OLUBUNMI OLADAPO ONI V. ADMINISTRATIVE PROCEEDINGS COMMITTEE OF SECURITIES & EXCHANGE COMMISSION & ANOR
(2013)LCN/6292(CA)
In The Court of Appeal of Nigeria
On Tuesday, the 11th day of June, 2013
CA/L/991/2008
JUSTICES
AMINA ADAMU AUGIE Justice of The Court of Appeal of Nigeria
CHIMA CENTUS NWEZE Justice of The Court of Appeal of Nigeria
CHINWE EUGENIA IYIZOBA Justice of The Court of Appeal of Nigeria
Between
OLUBUNMI OLADAPO ONI Appellant(s)
AND
1. ADMINISTRATIVE PROCEEDINGS COMMITTEE OF SECURITIES & EXCHANGE COMMISSION
2. SECURITIES AND EXCHANGE COMMISSION Respondent(s)
RATIO
DEFINITION OF THE SECURITIES INDUSTRY
In the judgment of the trial court at page 491 of the record, his Lordship observed:
“What is the Securities Industry one may ask? The expression ‘Securities Industry’ is not defined by the Act. But the word ‘Securities’ is defined to include debentures, stocks, shares, bonds or notes issued by a body corporate. To my mind, the expression ‘Securities Industry’ includes any body corporate that issues debentures, stocks, shares etc.” PER IYIZOBA, J.C.A.
THE FUNCTIONS AND POWERS OF THE SECURITIES AND EXCHANGE COMMISSION
Section 13 of ISA 2007 spells out the functions and powers of SEC. Having stated that publicly quoted companies are part of the securities industry, it follows that by section 13(bb) SEC can disqualify persons considered unfit from being employed in any arm of the securities industry including directorship positions in public companies. Learned counsel for the Appellant had submitted that it cannot be gathered from the words of Section 13 (bb) that SEC has implied power to regulate companies in general including assumption of powers of other Statutes that adjudicated on specifics. Learned senior counsel contended that it is not the function of SEC under ISA to regulate the membership of boards of companies. But Sections 60 – 65 of the ISA provides for the corporate responsibility of Public Companies such as the filing of annual reports with the 2nd Respondent, system of internal control of public companies and penalties for contravention etc. Section 66 of the ISA further provides:
“66(1) where a contravention of any provision under this Part is committed by a body corporate and it is proved that the contravention has been committed:
(a) With the connivance of or as a result of any neglect on the part of a director, manager, secretary or other similar officer, servant or agent of the body corporate or any person purporting to act in any such capacity; or
(b) As a result of a director, manager, secretary or other similar officer, servant or agent of the body corporate or any person purporting to act in any such capacity knowingly or willfully authorizing the contravention, the director, manager, secretary or other similar officer, servant or agent of the body corporate or any person purporting to act in any such capacity shall be deemed liable to the extent as the corporate body.
(2) The commission may administratively apply any of the penalties prescribed for the contravention of any of the provisions of this Part.”
From these provisions, it is not in doubt that SEC has the power to regulate the activities of companies and its board. The provisions of the Companies and Allied Matters Act and those of the Criminal Code do not derogate from the duties and powers of the 2nd Respondent. On the contrary, they compliment each other. See Okike v. L.P.D.C. [2005] 15 NWLR (Pt. 949) 471. PER IYIZOBA, J.C.A.
CHINWE EUGENIA IYIZOBA, J.C.A. (Delivering the Leading Judgment): This appeal is against the judgment of Abdullahi Mustapha CJ of the Federal High Court Lagos Division in suit No. FHC/LOS/CS/418/2008 delivered on 26/9/08 dismissing the Appellant’s application for review of the decision of the 1st Respondent, a Committee of the 2nd Respondent, which decision was communicated to the Appellant by a letter dated 8/4/08. In the judgment, the learned Chief Judge refused the prayers for injunction, certiorari and prohibition sought by the Appellant in respect of the said decision of the 1st Respondent.
The Appellant herein is the former Managing Director of Cadbury Nigeria Plc, a company listed in the Nigerian Stock Exchange. The 2nd Respondent is a Federal Government Agency established by the Investment and Securities Act (ISA) 1999 now repealed and replaced by the 2007 Act as the apex regulatory authority for the Nigerian capital market as well as regulation of the market to ensure the protection of investors, maintenance of fair, efficient and transparent market and the reduction of systemic risk and other related matters. The 1st Respondent is a Committee of the 2nd Respondent. Sometime in June 2006, the 2nd Respondent received a copy of Cadbury Nigeria Plc’s annual Report and Accounts for 2005. Upon review of the Report, the Commission wrote to Cadbury to express concern on issues arising from the report in the areas of declining profitability, worsening leverage ratio, deteriorating cash flow, inadequate disclosure, non-compliance with Corporate Governance Code and obtaining loans for the payment of dividends to shareholders contrary to SEC regulations. The Chairman of Cadbury through a letter to the Commission dated 16/11/06 reported the engagement of an independent firm, Price Waterhouse Coopers (PWC) to investigate the allegations of overstatement in the company’s Financial Statements for the period 2003 -30th September 2006. PWC’s report was forwarded to the 2nd Respondent. The Commission then constituted an in-house Committee which carried out a thorough investigation on the matter and confirmed the report of misstatements in the account of Cadbury to the tune of approximately N13 billion. Cadbury, its directors, persons in charge of the running of the company, the external auditor and the Registrars, about 20 persons in all including the Appellant were invited before the 1st Respondent to explain why sanctions should not be imposed on them for violating the provisions of the Investments and Securities Act, the SEC Rules and Regulations 2000 (as amended), Code of Conduct for Capital Market Operators and their employees and the Code of Corporate Governance in Nigeria. At the end of several sittings, the Committee made various findings and decisions. Sanctions and penalties in varying degrees were imposed. (See Pages 19 – 27 of the Record). In respect of the Appellant, the 1st Respondent inter alia disqualified the Appellant from operating in the Nigerian capital market, being employed in the financial services sector and holding directorship positions in any public company. These are the orders and sanctions the Appellant and others sought to prohibit in the suit at the Federal High Court. Dissatisfied with the refusal of the trial Judge to grant the orders and prohibitions sought, the appellant on 3/10/08 filed a notice of appeal containing four grounds of appeal. In his brief of argument, the Appellant withdrew the 4th ground of appeal and out of the remaining three grounds formulated the following issues for determination:
1. Whether the power of the Respondents or either of them to regulate the “capital market” and participation of “capital market operators” under the Investment & Securities Act 2007 extends to membership of the boards of directors of all or any companies registered and regulated under the Companies & Allied Matters Act 1990. (GROUND ONE)
2. Whether the Respondents or either of them possesses the judicial or quasi judicial powers exercised by the 1st Respondent on purported delegation from the 2nd Respondent? (GROUND TWO)
3. Whether the decisions of the Respondents were fair and not in fatal contravention of the rules of natural justice? (GROUND THREE)
The Respondents did not file any brief and on the 22nd day of January 2013, this Court granted the Appellant’s application that the appeal be heard on the appellant’s brief alone.
ARGUMENTS OF COUNSEL
ISSUE NO. 1:
Whether the power of the Respondents or either of them to regulate the “capital market” and participation of “capital Market operators” under the Investment & Securities Act 2007 extends to membership of the boards of directors of all companies registered and regulated under the Companies & Allied Matters Act 1990 (GROUND ONE).
Learned senior counsel for the Appellant, C.A. Candide-Johnson S.A.N. on this issue 1 submitted that SEC is a body created by law, the Investment and Securities Act, with limited functions and powers conferred on it by Section 13 thereof. Learned senior Counsel submitted that the learned Chief Judge found no definition of the expression “securities industry” in the statute and concluded that anybody that can issue a security is in the securities industry. Counsel argued that this critical conclusion ignored both the ordinary meaning of the expression as well as the compelling con of the statute itself, which makes the ordinary meaning of the word irresistible. He contended that the ordinary meaning of ‘Securities Industry’ is the “securities market in the aggregate” or the business of securities and dealing therein and that this is the market the 2nd Respondent was created to regulate. The learned senior counsel further contended that Section 315 of ISA defines “capital market operator” as a person duly registered by the Commission to perform specific functions in the capital market. “Market participant” as any person involved in any aspect of capital market transaction or operation under the act. These various individuals, counsel argued are mentioned specifically in the ISA as persons subject to regulation within the market of securities, or the securities industry. Section 13, counsel submitted defines the role of SEC as regulation of the capital market and the succeeding subsections particularize that role in specific area all of which deal with operations in the capital market. Counsel submitted that the ordinary impression to be taken from the words of Section 13 (bb) and the entire con is that disqualification of a person is from the capital market and the business or industry of dealing in securities and that it cannot be deduced from the words that SEC has received implied power to regulate companies in general. Learned senior counsel submitted that it is trite that in as much as SEC has powers to regulate matters on securities, it cannot assume the powers of other statutes that adjudicate on specifics, especially on issues properly outlined as to exclusive jurisdiction. Learned senior counsel submitted that it is not the function or power of SEC under ISA or any other law, to regulate the membership of boards of companies. He argued that no law gives SEC civil or criminal jurisdiction over ordinary Nigerian existing outside the scope of its limited power to regulate the “capital market.” Learned counsel further submitted that the power to regulate membership of boards of companies belongs by law to the Corporate Affairs Commission under Part IX, Chapter 1 (Section 244-292) of the Companies & Allied Matters Act Cap C20, Laws of the Federation of Nigeria 2004 and that the law deals with appointment and removal and disqualification of directors. Counsel submitted that contrary to the conclusion of the learned Chief Judge, the power given to SEC under Section 13 (bb) to “disqualify unfit persons from being employed anywhere in the securities industry,” is no cover for the action complained of. This provision, counsel argued, must be construed ejusdem generis with the powers given to regulate activity in the “securities industry” and in the con of the ISA itself, which allows SEC to control the activity of “Capital Market Operators” by registration of such operators under Section 38 of ISA 2007. The individuals over whom that power is exercised are described in Section 38 and further defined in Section 315 which further lends credence to the definition in con to which the Appellant has no connection whatsoever. Counsel submitted that none of these includes individual directors of companies.
Learned senior counsel submitted with emphasis that the Appellant is not a capital market operator and indeed has never been. He opined that his former appointment as a director of Cadbury Nigeria plc did not require registration or approval by SEC. The director of a company is in the business of the company (in this case, confectionary and beverages) and not in securities business merely because others may trade in the shares of the company. Counsel submitted that there is no jurisdiction or power conferred by any law on SEC to regulate the appointment of individuals on boards of companies or indeed to go so far as to impose a blanket ban on individuals to sit on boards of companies.
RESOLUTION:
I have read carefully the submissions of counsel, the record of proceedings, the judgment of the lower court and the relevant sections of the Investment and Securities Act. In the judgment of the trial court at page 491 of the record, his Lordship observed:
“What is the Securities Industry one may ask? The expression ‘Securities Industry’ is not defined by the Act. But the word ‘Securities’ is defined to include debentures, stocks, shares, bonds or notes issued by a body corporate. To my mind, the expression ‘Securities Industry’ includes any body corporate that issues debentures, stocks, shares etc.”
I agree with the learned trial Judge that any body corporate that issues stocks, shares and debentures is part of the Securities Industry. Cadbury Nigeria Plc is a public company quoted in the Nigerian Stock Exchange. Many citizens of Nigeria and other parts of the world invest in Cadbury. It is part of the responsibility of SEC to protect the interest of investors in the market. It is completely out of line for the Appellant to argue that it is not part of the responsibility of SEC to check the activities of Company Directors because they are not part of the capital market. Why then do companies send their annual returns to SEC.? If SEC cannot look into the activities of Company Directors who run public companies and create the wealth that ensures the continued existence of the capital market, then what is the purpose of the existence of SEC? When considering Securities market in the aggregate or business of securities it is not possible to exclude the public companies whose shares create the market or the business because how the companies are run impact on the market or business. From the various provisions in the ISA there is no doubt that once the shares of a company is quoted on a trade and such a company engages in capital market transactions, the company and its board fall within the control of the 2nd Respondent. Section 13 of ISA 2007 spells out the functions and powers of SEC. Having stated that publicly quoted companies are part of the securities industry, it follows that by section 13(bb) SEC can disqualify persons considered unfit from being employed in any arm of the securities industry including directorship positions in public companies. Learned counsel for the Appellant had submitted that it cannot be gathered from the words of Section 13 (bb) that SEC has implied power to regulate companies in general including assumption of powers of other Statutes that adjudicated on specifics. Learned senior counsel contended that it is not the function of SEC under ISA to regulate the membership of boards of companies. But Sections 60 – 65 of the ISA provides for the corporate responsibility of Public Companies such as the filing of annual reports with the 2nd Respondent, system of internal control of public companies and penalties for contravention etc. Section 66 of the ISA further provides:
“66(1) where a contravention of any provision under this Part is committed by a body corporate and it is proved that the contravention has been committed:
(a) With the connivance of or as a result of any neglect on the part of a director, manager, secretary or other similar officer, servant or agent of the body corporate or any person purporting to act in any such capacity; or
(b) As a result of a director, manager, secretary or other similar officer, servant or agent of the body corporate or any person purporting to act in any such capacity knowingly or willfully authorizing the contravention, the director, manager, secretary or other similar officer, servant or agent of the body corporate or any person purporting to act in any such capacity shall be deemed liable to the extent as the corporate body.
(2) The commission may administratively apply any of the penalties prescribed for the contravention of any of the provisions of this Part.”
From these provisions, it is not in doubt that SEC has the power to regulate the activities of companies and its board. The provisions of the Companies and Allied Matters Act and those of the Criminal Code do not derogate from the duties and powers of the 2nd Respondent. On the contrary, they compliment each other. See Okike v. L.P.D.C. [2005] 15 NWLR (Pt. 949) 471.
Issue I is consequently resolved against the appellant.
ISSUE NO 2:
Whether the Respondents or either of them possesses the judicial or quasi judicial powers exercised by the 1st Respondent on purported delegation from the 2nd Respondent? (GROUND TWO)
On this issue, learned senior counsel for the appellant submitted that the judgment of the Administrative Proceedings Committee (APC) had unlawfully pre-determined his guilt, pronounced his guilt contrary to the Constitution and the rules of natural justice and that same ought to be quashed for the reasons given by the Appellant in his complaints. Learned counsel submitted that there are no judicial or quasi judicial functions conferred on SEC by any law. He argued that by Section 310 of ISA 2007 SEC may appoint a committee to carry out “such of its functions as the commission may determine,” but a decision of the committee shall be of “no effect” until it is confirmed by the Commission (Section 310(1) of ISA 2007. Counsel submitted that the First Schedule of ISA 2007 make rules for proceedings of the Commission itself and Section 311 of the ISA 2007 prescribes the formal manner in which acts of the Commission are to be validated. It was argued that there was no evidence that the judgment of APC has been confirmed by the Commission or of any consideration of this judgment by the Commission following its publication on 8th April 2008. Counsel contended that on the face of the judgment itself, it is clear that; (i) this purports to be a final decision and; (ii) that it is a unilateral decision of APC acting as SEC. Counsel submitted that the result of the above un-contradicted facts is that the judgment is of no effect notwithstanding that APC has circulated it widely and that it has been acted upon by other agencies.
Counsel submitted that there is no provision of ISA which gives the Respondents or either of them, jurisdiction and power under Nigeria law and the Constitution of Nigeria over Appellant who is a Nigeria citizen and not a “capital market operator” as defined by the ISA 2007. The subject matter, the procedure and the decision being beyond the powers conferred upon the 2nd Respondent itself by Nigeria law and the Constitution of Nigeria cannot be enlarged by delegation to its own agent and if there is no jurisdiction, the decision and the proceeding leading to it are a nullity as one cannot delegate what one does not have. “Delegatus non potest delegare”
FAIR HEARING
Learned senior counsel relying on the cases of Legal Practitioners Disciplinary Committee v Chief Gani Fawehinmi (1985) 2 NWLR (Part 7) 300; Mohammed v The Nigeria Army (1999) 7 NWLR (Pt. 557) 232; Jibrin v NEPA (2004) 2 NWLR (Pt. 856) 210; Alhaji Baba M. Sale V Alh. Lawan Mongunor & Others. [2003] 1 NWLR (PART 801)221; Bamgboye v University of Ilorin (1999) 10 NWLR (PT. 622) 290, submitted that the Respondents failed to comply with the principles of fair hearing and that a proceeding where the complainant is also the judge cannot be said to have satisfied the rules of fair hearing and ought to be set aside. Counsel argued that the APC proceedings are illegal and unconstitutional; that SEC set up a Panel to look into its own complaints brought against the Appellant; that the very fact that APC was constituted by the members of the Complainant conferred an undue advantage on them; and that in essence, the Complainant (SEC) could avail itself of an opportunity that was not extended to the Respondent (Appellant herein). Counsel submitted that a body vested with disciplinary powers has a duty to act in accordance with the principles of natural justice and that a single infringement of the rule of fair hearing is sufficient to vitiate the entire proceedings. He referred to Ogundoyin v Adeyemi 2001 13 NWLR Part 730, 403 where the Supreme Court held that it is irrelevant that the same decision might have been reached by a fair process.
CRIMINAL ALLEGATIONS
The learned senior counsel submitted that the Respondents exercised judicial power over criminal allegations and made finding of guilt of said charges when neither the SEC Rules nor Regulations, Code of Conduct for Capital Market Operators and their employees and Code of Corporate Governance in Nigeria has or can validly create criminal or other civil liability. Counsel argued that Section 304 of ISA 2007 expressly reserved any right to initiate criminal proceedings by stating that:
“Where in the course of its investigation, the Commission discovers evidence of possible criminality the Commission shall be obliged to pass such information to the appropriate criminal prosecuting authorities, such as the office of the Attorney – General of the Federation and the Attorney – General of the State”
Counsel submitted that in this case, APC referred the offences for which it had found the Appellant guilty and imposed punishment, to the Economic and Financial Crimes Commission. Counsel contended that the exercise of criminal jurisdiction is by law and our Constitution limited to regular courts and that the principle that even a properly composed domestic tribunal cannot exercise criminal jurisdiction is well settled in our law. He referred to Odigie v Nig. Paper Mills Ltd (1993) 8 NWLR (Pt 331); Garba v University of Maiduguri (1986) 1 NWLR (Pt. 18) 556; Laoye v F.C.S.C. (1989) 2 NWLR (Pt.106) 689; Denloye v M.D.P.D.C. (1968) 1 ANLR Page 298 ; Sofekun v Akinyemi & Others (1980) Vol. 12 N.S.C.C Page 175 . Counsel submitted that it is clear from the above plethora of cases that criminal jurisdiction cannot be exercised by a domestic forum such as APC set up by SEC. To compound the error, it was submitted that in reaching a final decision affecting the civil rights of the Appellant APC awarded sanctions and penalties which exceeded the penalties provided for the allegations against the Appellant under the ISA 1999 itself. Counsel submitted that it was quite clear that the proceedings of APC and its decision communicated on 8th April 2008 on the Appellant were unlawful, ultra vires, contrary to settled constitutional provisions and of no legal effect. Counsel argued that SEC tactically acted on the (criminal) matter on the one hand and on the other hand to play safe also recommended to the EFCC in line with the provision of Sec 304, because it is irreconcilable to justify the sanctions imposed on a criminal matter by an ordinary Administrative commission who has no powers to act on such.
RESOLUTION OF ISSUE 2:
The points argued by learned senior counsel on this issue are many. I will take them seriatim. First is the issue of the authority of the 1st Respondent to act, and whether its decision was validated by the 2nd Respondent. In his judgment at pages 489 – 491, the learned trial Judge observed that under section 310 of the ISA, powers were conferred on SEC to appoint committees to carry out on its behalf such of its functions as SEC may determine. The learned Judge held that it had been shown that the 1st Respondent was set up pursuant to the Act for the protection of investors and for the maintenance of fair and orderly markets, to investigate and prevent fraudulent and unfair trade practices relating to securities industries. The learned Judge further held that from Exhibit AEA 1 attached to the affidavit in support of the motion on notice dated 22/4/08 filed by Ayo Akadiri, it must be taken that SEC had confirmed the decision of the 1st Respondent in line with the provision of Section 310(3) of ISA.
Section 310 of ISA provides:
“310(1) The Commission may appoint one or more committees to carry out on its behalf such of its functions as the Commission may determine.
310(2) A committee appointed under subsection (1) of this section shall consist of such number of persons as may be determined by the Commission; and a person other than a member of the Commission shall hold office on the committee in accordance with the terms of his appointment.
310(3) A decision of a committee of the Commission shall be of no effect until it is confirmed by the Commission.”
It is clear therefore and the learned trial Judge was right in holding that the 1st Respondent had the authority of the 2nd Respondent to act. SEC had full authority under the Act to set up the 1st Respondent. Furthermore, Schedule VII, Rule 12 of ISA provides:
(i) Every decision of the Administrative Proceedings Committee shall be confirmed by the Commission before it becomes effective. The confirmation shall be made not later than 14 days after the decision was taken by the Committee.
(ii) Decisions of the Commission shall be communicated in writing to the parties by the Secretary of the Committee within 5 days of the confirmation of the decision by the full board of the Commission.
The Administrative Proceedings Committee’s decision (1st Respondent’s decision) was reached on the 26th and 27th of March 2008. It must consequently be presumed that for the Secretary of the Committee to have communicated the decisions in writing to the parties by its letter of 8/4/08 on the Commission’s letter-headed paper, the Board of the Commission must have confirmed the decision. If the Appellant insists that there was no confirmation by the Board, the onus is on him to adduce evidence in rebuttal. There was no such evidence.
The Appellant’s contention that there is no provision of ISA which gives the Respondents or either of them, jurisdiction and power under Nigerian law and the Constitution of Nigeria over Appellant who is a Nigeria citizen and not a “capital market operator” as defined by the ISA 2007 is clearly misconceived. The move against the Appellant resulted, not from his status as a Nigerian citizen but on the basis not only that he is a member of the board of Cadbury but indeed its managing director and alter ego. By the provisions of sections 60 – 66 of ISA already set out above SEC has the power to regulate the activities of companies and its board. The ISA authorizes the commission to impose penalties for contravention of any of the provisions of Part B of the Act on Corporate Responsibility of Public Companies. The Respondents acted within their powers and jurisdiction as clearly spelt out in ISA 2007 and the Rules and Regulations made there under. The learned trial Judge was right in so holding.
On the matter of fair hearing, the learned trial Judge in his judgment at pages 494 – 496 held thus:
“The next issue that calls for determination is whether there was violation of the principles of natural justice. As noted earlier, under section 310 of the Investments and Securities Act, SEC is conferred with powers to appoint Committees to carry out on its behalf such of its functions as SEC may determine. It has been shown that the Administrative Proceedings Committee was established pursuant to the Act for the protection of investors and for the maintenance of fair and orderly markets, to investigate, prevent fraudulent and unfair trade practices relating to Securities Industry. It is enacted in Section 36(2) of the Constitution of the Federal Republic of Nigeria 1999 that no law shall be invalidated by reason only that it confers on any government or authority power to determine questions arising in the determination of a law that affects or may affect the civil rights and obligations of any person if such law provides for an opportunity for the person whose rights and obligations may be affected to make representations to the administering authority before that authority makes its decision affecting that person and the determination of that administering authority must not be final. The decision of the Administrative Proceedings Committee is not final because under Section 310(3) of the Act, the decision of the Committee shall be of no effect until it is confirmed by SEC. When a person is dissatisfied by the decision of the Tribunal he may appeal to the Court of Appeal. This is the provision of Section 295(1) of the Act. When the provision of Section 310 of the Act is read along with that of section 36(2) of the Constitution of the Federal Republic of Nigeria 1999, I am unable to hold that the act of SEC in constituting the said Committee to determine questions concerning the functioning and operation of Capital market operators is contrary to the principles of natural justice as enshrined in section 36 of the Constitution of the Federal Republic of Nigeria 1999. It has been shown that SEC in order to maintain efficiency separated investigative committee from the hearing committee so that each committee has functions and members separate from each other and that the members of the committee were drawn from the Respondents. There is further nothing to show that the members of the in-house Investigation team also sat as members of the Administrative Proceedings Committee.”
I am in total agreement with the reasoning of the learned trial Judge. All the cases learned counsel for the Appellant referred to are inapposite to the facts and circumstances of the present case. In Ogundoyin v Adeyemi 2001 13 NWLR Part 730, 403, the appellants did not receive hearing notice on the day their appeal was dismissed for want of prosecution. The Supreme Court naturally held they were denied fair hearing. An unbiased third party watching the sequence of events in the instant case will not say that the appellant was denied fair hearing. The 2nd Respondent is the regulatory authority for the Nigerian capital market and is also responsible for the regulation of the market to ensure the protection of investors, maintenance of fair, efficient and transparent market and the reduction of systemic risk and other related matters. From the annual reports forwarded to it by the Appellant’s company, the 2nd Respondent noticed some anomalies. It called the attention of the Appellant’s company to the anomalies. The Company on its own hired Price Water House to audit its books. This was done and forwarded to the 2nd Respondent. From these Reports, it became obvious that all was not well with the Company. An in-house investigating committee was empanelled to carry out in-depth study of the various reports. The anomalies were confirmed. At the end the appellant and others responsible for the management of the Company were invited by the 1st Respondent to show cause why they should not be sanctioned. It is this body that the Appellant alleged constituted itself into a court, presumed guilt of the Appellant, even before hearing him and proceeded to pronounce him guilty. This clearly does not represent the correct picture of what transpired. The facts were glaringly evident even from the reports sent in by Price Water House hired by Cadbury. The appellant and his group were certainly given the opportunity to exculpate themselves if they could. The claim of the Appellant that he was denied fair hearing is completely unfounded.
There is also no substance in the claim that the Respondents exercised judicial power over criminal allegations and made finding of guilt of said charges.
The learned trial Judge in his judgment at page 493 dealt with the issue thus:
“I have reproduced in the course of this judgment the allegations against the Applicants i.e. OLUBUNMI OLADAPO ONI, AYO KADIRI and CHRISTOPHER OKEKE. I have also reproduced the findings of and decisions in respect of them. From these allegations, findings and decisions I am unable to hold that the Committee exercised criminal jurisdiction and usurped the powers of the Corporate Affairs Commission. Furthermore, the fact that the committee referred the said Applicants to the Economic and Financial Crimes Commission (EFCC) for further investigation and prosecution has weakened the arguments that it charged the Applicants with criminal offences and adjudicated over same. Rather, what it did was in compliance with section 304 of the Investments and Securities Act that where in the course of investigations, SEC discovers evidence of criminality, it shall pass such information to the appropriate criminal prosecution authorities such as the office of the Attorney-General of the Federation, the Attorney-General of a State and the Economic and Financial Crimes Commission.”
I again agree entirely with the learned trial Judge that the Committee did not exercise any criminal jurisdiction. To buttress the argument and to drive home the point, it is necessary to reproduce the allegations against the appellant and his accomplices. The Appellant was the 3rd Respondent before the Administrative Proceedings Committee:
1. That the 1st – 19th Respondents; being the company, Directors and persons in charge of, and responsible for the running of the 1st Respondent and or audit Committee members filed and or authorized the filing of a document with the Commission to wit: 2005 Annual Report and Account of the 1st Respondent which contained false/misleading statements and thereby violated Rule 3(4) SEC Rules and Regulations 2000 as amended in 2005 which forbids filing of any paper, document or information with the Commission that contains misleading information and thereby liable under Rule 3(4) and Rule 7 and Schedule VII, Rule 11 of Sec Rules and Regulations 2000 as amended in 2005.
2. That the 1st Respondent as Issuer and the 2nd – 16th Respondents as directors of the 1st Respondent, in 2005 issued and or authorized the issuance of a Rights Circular dated 24 August, 2005 containing an untrue statement and thereby contravened Rule 3(4) SEC Rules and Regulations 2000 as amended in 2005 which contravention renders the Respondents liable under Rule 3(4) and Rule 7 and Schedule VII, Rule 11 of SEC Rules and Regulations 2000 as amended in 2005
3. That the 1st Respondent failed/refused and/or neglected to deliver funds en-bloc to the 21st Respondent for the payment of dividends declared to shareholders within 7 working days after the Annual General Meeting and thereby violated Rule 204 of the SEC Rules and Regulations 2000 as amended in 2005 which contravention renders the 1st Respondent liable under Rule 7 and Schedule VII, Rule 11 of SEC Rules and Regulations 2000 as amended in 2005
4. That the 2nd – 16th Respondents failed and/or neglected to abide by the provisions of the Code of Corporate Governance in Nigeria.
After reviewing the oral and documentary evidence before it, the Committee found as follows:
1 (c) That the 1st – 13th Respondents, being the company, Directors and Persons in charge of, and responsible for the running of the 1st Respondent authorized the filing of a document with the Commission to wit: 2005 Annual Report and Account of the 1st Respondent which contained false/misleading statements.
2 (d) That the 3rd Respondent in concert with the 1st Respondent’s Board since year 2002 used stock buy backs, cost deferrals, trade loading and false suppliers stock certificates to manipulate its financial report that were filed with the Commission.
3 (e) That both 3rd and 4th Respondents stated that the use of the sale and stock buy-back as well as the issuance of false stock certificates schemes were motivated by what they called ‘profit management Desire/action” and that off-shore payments were made to Executive Directors to cushion the devaluation of their pay by soaring inflation.
4 (f) That an undocumented and undisclosed offshore account was maintained and operated by the 1st Respondent from which the 3rd – 8th Respondents (Executive Directors) were paid offshore remuneration without the approval of the Committee responsible for fixing remuneration of Executive Directors and not recorded in the 1st Respondent Financial report and account.
5 (G) That the 1st Respondent as Issuer and the 2nd – 19th Respondents as
Directors and persons in charge of running the 1st Respondent in 2005 authorized the issuance of a Rights Circular dated August 24, 2005 which contained untrue statements.
6 (h) That the 3rd, 4th, 14th to 16th Respondents were the master minds of the financial malpractices perpetuated through the falsification of sales figures, over statement of profits/assets and false suppliers certificates to manipulate its financial records/report.
7 (n) That the 2nd to the 16th Respondents in this matter used stock buy backs, cost deferrals, trade loading and false suppliers stock certificates to manipulate its financial reports which conduct is fraudulent and needs to be further investigated by the Economic and Financial Crimes Commission (EFCC).
It is very clear from the above that the learned trial Judge was right in holding that the Committee did not exercise any criminal jurisdiction. All the offences were infractions and violations of SEC rules. The one that had element of fraud and possible criminality, they referred to EFCC.
Issue 2 is also resolved against the Appellant.
The third issue formulated by the Appellant on fair hearing has already been dealt with under issue 2.
In the final result, the appellant has not succeeded in convincing this Court that the learned trial Judge came to a wrong decision on any of the questions raised in the appeal. I hold therefore that the appeal lacks merit. It is hereby dismissed. I make no order as to costs.
AMINA A. AUGIE. J.C.A: I have read in draft the lead Judgment just delivered by my learned brother, Iyizoba, JCA, and l agree with his reasoning and conclusion. He has addressed all the lssues canvassed in this appeal, and I have nothing useful to add except to reiterate the point made that only a Court vested with criminal jurisdiction is competent to determine the allegation of fraud – see Baba V. N.C.A.T.C (1991) 5 NWLR (pt. 192) 388, where Nnaemeka-Agu, JSC, observed as follows –
“When a person is accused of a crime, once the hearing body is anything less thon a jurisdiction body vested with criminal jurisdiction, on administrative body lacks the jurisdiction and competence to try the issue, For such a body is not o Court, much less a criminal Court. Only a Court vested with criminal jurisdiction is competent to hear and determine such on issue”.
In this case, I agree with the lower Court that “the fact that the Committee referred the said Applicants to EFCC for further investigation and prosecution has weakened the arguments that it charged [them] with criminal offences and adjudicated over some”. The said Committee found evidence of criminality and passed the information to EFCC as stipulated by the law. The Appellant’s contention to the contrary lacks merit. It is for this and the other reasons in the lead Judgment, which I adopt in its entirety, that I also dismiss this appeal. I abide by the consequential orders therein including the order as to no costs.
CHIMA CENTUS NWEZE, J.C.A.: I had the advantage of reading the draft of the leading judgment which my noble Lord, Iyizoba JCA, just delivered now.
Like the leading judgment, I find this appeal unmeritorious. l abide by the consequential orders in the m-td-leading judgment.
Appearances
C. A. Candide-Johnson, Esq., S.A.N. with R. Oshodi Esq., and F. O. Abass Esq.For Appellant
AND
Respondents not represented.For Respondent
