Oando crisis: SEC uncovers insider deals, other infractions

Oando Plc CEO Wale Tinubu

In line with the mandate given to it by the National Assembly to investigate shareholders’ allegations against Oando Plc, the Securities and Exchange Commission (SEC), yesterday wrote its management, revealing gross insider dealings and other alleged unwholesome practices that forced it to wield the big stick.

The letter came as anxious stakeholders await the outcome of the forensic audit of the embattled oil firm,  The SEC letter dated October 17 and titled: “Re-Serious Concern To Corporate Governance Existence, Gross Abuse of Corporate Governance And Financial Mismanagement In Oando Plc”, signed by Head, Legal Department, Mrs Braimoh Anastsia, was addressed to the Group Chief Executive Officer (GCEO), Adewale Tinubu.

It stated clearly that there was outright disregard of laid down rules and regulations, especially the mis-statements in the 2013 and 2014 audited financial statements of Oando Plc, arising from the OEPL transaction.

According to SEC, “Following the structuring of the OEPL transaction in contravention of the ISA 2007, Oando Plc recorded a profit of about N6 billion from the sale of OEPL that erased the operating loss of N4.68 billion leading to a profit of N1.4 billion for the year 2013.

“The company subsequently declared dividends from the profit. Having admitted that the action was in breach of the ISA 2007, Oando Plc, restated its 2013 & 2014 Audited Financial Statements which contained material false and misleading information contrary to Section 60(2) of the ISA 2007.

The Commission added: “The Commission finds from the Corporate Governance return submitted by the company for the period ended December 31, 2016 that the renumeration of the Group Executive Officer (GCEO) and the Deputy GCEO were approved by the Board while the GCEO was responsible for fixing the renumeration of other Executive Directors which is in violation of part 3, 14,3 of the SEC Code of Corporate Governance”. SEC explained that the last board evaluation of Oando Plc was done by KPMG in 2012, adding that “this is a violation of Part B, 15.1 of the SEC Code of Corporate Governance.

Other areas highlighted by the Commission include:  “Breach of ISA 2007 on Disposal of Oando Exploration & Production Limited (OEPL) by Oando Plc 2013. It explained that  the disposal of Oando Exploration Production Limited (OEPL) to Green Park Management Limited was done without the prior approval of the Commission.

SEC highlighted: “Misstatements in the 2013 and 2014 Audited Financial statement of Oando Plc arising from the OEPL transaction following the structuring of the OEPL transaction in contravention of the ISA 2007. It also noted that “The 2014 Rights Issue Circular of Oando Plc contained information relating to the profit reported by Oando Plc in 2013 arising from the sale of OEPL, which was equally a breach of its rules.

Consequently, the said Rights Issue circular contained material misleading information. This action amounts to a violation as contained in Section 85(1), 86(1) and 87(1) of the ISA 2007.  The capital market regulator further pointed out “That Oando Plc in 2014, remitted dividends to the Registrar in piecemeal in violation of Rule 44 (1) of the SEC Rules and Regulations contrary to the code of conduct in respect to dividends.

“The Commission notes the Report of the Independent Auditors of Oando Plc, Ernst & Young, which is contained on Pages 63-68 of the 2016 Annual Reports & Accounts of Oando Plc, more particularly in Paragraph 1 of Page 64 where the independent auditors reported the going concern status of the Company.

“The Commission observed that certain persons classified as insiders within the provisions of Section 315 of the Investment and Securities Act (ISA), 2007 and who were in possession of confidential price sensitive information not generally available to the public, had between January-October 2015 traded on Oando Plc shares prior to the release of the company’s 2014 Financial Statement, where the company reported a loss of N83 billion.

Meanwhile, share price of Oando Plc was yesterday frozen at N5.99, a notice from the Nigerian Stock Exchange had shown. The Exchange said it has partially lifted the suspension placed on shares of Oando Plc on Wednesday.

In a notice signed by Tinuade Awe, General Counsel, Head of Regulation, NSE said shareholders can now trade their shares, but the trading activity will not lead to a change in price. “Dealing members are referred to our market bulletins of Wednesday, October 18, 2017 (NSE/LARD/LRD/MB05/17/10/18) notifying them that effective Friday, October 20, 2017 and until further directive, the shares of Oando Plc (“Oando” or “the company”) will be placed on technical suspension; and that of Friday, October 20, 2017 (NSE/LARD/LRD/MB07/17/10/20) informing them that the shares of Oando were still on full suspension as the process of converting from full to technical suspension was yet to be completed,” the statement read.

On Thursday, the Johannesburg Stock Exchange also placed a ban on Oando on request of SEC.” Oando had said it was aware the regulator had received petitions and said the allegations were “unsubstantiated, misleading and defamatory.” On technical suspension of its shares, the company said it was still reviewing SEC’s letter to it and will reply as soon as possible. The regulator had suspended the company’s shares last Wednesday following a request from the Securities Exchange Commission (SEC).

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