There is more to Oando and SEC fiasco than meets the eye

For the past three days, Nigeria’s leading indigenous energy group listed on both the Nigerian and Johannesburg Stock Exchange, Oando Plc and Nigerian capital market regulator, Securities and Exchange Commission (SEC) have been in the news with regards to a press release by the SEC on the investigation against Oando following two petitions in 2017. This press release has received a lot of criticism and compliment from different people, especially those that matter in both the financial and oil and gas sector.

How it all started

In 2017, Alhaji Dahiru Mangal and Ansbury Inc. sent a petition to SEC objecting to the Annual General Meeting (AGM) of Oando Nigeria Plc billed for September 11, 2017, over alleged corporate governance breaches by its management. Alhaji Mangal is a substantial shareholder in Oando Plc. Ansbury, is a majority shareholder in Ocean and Oil Development Partners which owns 56 percent equity stake in Oando Plc, petitioned SEC to intervene and change the management of Oando. The company alleges that the management wants to continue running the oil firm even when it was not improving its fortunes. Following the receipt of this petitions, in March 2018, SEC engaged Deloitte & Touche to conduct a Forensic Audit of the activities of Oando Plc.

What is happening now

On Friday May 31, 2019, SEC issued a press release stating that following the forensic audit done by Deloitte & Touche  into the activities of Oando Plc certain infractions of Securities and other relevant laws were observed.

“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,” SEC said in a statement.

The commission also directed that the Group Chief Executive Officer (GCEO) and the Deputy Group Chief Executive Officer (DGCEO) of Oando Plc should resign and refund improperly disbursed remuneration among others.

According to the company’s 2018 full year financial statement, Employee benefit page 65, Wale Tinubu earned N568 million ($1.58million) making him the highest paid CEO in Nigeria.

Oando

In response to this, Oando Issued a press statement saying that “Oando is of the view that these alleged infractions and penalties are unsubstantiated, ultra vires, invalid and calculated to prejudice the business of the company. The company has not been given the opportunity to see, review and respond to the forensic audit report and so it’s unable to ascertain what findings (if any) were made in relation to the alleged infractions and defend itself accordingly before the SEC. The company reserves its rights to take all legal steps to protect its business and assets whilst remaining committed to acting in the best interests of all its shareholders.”

Surprisingly Oando issued another press statement refuting the initial press release urging the general public to take note. This move by the company questions the innocence of the company on the whole issue since it looked like the damage control by the company failed to stop SEC.

In the early hours of Monday June 3 2019, it was reported that staff of Oando Plc workers were denied access into the company’s corporate headquarters situated at Ozumba Mbadiwe street in Victoria Island, Lagos as operatives of the Nigerian Police Force (NPF) sealed the building. The police took over the building in line with the directives of the Security and Exchange Commission (SEC) on the constitution of an Interim Management Team.

“Further to our press release on Oando Plc, dated May 31, 2019, the commission hereby informs the public of the constitution of an interim management team headed by Mr Mutiu Olaniyi Adio Sunmonu CON, to oversee the affairs of Oando Plc, and conduct an Extraordinary General Meeting on or before July 1, 2019, to appoint new directors to the board of the company, who would subsequently select a management team for Oando Plc.”

In response to this fiasco, Reno Omokiri in an op-ed published on Thisday titled Bola Tinubu: Caught In A Monkey Trap said that the Cabal is using Nasir El-Rufai to clip Bola Tinubu’s wings politically through the instrumentality of the Securities and Exchange Commission. This is because the bond between Bola Tinubu and his Nephew Wale is so deep. It would be recalled that there have been hints that Tinubu would run for presidency come 2023 a position which El-Rufai also has an interest.

“The fact that Nasir El-Rufai unleashed his salvo about cutting certain godfathers to size, three weeks ago in Lagos, and then this recent move by the Securities and Exchange Commission against a company that is only one degree separated from both El-Rufai and Tinubu, cannot be a coincidence. Not at all!” Reno stated.

While SEC was busy dealing with Oando the organization itself was on fire as staff of the commission under the aegis of the Association of Senior Civil Servants of Nigeria, SEC Branch, on Tuesday rejected the judgement of the court reinstating the suspended Director-General, Mounir Gwarzo. They shut down the premises and crippled business activities for the day. Gwarzo was indicted for abuse of office and corruption by an Administrative Panel of Inquiry set up by the Federal Ministry of Finance headed by the Permanent Secretary, Dr Mahmoud Isa-Dutse. But last week the National Industrial Court, ordered his reinstatement with immediate effect and also ruled that all his salaries and allowances be paid to him.

This issue has so far affected the shares of Oando. At the early hours of trading on Monday, Oando shares fell by 9.52 percent.  The stock closed the month of May at 13.4% low which is the company’s lowest share price (N4.15) since January 2019.

Looking away from the allegations of Omokiri it is worrisome that if truly a crime of this magnitude happened in Oando, then it surely means that it has happened somewhere else too. A lot of Nigerians are also waiting on SEC to look into MTN’s listing on the Nigerian Bourse (NSE).