•Investors allege directors fritter N275m as severance pay

Securities and Exchange Commission (SEC) is set to investigate allegations of massive financial and securities fraud at Mass Telecommunication Innovation (MTI) following the petition by investors in the company, alleging that former directors of the telecommunication infrastructure company engaged in fraudulent practices and mismanaged the finances of the company.

The petition dated January 6 was acknowledged by the office of the director-general of SEC on January 22, 2014. A source at the apex capital market regulator indicated that the Commission will investigate the claims by the petitioners in line with its avowed commitment to market integrity.

The source indicated that SEC will give fair hearing to all parties and will also make its final findings available to the public as it has done in recent cases.

The petition, submitted on behalf of the aggrieved shareholders by the law firm of Punuka Attorneys and Solicitors was titled “Petition Against Five Former Directors Of Mass Telecommunication Innovation Plc (MTI Plc) Unlawful Distribution and Utilisation of the Company’s Funds Raised from the Capital Market”.

According to the petitioners, the five former directors of the company misappropriated funds raised through the private placement and made erroneous and misleading statements to hoodwink the public.

The former directors were Hon. Chibudom Nwuche, former chairman; Frank Kartitie, former executive vice chairman; Glen Daley, former managing director; Amunel Araya, former executive director for Finance and Administration and Gaetino Marcon, former executive director for engineering and technical services.

The petition stated that MTI, a company incorporated in December 2001, had between March and April 2008, after obtaining the consent of the SEC, undertaken a private placement to raise funds for the purpose of implementing its business development and expansion programme, improvement in information technology infrastructure, staff development and working capital as stated in the offer document.

According to the petitioners, N5.2 billion was raised through private placement and the firm was converted to a public limited liability company and its shares were listed on the floor of the Nigerian Stock Exchange (NSE) after a successful private placement.

However, the aggrieved investors alleged that as soon as the funds were released to the board and management, they immediately paid themselves what they tagged “severance pay.”

They alleged that each of the five directors took N55 million amounting to a total of N275 million but all the directors, including the non-executive directors, still remained on the board after collecting the severance pay.

They alleged that just one year after the proceeds of the private placement were received, the company was unable to pay salaries and pay for the execution of existing contracts.

“All the directors continued to collect salaries and allowances. Non-executive directors were not entitled to salaries. Payment of the severance pay was illegal as it ran contrary to the provisions of the law and the procedure stipulated,” the petitioners stated.

They also alleged that the directors might have fraudulently misdirected the investing public through overstatements and understatements of the financial conditions of the company during the issue period.

According to the petitioners, the financial details in the prospectus for the private placement were manipulated to deceive the investing public as the company has had to write off over N1 billion of overstated debts.

“Subcontractors were owed in spite of the fact that huge sums were paid to the company by major telecom companies as advance payment. Accumulated taxes such as VAT, companies’ income tax, and withholding tax were not paid,” they alleged.

The petitioners noted that the debts that were purportedly indicated as related to MTN Communications Limited, Etisalat Limited Airtel Nigeria Limited and Huawei Limited were hoaxes while the share premium account might also have been manipulated for more than N100 million.

MTI has struggled since quoted on the NSE. NSE has designated MTI as a company “below listing standard (BLS) for non rendition of financial statements.

MTI Plc prides itself as a diversified project development group offering high-performance infrastructure that assists service providers, enterprises and private sector organizations to

•Investors allege directors fritter N275m as severance pay

Securities and Exchange Commission (SEC) is set to investigate allegations of massive financial and securities fraud at Mass Telecommunication Innovation (MTI) following the petition by investors in the company, alleging that former directors of the telecommunication infrastructure company engaged in fraudulent practices and mismanaged the finances of the company.

The petition dated January 6 was acknowledged by the office of the director-general of SEC on January 22, 2014. A source at the apex capital market regulator indicated that the Commission will investigate the claims by the petitioners in line with its avowed commitment to market integrity.

The source indicated that SEC will give fair hearing to all parties and will also make its final findings available to the public as it has done in recent cases.

The petition, submitted on behalf of the aggrieved shareholders by the law firm of Punuka Attorneys and Solicitors was titled “Petition Against Five Former Directors Of Mass Telecommunication Innovation Plc (MTI Plc) Unlawful Distribution and Utilisation of the Company’s Funds Raised from the Capital Market”.

According to the petitioners, the five former directors of the company misappropriated funds raised through the private placement and made erroneous and misleading statements to hoodwink the public.

The former directors were Hon. Chibudom Nwuche, former chairman; Frank Kartitie, former executive vice chairman; Glen Daley, former managing director; Amunel Araya, former executive director for Finance and Administration and Gaetino Marcon, former executive director for engineering and technical services.

The petition stated that MTI, a company incorporated in December 2001, had between March and April 2008, after obtaining the consent of the SEC, undertaken a private placement to raise funds for the purpose of implementing its business development and expansion programme, improvement in information technology infrastructure, staff development and working capital as stated in the offer document.

According to the petitioners, N5.2 billion was raised through private placement and the firm was converted to a public limited liability company and its shares were listed on the floor of the Nigerian Stock Exchange (NSE) after a successful private placement.

However, the aggrieved investors alleged that as soon as the funds were released to the board and management, they immediately paid themselves what they tagged “severance pay.”

They alleged that each of the five directors took N55 million amounting to a total of N275 million but all the directors, including the non-executive directors, still remained on the board after collecting the severance pay.

They alleged that just one year after the proceeds of the private placement were received, the company was unable to pay salaries and pay for the execution of existing contracts.

“All the directors continued to collect salaries and allowances. Non-executive directors were not entitled to salaries. Payment of the severance pay was illegal as it ran contrary to the provisions of the law and the procedure stipulated,” the petitioners stated.

They also alleged that the directors might have fraudulently misdirected the investing public through overstatements and understatements of the financial conditions of the company during the issue period.

According to the petitioners, the financial details in the prospectus for the private placement were manipulated to deceive the investing public as the company has had to write off over N1 billion of overstated debts.

“Subcontractors were owed in spite of the fact that huge sums were paid to the company by major telecom companies as advance payment. Accumulated taxes such as VAT, companies’ income tax, and withholding tax were not paid,” they alleged.

The petitioners noted that the debts that were purportedly indicated as related to MTN Communications Limited, Etisalat Limited Airtel Nigeria Limited and Huawei Limited were hoaxes while the share premium account might also have been manipulated for more than N100 million.

MTI has struggled since quoted on the NSE. NSE has designated MTI as a company “below listing standard (BLS) for non rendition of financial statements.

MTI Plc prides itself as a diversified project development group offering high-performance infrastructure that assists service providers, enterprises and private sector organizations to create value and accelerate business success within the new changing African and global marketplace.

According to its corporate information, the foundation of MTI Plc was laid with its incorporation in December 2001. It commenced operations in the year 2002 as an Information Communication and Technology (ICT) company to provide a broad spectrum of world-class telecommunication products and services. It became a publicly quoted company in March 2008 with four distinct subsidiaries.

“Headquartered in Lagos, MTI has offices in Ghana and Nigeria, and employs approximately 192 employees. The prime objective of this uniquely positioned company is to implement infrastructure projects on a commercial format. MTI’s business is to build quality, independently owned and operated infrastructure to service Sub-Saharan African needs in telecommunication, energy, transport and sanitation on an open-access, open-book and common-user basis,” the company stated on its profile.

create value and accelerate business success within the new changing African and global marketplace.

According to its corporate information, the foundation of MTI Plc was laid with its incorporation in December 2001. It commenced operations in the year 2002 as an Information Communication and Technology (ICT) company to provide a broad spectrum of world-class telecommunication products and services. It became a publicly quoted company in March 2008 with four distinct subsidiaries.

“Headquartered in Lagos, MTI has offices in Ghana and Nigeria, and employs approximately 192 employees. The prime objective of this uniquely positioned company is to implement infrastructure projects on a commercial format. MTI’s business is to build quality, independently owned and operated infrastructure to service Sub-Saharan African needs in telecommunication, energy, transport and sanitation on an open-access, open-book and common-user basis,” the company stated on its profile.