PenCom has become a law unto itself. Its management is contemptuous of court judgments and treats well-meaning advice from constituted authorities with levity.

In PenCom, bias against certain business interests trumps equity and justice. That is a dangerous value proposition for a regulator in such a critical industry.

The story of the regulator-engineered crisis that has engulfed an otherwise frontline Pension Fund Administrator (PFA) is pathetic. It is a classic illustration of the ‘might is right’ philosophy of those who think they control the levers of power in Nigeria.

The contrived crisis which has hobbled First Guarantee Pensions Limited (FGPL) for over five years is orchestrated by PenCom headed by Chinelo Anohu-Amazu.

I commented on this matter a few weeks ago, hoping that somehow the shenanigans will stop.
But the impunity continues and I am appalled and horrorstruck by the propensity of a government agency to flagrantly disobey court orders.

To recap, FGPL is a Nigerian company incorporated in 2004 and licensed as a PFA in 2006, with a total 37 shareholders.
Despite the teething problems, the management turned around the fortunes of the company in 2010 and subsequently paid dividends, a feat PenCom acknowledged.

So happy was PenCom with the performance of FGPL that on February 23, 2011 it released its annual report on the performance of PFAs.

And guess what? FGPL was categorised as the most improved PFA in 2010. Yet, barely one month later, precisely on March 22, 2011, PenCom queried the same management style that had earned FGPL the honour of being adjudged the most improved PFA.
Sensing the axiomatic hand of Esau in the very untidy scenario, the shareholders of FGPL went to court to stop PenCom from implementing the target report.

On August 11, 2011, Justice D. U. Okorowo of the Federal High Court, Abuja granted an ex-parte order requesting all parties, including PenCom, to maintain the status quo ante and stop implementing the target report pending the determination of the suit.

However, that was the beginning of the reign of impunity.
Notwithstanding the court order, PenCom on August 15, 2011 dissolved the FGPL board and appointed an interim management. A very dangerous affront on the courts.

Where did the regulator acquire such powers to treat an order of the court with so much scorn? When did PenCom become an institution that is above the law? What provision of the PRA empowers the regulator to spurn judicial pronouncements?
Not wanting to jump into the puddle of illegality with PenCom, the aggrieved shareholders petitioned the then Attorney General of the Federation and Minister of Justice, Mohammed Bello Adoke, on the disrespect for court order.

The chief law officer of Nigeria wrote two letters dated August 17, 2011 (referenced HAGF/PENCOM/2011/VOL.1/2 and September 8, 2011 (referenced HAGF/PENCOM/2011/VOL.1/2) requesting all the parties to abide by the court orders. But like the ex-parte order, the two letters were ignored.

Then, on July 18, 2012, Justice Okorowo unequivocally nullified the “Draft First Guarantee Pension Limited Target Examination” and the “Target Examination Report of First Guarantee Pension” and upbraided PenCom for acting above the law and not obeying court order.

The court not only ordered that the interim management foisted on FGPL by PenCom be removed but also requested the commissioners of police in Lagos and Abuja to enable the board members take over their business.

Almost four years after this verdict, and without a higher court annulling the ruling, the interim management is still calling the shots at FGPL.
In utter contempt for the courts, the interim management declared illegal by Justice Okorowo made a filing at the Corporate Affairs Commission (CAC) which restructured the shareholding structure of FGPL.

The shares of its foreign partners, Novare, were removed as investors in FGPL and treated as deposit for shares. The shares of the founder and promoter of the business, Nze Chidi Duru, were reduced by 50 per cent from N248 million to under N122 million.
Beyond flying in the face of court order, this action was illegal through and through because there was neither shareholders’ nor directors’ meeting where the decision was taken and, therefore, there couldn’t have been a resolution to back up the illegality.

Then, on June 13, 2012, one Ibrahim Kashim Imam, a minority shareholder, was purportedly elected chairman of FGPL board against the injunction of Justice Okechukwu Okeke of the Federal High Court, Lagos on July 10, 2012, restraining the CAC as well as Kashim Imam and his minority shareholders from “convening and/or holding any annual general meeting of FGPL.”

But even if there was no restraining order, the purported shareholders’ resolution signed by one Funmi Olowo, which claimed that Kashim Imam was now the chairman and went ahead to either remove or replace the legitimate directors of the company would have still been illegal.

Why?

The “resolution” claimed that the decision was taken at an annual general meeting (AGM) of FGPL which allegedly held at the Valentia Hotel, Abuja on July 13, 2012.
Meanwhile, in the advertised notice for the meeting, over which a restraining order was obtained, the venue was to be Niger Hall, Transcorp Hilton, Abuja.

Now, the Companies and Allied Matters Act (CAMA), clearly states that if for any reason the advertised venue of a meeting is moved to another venue, then that meeting will stand adjourned until the next week, and a fresh notice published.
So, it is against the law to have a meeting already advertised to hold at the Niger Hall, Transcorp Hilton Hotel for June 13 to hold at the Valencia Hotel on the same day.

Yet, all these illegalities are going on under the watch of the interim management committee appointed by PenCom.
To ramp up the illegitimacies and build a monument of impunity, there has not been a meeting of the shareholders of FGPL in the last five years.

Within the same period, the company has also not filed its annual returns and accounts with the CAC as required by law, not to talk of paying dividend to the shareholders or taxes to state and federal governments.

Perhaps, the most pernicious impunity is the surreptitious attempt to sell off the company to a South African firm.
On May 27, 2016, a company, Alexander Forbes Group Holdings Limited, which claims to be “a specialised financial services group established in 1935 and listed on the Johannesburg Stock Exchange,” impudently summoned FGPL shareholders to a meeting on July 20, 2016.

The group said the meeting will discuss, among other things, its “offer to shareholders” of FGPL and “proposal for the structure of the sale/share transfer.”
The letter was signed by Kelechi Umelo, Head, Investment Banking; and Femi Ogunjimi, chief executive officer of Cardinalstone Partners and titled, “Presentation to shareholders of First Guarantee Pension Limited”.

It reads in part: “Our client, Alexander Forbes Group Holdings Limited (“Alexander Forbes” or the “Group”) hereby invites you as a shareholder of First Guarantee Pension Limited (“First Guarantee” or the “Company”) to a meeting on the 20th of July, 2016.

“The purpose of this meeting is to present our offer to shareholders to acquire an equity stake in First Guarantee as well as our future plan for the business.”

The questions that arise from this are legion. Has PenCom concluded to sell FGPL? On whose authority is it doing so? Can PenCom sell the company without the consent of the shareholders?

But most importantly, has Nigeria become such a Banana Republic where an agency of government can flagrantly disobey court verdicts without any consequences?

For good corporate governance and the rule of law, the impunity going on at PenCom must stop.

*Ikechukwu is the Managing Director and Editor-in-Chief of TheNiche newspaper. He could be reached with ikechukwuamaechi@yahoo.com