By Akintola Omigbodun

Last week, we presented the judgment of the Investments and Securities Tribunal, IST, in respect of an originating application filed by the Securities and Exchange Commission, SEC, against Union Bank of Nigeria Plc – UBN and 19 others. The presentation covered the trial and the submissions of the parties.

The Tribunal in its decision looked at when, how and why the 1st Respondent purchased its own shares and the individual responsibilities of the 2nd – 20th Respondents for the purchase.

The Tribunal found as follows: The 1st Respondent at the direction of the 2nd – 4th Respondents, in conjunction with Union Trustees Limited and Falcon conceived of, engaged in and deployed a scheme and or artifice to enhance the value of the 1st Respondent shares by surreptitiously using the funds procured from foreign institutions for the purpose of purchasing the 1st Respondent’s own shares on the floor of the stock exchange.

The Respondents have made so much weather to the effect that the Applicant had not specifically proved the allegations. It is trite and in fact an unimpeachable proposition of the law that he who alleges must prove. See section 132 of the Evidence Act 2011. Proof of facts may either be direct or indirect. Circumstantial evidence otherwise known as best evidence.

On the loans from Merrill Lynch and HSBC the Tribunal stated: The Record before us, oral and documentary, shows that in spite of the non-Board approvals, these foreign loans were obtained, utilized and repaid. We can infer that the Respondents have little or no regard for due process or corporate governance policies.

On Falcon Securities Ltd and Union Trustee Ltd, the Tribunal found as follows: It is however a reasonable assumption that the volume of trade (609, 852,000 units of the 1st Respondent’s shares in 31 transactions) carried out by Falcon Securities Ltd is such that could affect the price movement of shares.

It is thus our view that the share purchases by Falcon Securities Limited made pursuant to the scheme to achieve the objective of the 1st Respondent did influence an upward movement of the share price of the 1st Respondent.

In the light of the above, we find that there was a scheme orchestrated by the 1st Respondent with the assistance and connivance of its officers. In other words, there were clear and willful violations of not only the Rules and Regulations guiding operations in the capital market, but also general laws on corporate practice.

On the individual roles of the Respondents, the Tribunal stated: The directors of the 1st Respondent whether executive or non-executive owed a duty to ensure that the business of the 1st Respondent was carried out in such an efficient and responsible manner as possible.

Consequently, any purported action or conduct by the Board of the 1st Respondent would be deemed to have the imprimatur of the directors. Any director who was absent from the Board meeting where a resolution to raise loans was passed but did not raise issues or take action against the transaction cannot absolve himself of liability.

All the directors have not satisfied the Tribunal that they discharged the duties imposed upon them by statute. We find that the 2nd – 4th Respondents being executive directors and experienced professionals are particularly culpable for willful violations of the provisions of ISA and SEC rules.

The 20th Respondent’s questionable knowledge of corporate governance and procedures is manifest and reprehensible given her position as the Company Secretary/Legal Adviser of the 1st Respondent. The 19th Respondent, a DGM and Head of Treasury from the evidence is directly culpable and exhibited a reckless disregard for due process and professionalism.

The Tribunal reviewed various foreign precedents relevant to this suit and in granting the reliefs sought by the Applicant, the Tribunal appointed KPMG to undertake an audit of transactions on the shares of the 1st Respondent on the floor of the Nigerian Stock Exchange from October 2007 to March 2008 with a view to determining the losses suffered by investors who sold or purchased 1st Respondent’s shares during the above period amongst other things.

The Respondents have filed Notices of Appeal at the Court of Appeal against this judgment.             …CONCLUDED