By Ikechukwu Amaechi
For starters, FGPL is the acronym for First Guarantee Pensions Limited (FGPL), one of the 20 licensed pension fund administrators (PFAs) in Nigeria.
When the National Pension Commission (PenCom) snootily declared on Monday, May 4 that the decade-long FGPL crisis had been resolved, I remembered one of the famous admonitions of Winston Churchill.
After the British routed Rommel’s forces at Alamein, driving German troops out of Egypt in 1942, the Allied forces were expectedly ecstatic with a mission-accomplished lullaby, but not for the perspicacious Churchill.
Standing at London’s Mansion House, the war-time British Prime Minister delivered what perhaps are his most famous words. “Now, this is not the end. It is not even the beginning of the end. But it is, perhaps, the end of the beginning.”
On April 30, the Court of Appeal in Abuja entered judgment in the three appeals filed by PenCom, the attorney general of the federation and a faction of the FGPL board led by Kashim Ibrahim against a 2012 judgment of the Federal High Court that nullified PenCom’s regulatory measures in the PFA.
Four days later, the regulatory agency, claiming that the appellate court’s judgment validated its 2011 regulatory actions, issued the triumphalist statement informing the public that its regulatory intervention in FGPL was over.
“Accordingly, the Commission has handed the PFA over to its reconstituted board of directors under the chairmanship of Kashim Ibrahim Imam with Tsegba Terngu, Ahmed Salik, Pat Asadu, and George I. Ozodinobi as members.
“Concurrently, the Commission has dissolved the interim management committee it appointed on August 12, 2011,” PenCom ululated.
Anyone abreast of the crisis would know that any claim of a return to normality flies in the face of reason.
So, it was no surprise that Novare Holdings (Pty) Limited immediately after the Appeal Court judgement filed an appeal at the Supreme Court and a motion seeking to restrain PenCom, FGPL or anyone from interfering with the management or assets of the company pending the determination of the appeal.
What is surprising, therefore, is that PenCom still went ahead to hand over the PFA to the so-called reconstituted board of directors without waiting for the decision of the apex court. Yet, the same regulator that is in a haste to act now sat on its palms for eight years flagrantly ignoring the verdict of the high court.
For those who may not know the issues, a little background is needed here.
The Pension Reform Act (PRA), which established PenCom, was enacted by the National Assembly in 2004 to create a body to regulate, supervise and ensure the effective administration of pension matters by establishing standards, rules and regulations.
Before then, pension schemes in Nigeria were bedeviled by many problems, including the fact that the public service operated an unfunded Defined Benefits Scheme. The private sector was not faring better. So, the PRA was hailed as pragmatic, just as PenCom.
FGPL, as a PFA, sprouted from the Pension Reform Act: A Nigerian company incorporated in 2004 and licensed as a PFA in 2006.
The crisis started when PenCom – which released its annual report on February 23, 2011 that categorised FGPL as the most improved PFA in 2010, surprisingly, one month later, on March 22, 2011 – wrote the FGPL board that it would undertake a target examination.
The target examination report PenCom presented to the board in June 2011 was critical of the way the company was being run, asserting, among other issues, that the chairman should not have occupied the post because he had insignificant shares.
But the FGPL board reasoned that the chairman, who had well over N20 million worth of shares, could not be said to have insignificant shares, more so since the company’s article and memorandum of association didn’t even provide for a share qualification to be on the board.
On the strength of that, FGPL questioned the report. PenCom became antagonistic and FGPL went to court to stop the regulator from implementing the report.
On August 11, 2011, Justice Donatus Uwaezuoke Okorowo of the Federal High Court, Abuja issued an ex-parte order restraining PenCom from implementing the report pending the determination of the substantive suit.
PenCom demurred and on August 15, 2011, dissolved the board of FGPL and appointed an interim management.
Not wanting to jump into the wet patch 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.
Adoke 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.
On June 18, 2012, Okorowo finally ruled on the matter in a 132-page judgment in which he nullified the “Draft First Guarantee Pension Limited Target Examination” and the “Target Examination Report of First Guarantee Pension.”
The judge took umbrage at PenCom for acting above the law and ordered the interim management removed.
But for eight years, the judgment was observed in the breach. Instead, the interim management declared illegal by the court made a filing at the Corporate Affairs Commission (CAC) and 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.
These actions were taken with neither shareholders’ nor directors’ meeting and, therefore, without a resolution.
Then, to add insult to injury, on June 13, 2012, Ibrahim, 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 and his group of minority shareholders from “convening and/or holding any annual general meeting of FGPL.”
All these illegalities went on under the watch of the interim management committee appointed by PenCom.
So, at the heart of the FGPL crisis is the shareholders’ disputes which emanated from the stake of Novare Holdings, which, over a decade ago, brought in foreign investments into the company.
The legal action commenced by Novare at the Federal High Court in Abuja by way of fundamental rights claims followed PenCom’s refusal to grant it fair hearing prior to making and enforcing decisions that significantly affected its position in FGPL.
The judgment of the Court of Appeal has not changed much, if anything at all. That is why PenCom’s “we have met the moment and we have prevailed” May 4 statement is too hasty.
When a regulator that refused to abide by a court decision for eight years, even when the judgment was not vacated by a superior court, suddenly acts on a new court order five days after despite a pending appeal at the Supreme Court, that is bad faith.
Until the Supreme Court decides one way or the other, the crisis at FGPL, a needless and contrived crisis, will continue with its deleterious effect on such a sensitive industry.
The winner-takes-all approach – which is what handing over FGPL to Kashim Ibrahim, a party to the crisis, means – without any consideration for the other party is a recipe for more crisis.
That is not how to resolve a nine-year-old dispute in the corporate world.