By Peter Egwuatu

Following the suspension placed on BGL subsidiaries as a result of alleged infractions in the Nigerian capital market, the Securities and Exchange Commission, SEC has ordered the management to appear before its Administrative Proceedings Committee, APC to explain the allegations of infractions against them.

The commission has disclosed that the management has been invited to appear before its APC on 4th and 5th August for hearing on the alleged infractions. The SEC has explained that it received over 40 letters of investor complaints against BGL Group Plc, alleging indebtedness to the tune of about N5.8 billion.

Investigations were conducted and all-parties meetings were arranged by SEC during which repayment agreements were struck between BGL and some of the affected investors. Unfortunately, BGL continued reneging on promises to restitute investors. Backed by a court order from the Investments and Securities Tribunal (IST), SEC said, it set up a 7-man Interim Management Team (IMT) for BGL Group.

According to SEC “This was a necessary, well-considered action with the sole objective of protecting investors while a more detailed forensic audit was conducted to determine the financial health of the companies within the BGL Group and the nature/extent of infractions committed by the BGL management.”

From the preliminary report of the forensic auditors, it was revealed, among other facts, that indeed BGL Group was in a critical financial state in which:

The Group’s management had progressively eroded its shareholders’ funds through losses sustained over a 5-year period totaling about N48 billion as at December 31, 2014; Billions of naira in investors’ funds were put at extreme risk through questionable investments by the BGL management in some illiquid, unlisted companies’ securities; one of which has been declared bankrupt ; The Group has significant liquidity challenges making it unable to meet its responsibilities towards clients and investors as evidenced by over N11 billion in unpaid matured funds to investors.