Shareholders of Oando Plc, and stakeholders in the capital market were thrown into uncertainty last Friday following the announcement of sanctions on the company and its management by the Securities and Exchange Commission (SEC).
The sanctions were a result of an 18-month protracted forensic audit investigation into the company.
SEC, in its notice to the public, said Oando was guilty of false disclosures, market abuses, misstatements in finances, and corporate governance lapses among others.
In May, 2017, SEC notified Oando that it had received complaints from Ansbury Investments Inc. and Alhaji Dahiru Mangal, both alleging serious concerns on corporate governance existence, gross abuse of corporate governance and financial mismanagement in Oando.
Oando challenged the veracity of the petitions and the immediate fall out. It questioned the motive of SEC’s investigation in the belief that it was biased, did not follow due process and lacked fairness.
Following the outcome of the audit, SEC last Friday, directed the resignation of the affected board members of Oando, and the convening of an extra-ordinary general meeting on or before July 1, 2019, to appoint new directors.
The communication to Oando Plc which was sighted by Daily Trust, had the regulator alleging that Oando Plc failed to establish an effective system of internal control as required under section 61 of the ISA 2007 over its financial reporting thereby compromising the integrity of the company’s financial control.
Explaining the suspected market abuse, SEC stated that in 2012, 2013, 2014 and 2015, certain insiders of Oando Plc sold shares during close period, despite having knowledge of active close period by the company and contrary to the rules of the Nigerian Stock Exchange (NSE).
The letter also alleged that Oando deducted an amount representing 24 percent of dividend paid to shareholders in 2014 as withholding tax, which exceed the statutory requirement of 10 percent by the company income tax act (CITA).
In view of the above stated, SEC in its letter directed that Oando Plc pay N182 million for publishing untrue statements and non-disclosure of related party transaction.
SEC directed the refund of N145m as remuneration of the eight members of the board of directors paid to them within the period.
It also directed Mr Jibril Adewale Tinubu (Group Chief Executive officer) and Mr Olufemi Adeyemi (Chief Financial Officer) to pay the commission N91.1m for certification of untrue statements immediately.
Oando insists on fair hearing
In their reaction, the management of Oando claimed that the outcome of the forensic audit and the actions of SEC were unsubstantiated, invalid and calculated to prejudice the business of the company.
The company claimed it had not been given the opportunity to see, review and respond to the forensic audit report and so was unable to ascertain what findings (if any) were made in relation to the alleged infractions to defend itself accordingly before SEC.
The Chief Operating Officer (COO) of Oando Energy Resource, Dr. Ainojie ‘Alex’ Irune, at a press conference in the company’s head office, said, “We were not given a chance to review and respond to the outcome of the report.
“In this instance, we have been sentenced to death without knowing what our crime is or being given a chance to defend ourselves. At the barest minimum, best practice requires that you give the person a chance of a fair hearing. We have not been accorded this opportunity,” he noted.
On the damage done to the brand, the Chief Finance Officer, Oando, Olufemi Adeyemo, said: “The damage cannot be quantified. We require credit to run our business, and this has come at an extra cost, one that we would ordinarily not have incurred. Despite these challenges we’ve kept making milestones and running the business as usual.
“It would interest you to note that the damage, financial and reputation, caused by the SEC fiasco is worth significantly more than the alleged infractions levelled against the company and its management team,” he said.
Reactions have also trailed the sanctions by SEC with business leader and founder of Stanbic IBTC Bank, Atedo Peterside, saying the oil and gas firm should be given fair hearing.
He said, “On Oando, what I don’t understand is why the SEC would not give the findings of the forensic audit to Oando and give them an opportunity to defend themselves? The findings of the forensic audit should be made public alongside Oando’s responses so we can all judge for ourselves.”
The management of Oando also said they would continue to insist on engagement with SEC until its constitutional rights are fulfilled.
“We owe it to our shareholders to continue running operations as usual,” it noted.
Ruling out any hasty decision to have its management resign, the COO, Mr. Irune, said, “Our engagement will continue into the weekend and we may be requesting a stay of execution.
“We will continue to appeal to the SEC to follow due process by sharing with us the forensic audit report, allow us defend ourselves and then make a decision based on a fair process.
“If the SEC does not engage with us, not only are they not working in the interests of the market and shareholders, they will scare away international investment/Foreign Direct Investment (FDI) into the country.”