Nigeria’s Finance Minister, Kemi Adeosun has directed the capital market regulator in Nigeria, the Securities and Exchange Commission (SEC) to probe the divestment of the Federal Government’s share in Transcorp Hotel, one of the state-owned enterprises.
The move, according to sources, may be part of the searchlight the Federal Government is beaming on how some of its assets were acquired under the past administration.
The Federal Government is believed to be upset that the process of divesting the Federal Government’s 49 per cent equity in Transcorp was everything but transparent as due process was not allegedly followed leading in the dilution of Federal Government’s holding in Transcorp from 49 to 12.
A source in SEC who pleaded anonymity said that ”Two years after it gave its nod to a rights issue undertaken by Transcorp Hotels Plc in December 2013, the Securities and Exchange Commission (SEC) has been put under pressure by the Federal Government to investigate the process adopted for the controversial fund raising, which diluted the Federal Government’s shareholding from 49 per cent to 12 per cent. ”
In rejecting the process adopted by SEC for the rights issue, the Federal Government, which alleged a deliberate ploy to whittle down its shareholding from the hotels by subterfuge called on SEC to revisit the entire process.
“This protest is contained in a letter addressed to the Director-General of SEC by the Honourable Minister of Finance, Mrs. Adeosun, requesting the highest regulatory authorities in the capital market to investigate the process adopted for the rights issue.
“Adeosun, in the letter alleged that the notice of the Rights Issue was misdirected to the Bureau of Public Enterprises (BPE) instead of Ministry of Finance Incorporated (MOFI), the real shareholder of Transcorp Hotels on behalf of the Federal Government.
“The Federal Government was also said to have taken very serious exemptions to the role played by the BPE which allegedly failed to forward the Notice of Rights Issue to MOFI but instead wrote a letter to the then Vice President and Chairman of the National Council on Privatization (NCP) on December 10, 2013 to inform him of the offer on the Rights Issue of 7,840,000 totaling the sum of N1, 960 billion to be paid by the Government (MOFI), for an offer that was to close on the December 13, 2013,” the source revealed.
It also added that curiously, the BPE was said to have in the letter to the Vice President claimed to have applied for an extension of time but, did not state whether the extension had been granted or not.
“That alone is sufficient indictment on the part of BPE; knowing fully well that the time provided was not sufficient to enable MOFI or even the Federal Government do anything substantial to participate in the Rights Issue,” the Minister’s letter reportedly alleged.
The source provided more insight into the content of the letter dated, March 11, 2016. “I write to request for an investigation into the Rights Issue conducted by Transcorp Hotels Plc in December 2013 which diluted the Federal Government of Nigeria’s shareholding from 49 per cent to 12 per cent.
“You will recall the company was hitherto 100 percent Federal Government owned prior to privatisation in 2001/2002. After the privatization, Ministry of Finance Incorporated (MOFI) retained 49 percent of equity in the company on behalf of the Federal Government.
“The company conducted a Rights Issue that put MOFI in a disadvantageous position which resulted in the dilution of the Federal Government’s shareholding from 49 per cent to 12 per cent in December, 2013. This was done by misdirecting the Notice of Rights Issue to the Bureau of Public Enterprises (BPE) instead of the Ministry of Finance Incorporated (MOFI), thereby delaying communication on the matter.
“Also note that the Company and BPE relied on a pre-privatization Power of Attorney on privatizing 51 per cent of the FGN Holding which did not convey the right to decide on the remaining 49 per cent investment on behalf of MOFI and consequently altered the shareholding structure of the company.”
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