Stock markets all over the world are susceptible to crisis arising from internal orexternal shocks depending on the factors driving it.
As the global financial crisis intensified significantly in September 2008, liquidity dried up in many markets including Nigeria, equity prices fell sharply worldwide, and a number of large financial institutions collapsed or came close to bankruptcy.
It has been months after the Securities and Exchange Commission (SEC) declared its intention to conduct a forensic audit on the operations of Oando Plc after the Nigerian investment community and other stakeholders began to express some consternation over attempts to sweep the matter under the carpet.
SEC had given its word in December 2017 that the audit on activities of Oando Plc would continue after a Lagos court gave an order setting aside the prayers of the company to stop the process.
In a letter dated December 5, 2017 addressed to Oando, the commission communicated to the company that the audit would commence December 6, 2017. Prior to the ongoing confusion on its oversight function at the Nigerian capital market, there were allegations in most circles that SEC’s insistence to proceed with the audit led to the suspension of its Director General, Mounir Gwarzo (who is set to be reinstated) by the Minister of Finance, Mrs. Kemi Adeosun. This came after alleged political intrigues and power play at the highest level, after a protracted dispute between Oando and a major shareholder of the company, Dahiru Mangal, which was reported to have been resolved.
The decision had put in doubt the possibility of a proposed forensic audit of the company by SEC.
According to the notice on Nigerian Stock Exchange (NSE) website, the ‘peace deal’ had been arrived between Mangal and Mr. Wale Tinubu following the intervention of the Emir of Kano, Muhammadu Sanusi.
The notice, signed by Oando’s Chief Compliance Officer/Company Secretary, Ayotola Jagun, and its Head of Corporate Communications Unit, Alero Balogun, had indicated that the company was officially notified by Mangal that he is a substantial shareholder in the company.
“In accordance with the Companies and Allied Matters Act, Cap C20, LFN 2004 (CAMA), an individual or entity with direct/beneficial share ownership over 10 per cent constitutes a substantial shareholder in the company,” the notice said.
“In addition to confirming his status as a substantial shareholder, all the issues raised by Alhaji Mangal in his petition to SEC have been successfully addressed and clarified by the company.”
But the Commission continued to assure the investing community that it would go forward with the forensic audit, this time with Deloitte, an audit firm. But that took too long and the matter lay low.
So when SEC at the weekend announced that it had concluded investigation of Oil firm and directed among others the resignation of the affected Board members, and also barred the Group Chief Executive Officer (GCEO) and the Deputy Group Chief Executive Officer (DGCEO) of Oando Plc from being directors of public companies for a period of 5 years, all hell was bound to get loose.
According to the SEC, “Following the receipt of two petitions by the Commission in 2017, investigations were conducted into the activities of Oando Plc.
“Certain infractions of Securities and other relevant laws were observed. The Commission further engaged Deloitte & Touche to conduct a Forensic Audit of the activities of Oando Plc.
The general public is hereby notified of the conclusion of the investigations of Oando Plc. The findings from the report revealed serious infractions such as false disclosures, market abuses, misstatements in financial statements, internal control failures, and corporate governance lapses stemming from poor board oversight, irregular approval of directors’ remuneration, unjustified disbursements to directors and management of the company, related party transactions not conducted at arm’s length, amongst others”, it said.
SEC also directed the payment of monetary penalties by the company and affected individuals and directors, and refund of improperly disbursed remuneration by the affected Board members to the company.
As required under Section 304 of the Investments and Securities Act, (ISA) 2007, the Commission said it would refer all issues with possible criminality to the appropriate criminal prosecuting authorities.
In addition, the SEC stated that other aspects of the findings would be referred to the Nigerian Stock Exchange (NSE), Federal Inland Revenue Service (FIRS), and the Corporate Affairs Commission (CAC).
“The Commission is confident that with the implementation of the above directives and introduction of some remedial measures, such unwholesome practices by public companies would be significantly reduced.
Therefore, in line with the Federal Government’s resolve to build strong institutions, Boards of public companies are enjoined to properly perform their fiduciary duties as required under extant securities laws” the statement added.
However, the Oil firm roared back accusing the commission of bias in its investigation and ruling on the outcome of the forensic audit while adding that the alleged infractions and penalties were unsubstantiated.
It said, “Our attention has been drawn to a press release published by the Securities and Exchange Commission (SEC) on Friday, May 31, 2019 “Press Release on “Investigation of Oando Plc.
In the statement, the Commission confirms the conclusion of its investigations and that the findings from the report reveal serious infractions by the Company and as part of measures to address these violations, the Commission has directed penalties as follows; resignation of the affected Board members of Oando Plc, the convening of an Extra-Ordinary General Meeting on or before July 1, 2019,to appoint new directors, payment of monetary penalties by the company and affected individuals and directors,refund of improperly disbursed remuneration by the affected Board members to the company and barring of the Group Chief Executive Officer (GCEO) and the Deputy Group Chief Executive Officer (DGCEO) of Oando Plc from being directors of public companies for a period of 5 years”.
Furthermore, Oando said it has not been given the opportunity to see, review and respond to the forensic audit report and so is unable to ascertain what findings (if any) were made in relation to the alleged infractions and defend itself accordingly before the SEC.
According to the company, it reserves its rights to take all legal steps to protect its business and assets whilst remaining committed to act in the best interests of all its shareholders.
Speaking to Daily Sun, Shareholders of the embattled oil company welcomed the development while adding that they will mobilize their members to ensure a new management favourable to them will be constituted.
Chairman, Trusted Shareholders Association of Nigeria (TSAN), Alhaji Mukhtar Mukhtar,had wondered why the government will leave the management of a company it investigated and found to have engaged in underhand dealings to remain in office during a forensic audit.
His words, “It is never done anywhere. They are to be suspended pending the duration of the audit and if they are without blemish, they return but if guilty, let the law take its course.
We all remember the former SEC DG who insisted on this forensic audit, they leveled some allegations against him and he was suspended pending the outcome of the Administrative Panel of Inquiry. Why can’t the Oando management be suspended? This smells of bias and we are worried about it.
For his part, National President, Progressive Shareholders Association of Nigeria (PSAN), Boniface Okezie, urged the SEC to stop folding its hands until corruption wades in before it starts acting.
“It is a welcome development and other companies will learn a lesson. But SEC cannot continue to fold hands and allow itself and allow things to be at a big web of corruption before they wade in as they have to beam their searchlight on quoted oil companies as a lot of things have gone wrong beneath the surface. When you say you are divesting the subsidiary and you still have a hand in buying or recycling the money within, it has become a problem.
This situation is just like Cadbury in which some of their directors in public office were banned for life. so for me, SEC has even soften its stance in that the CEO banned can still come back after 5 years. The CEO has stayed long on that seat and that is why we the shareholders are clamouring that a policy as regards amount of years for a role should be put in place. Yes we are in a democracy, how far can they go in challenging the regulator? SEC didn’t conduct the forensic investigation, Deloitte an international audit firm did that so they should take what SEC has said in good faith as the survival of the firm is key to us shareholders”, Okezie said.