A Federal High Court, Lagos, on Monday, May 16, struck out the suit instituted by the sacked management of Investment and Allied Assurance Plc, (IAA) against the National Insurance Commission (NAICOM).
Trial Judge, Charles Archibong, struck out the matter and also discharged the interim injunction restraining NAICOM from running the management of IAA and appointing a new interim management for the company.
The matter was struck out on two grounds. First, the judge observed that the sacked management commenced the action without the authority of the board of IAA. Secondly, the judge also observed that the requisite pre-action notice was not served on NAICOM before the action was commenced.
The National Insurance Commission, acting in accordance with its statutory powers under (part V11) of the NAICOM Act 1997 on February this year suspended the management of Investment and Allied Assurance Plc from office for failure of the management of the company to satisfactorily correct material lapses observed and brought to its attention by the Commission.
Going by the provision of the Insurance Act, NAICOM assumed control and appointed a team of tested professionals to manage the affairs of the company for an initial period of six months.
NAICOM, in the course of on-site inspection exercise conducted on the company last year, discovered a number of fundamental weaknesses in the management of the company, including poor corporate governance structure practices, weak management and internal control, non payment of outstanding claims, and failure to account for the sum of N26.6 billion being proceeds of private placements in the company.
Besides, the routine inspection by NAICOM, the Securities and Exchange Commission (SEC) also had cause to investigate activities of IAA following series of complaints by subscribers to the company’s private placement. The findings by SEC were quite revealing.
Whereas the company claimed that the amount realised from the private placement was N11.1 billion, records available at the registrar’s office indicated that the total sum realised from the placement was N26.6 billion. The offer proceeds of N26 billion were paid directly into IAA account with Home Trust Savings and Loans Limited.
The vice chairman and another non-executive director of IAA are the managing director and deputy managing director respectively of Home Trust Savings and Loans Limited. The balance of N15.6 billion from the proceeds is yet to be accounted for by the company.
It was also discovered that four companies where the vice chairman and his family members hold majority shares bought shares worth N9.92 billion of IAA through private placement.
The Managing Director and the Assistant General Manager, Finance of IAA reported that all financial transactions in the company were solely handled by the vice chairman, while records of the transactions were being kept by him in Home Trust Savings and Loans Limited.
These observations and others were communicated to the company vide letter dated January 28, 2009. The company responded by letter dated March 10, 2009.
Following the company’s response and the revelations from the SEC report, the commission with the approval of its governing board ordered a special inspection of the activities of the company, which was conducted between February 2 and 10, 2010. The report of the special inspection confirmed the revelations contained in the SEC report and made other specific findings.