Uche Usim, Abuja
Players in the capital market on the platform of Consolidated Capital Market Stakeholders Forum (CCMSF) at the weekend endorsed the steps taken by the Securities and Exchange Commission (SEC) in suspending directors of Oando Plc, saying it was in line with due process stipulations.
The group in a statement signed by Umar Usman, urged the Oando directors to provide credible evidence refuting the findings of the forensic audit instead of whipping up sentiments.
According to Usman, there were several corporate governance lapses stemming from poor board oversight at Oando.
“These include irregular approval of Director’s remuneration, Director’s participation in matters in which they had declared interest, unjustified disbursements to Directors and management of the company, failure of the Audit committed to hold meetings with management, internal auditors and external auditors”, he noted.
Usman said Oando also failed to establish an effective system of internal controls as required under section 61 of the ISA 2007, over its financial reporting thereby compromising the integrity of the company’s financial controls and reporting as revealed by the misstatements In the financial statements, high number of related party transactions and unjustified disbursements to directors.
He stated that Oando Plc reported the sale of its subsidiary, Oando Exploration and Production Limited (OEPL) to Green Park Management Limited without obtaining the approval of the commission, (In violation of the provisions of the Investment and Securities Act (ISA 2007) and the consent of the minister of petroleum (as required under the Petroleum Act, 1969).
“The purported sale of OEPL enabled Oando Plc to report a profit instead of a loss, thereby misstating its financial statement in 2013 and 2014 and consequently misleading investors. This “Fictitious” profit reported in 2013 enabled “Oando Plc to declare dividends.
“The 2013 misstated accounts and quarterly reports of Oando Plc were included in the 2014 rights circular, thereby misrepresenting the financial status of the company to the public in violation of section 64 of the provisions of the ISA 2007.
On suspected market abuse, he said in 2012, 2013, 2014 and 2015, certain insiders of Oando Plc sold shares of the Company during “ Closed periods” despite having knowledge of active closed periods by the company and contrary to the rules of the NSE. The insiders include Ocean and Oil Investment Limited (OOIL-represented by Jubril Adewale Tinubu and Godwin Omamafe Boyo, Ocean and Oil Development Partners OODP represented by Jubril Adewale Tinubu, Godwin Omamofe Boyo, Francesco Cuzzocrea, and ECP African Fund II. PC ( a company in which Nana Appiah- Korang was director)
According to Usman, “They have not yet refuted the facts in the report of the forensic audit. Publishing untrue financial statements, paying themselves remuneration above the board charter , market abuse, related party transactions not conducted at arm’s length, misstatements in financial statement and inaccurate disclosures in the financial statements of Oando Plc are grievous issues that they ought to respond to”
“Those are very serious issues that no regulator would gloss over. Are they saying the SEC should wait till the company collapses before its does the needful?
“SEC is the statutory regulatory body for the capital market in Nigeria and a body charged with the responsibility of safeguarding the interest of the shareholders, investors, creditors and the public in order to maintain the stability of the capital market and by extension the economy of the Country as a whole”. He added
Usman said it was only proper for the SEC to Commence investigations After it received a petition dated 4th day of May 2017 from Alhaji Dahiru Bara’u Mangal, a shareholder of Oando complaining about Oando Plc management.
“Every action the Regulator has taken is to protect the stakeholders of the company. If the Directors feel the Regulator is wrong, then the onus is on them to provide evidence that they did not commit the above infractions.
According to him, “The actions of the Commission were properly effected pursuant to the provisions of the Investments & Securities Act (ISA) 2007 and the SEC Rules and Regulations made pursuant to the ISA 2007”.
“As the Apex Regulator of the Nigerian capital market, the Commission has a mandate to protect investors and the Commission’s recent action on Oando Plc aligns with the above cardinal mandate, as the directive for the removal of persons from the board of Oando Plc and the appointment of an interim management team to temporarily steer the affairs of the company is to protect investors and preserve stakeholder value.
“This is in line with the Federal Government’s agenda to build strong institutions and promote the transparency and integrity of the Nigerian capital market, especially given that, these are preconditions for attracting foreign investors to the Nigerian capital market” he added.