Audit report indicts Nigeria’s SEC for N60.65bn fraud

THE Nigerian Securities and Exchange Commission (SEC) has been indicted by the Office of the Auditor-General (OAuGF) for committing fraudulent activities amounting to N60.65 billion.

The OAuGF exposed the SEC’s activities in the ‘Auditor-General for the Federation’s Annual Report for the year ended December 2020, ‘ released recently.

It revealed the non-compliance/internal control weaknesses in the federal government’s ministries, departments, and agencies (MDAs).

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According to the audit report, the SEC, the apex regulator in the Nigerian capital market, committed 27 infractions during its operations in 2017, 2018, and 2019. See the table below for details of the issues involved.

OAuGF indictment against SEC
1 Irregular payment of allowances to staff 11,087,344,294.94
2 Ineligible allowances paid to some directors of the commission 625,915,105.70
3 Non-deduction and remittance of PAYE 545,027,411.21
4 Irregular payments of staff PAYE liabilities from public funds 33,424,144.56
5 Irregular payment of medical allowances to staff registered under national health insurance scheme 241,865,640.08
6 Improper payments of medical bills 173,033,395.53
7 Irregular payment of monetised car grant to management staff 3,382,313,745.12
8 Unjustified payments of furniture allowance to staff of the commission 848,986,361.50
9 Diversion of public funds to pension fund administration (PFAs) 871,441,029.08
10 Illegal payment of commission gross income earned on pension fund investments 93,380,888.38
11 Ineligible payments by the commission 269,079,000.00
12 Irregular payment of productivity incentive bonus 34,899,051.15
13 Irregular payment of gratuity/severance to retired staff 1,013,565,617.08
14 Extra-budgetary expenditure 27,191,792,063.85
15 Irregular payment of severance allowance to non-staff 255,426,494.80
16 Irregular transfer of funds to the investment and securities tribunal 1,151,197,320.96
17 Irregularities in the engagement of and payment to audit firms 134,647,500.00
18 Payment for foreign travels without approval 361,787,800.38
19 Unaccounted expenditure by the commission’s subsidiaries 774,259,000.00
20 Irregular payment of allowances 7,394,287,819.88
21 Under remittance of operating surplus 3,400,256,386.14
22 Engagement of external solicitors without the approval of the attorney-general of the federations 329,745,402.82
23 Payments of tenement rates not accounted for 199,527,500.00
24 Unsubstantiated transfer of public funds 50,000,000.00
25 Payments to media houses without evidence of publication 37,096,870.23
26 Irregular payment of sabbatical leave 96,262,704.87
27 Non-adherence to due process in the disposal of vehicles 56,220,000.00
Total amount of indictment 60,652,782,548.26


It disclosed that the SEC perpetrated irregular payment of allowances to staff, failed to deduct and remit staff pay-as-you-go (PAYE) taxes, diverted public funds to pension fund administration (PFAs), reported extra-budgetary expenditure, made payment for foreign travels without approval and unjustified payments of furniture allowance to staff.

The SEC was also involved in ineligible allowances it paid to some of its directors, made improper payments of medical bills, engaged external solicitors without the approval of the Attorney-General of the Federations, and did not account for expenditure by its subsidiaries, among other issues.

The ICIR reports that in the three years under review, the Commission had Abdul Zubair as the SEC Director-General, who served between 2017 and 2018 and Mary Uduk, who served in the same capacity between 2017 and 2020.

The current DG, Lamido Yuguda, was appointed by former President Muhammadu Buhari in May 2020, assumed office on Monday, July 6, 2020, and took over from Uduk.

The audit report specifically accused the SEC of wasting, diverting, and losing public funds and government revenues, exposing the Commission’s inability to fund its budget.

Despite the weighty indictment, the report stated clearly that the SEC management could not provide responses to some of the issues or clear itself from the spotted infractions.

For instance, the SEC could not provide OAuGF’s inquiry over the N11.09 billion the Commission paid its staff between 2017 and 2019 for dressing, leave, medical, education, rent, mineral and other allowances.

The OAuGF stated emphatically that the SEC DG should account for, provide justifications, submit evidence, and remit the various amounts involved in the infractions to the National Assembly Public Accounts Committees.

It also stated that for non-adherence to due processes in its operations in the review years, the Commission should be sanctioned by the Financial Regulations 2009 for gross misconduct of public funds, among other infractions.

It specifically recommended paragraphs 3106, 3115, 3129, and 3111 as sanctions against the SEC and its management.



    Paragraph 3106 states, “A public officer who makes an irregular payment from public funds, shall be given 21 days’ notice to explain. Where no satisfactory explanation is given, the amount involved shall be recovered from the officer and such officer shall be removed from the schedule.”

    Paragraph 3111 states, “A public officer who receives a query involving an overpayment of public funds in respect of salaries and allowances to staff, shall be given 21 days within which to replay to the query and refund the amount overpaid. He shall also be disciplined by Public Service Rules and if need be, the matter should be referred to the police for prosecution.”

    Paragraph 3115 also states, “An Accounting Officer who is queried for his failure to manage or spend public funds effectively or who spends money without due regard to economy contrary to FR 415 and fails to reply to the query, shall be removed from the schedule and be disciplined by the Public Service Rules.”

    The ICIR had, in a report, raised the concern that the non-compliance of the SEC in publishing its annual reports yearly for public consumption raises concerns about the Commission’s integrity in their financial management.

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