Shareholders seek accelerated forensic audit of Oando

 

Shareholders of Oando Plc has called for immediate commencement of the proposed forensic audit of the company.

According to the shareholders who made the declaration yesterday in Lagos, the investigation should be detailed and “without any fear or favour”.

Under the aegis of Nigeria Shareholders Solidarity Association (NSSA), the shareholders also called on the auditors to investigate all management staff of the company, adding that anybody found guilty should be prosecuted in line with laid down rules and regulations.

Speaking further on behalf of the group, Alhaji Gbadebo Olatokunbo said that majority of shareholders are not happy with development in the company.

Gbadebo, who is one the co-founder of the group in 1985 said: “Anybody found guilty should be sanctioned for cheating on investors. They refused to pay The Right Returns on investment for some time despite their several advantages as on/off shores oil company”.

He added: “The God of the silence-majority is at work to revenge for the cheated retail shareholders of the company. I want to suggest that all the management staff of the company should be probed”.

Meanwhile some brokers whose clients’ had lost substantial investments in Oando Plc, also at the weekend advised the leadership of the Securities and Exchange Commission (SEC) to “ignore all forms of blackmails and intimidations”.

Urging members of the public especially investors to give SEC all the necessary support, they insisted that the allegation against the management of Oando must not be swept under the carpet through court injunctions.

According to an aggrieved Broker who preferred to remain anonymous, the order of court vacating the technical suspension placed on Oando’s shares by the NSE is all geared towards halting the justice process for shareholders who might have in one way or the other suffered losses.

According to the broker, removing the technical suspension will make investors suffer more losses as investors will dump the shares immediately.

He said: If they have nothing to hide, they should allow the forensic auditing directed by the Commission to take its full course and let Nigerians know who is at fault.

The Broker explained that the Investment and Securities Act (ISA) has spelt out all the rules guiding the market, adding “The records are there for people to see. The court cannot save the management of the company. They must step down and be prepared for prosecution. The auditor’s report is there for all to see. Wale Tinubu, the CEO of Oando Plc is just buying time”.

Indeed, as stakeholders await the outcome of the Forensic Audit, SEC has revealed more details into the alleged unwholesome practices that prevailed in the organization, noting that its action was based on petition.

Specifically, a committee raised by the commission observed alleged misstatements in the 2013 and 2014 Audited Financial statement 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 said: “The commission finds from the Corpororate Governance return submitted by the company for the period ended December 31st, 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”.

The letter dated October 17, 2017, was 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, 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 includes: “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.

“Breach of ISA 2007: 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, 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.

“Breach of ISA on Misleading Information contained in Oando Plc’s 2014 Rights Issue Circular.

“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. 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.

“Breach of SEC Rules and Regulations on Payment of Dividends

That Oando Plc in 2014, remitted dividends to the Registrar in piecemeal in violation of Rule 44 (1) of the SEC Rules and Regulations.

“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 Ni 83 Billion.

“On the allegation of insider dealing made by Oando Plc against Aihaji Dahiru Mangcil. Although investigation was initiated by the Commission, the attention of the Commission was drawn to a letter dated September 21, 2017 from Oando Plc, informing it that a suit had been filed in court in that regard, and that the matter was now sub-judice.

“The Commission identified certain Related Party Transactions and observed that they were not conducted on arm’s length basis.

“The Committee noted that Oando Plc declared dividends in 2013 and 2014 from unrealized profits.

“Shareholding Structure/Register of Members of Oando Plc

“The Commission observed discrepancies in the shareholding structure of Oando Plc. While Alhaji Mangal’s status as a shareholder in Oando Plc is not in contention or dispute, the exact units of shares held by him requires reconciliation.

“The Commission’s primary role as the Apex Regulator of the Nigerian capital market is to regulate market participants and protect the investing public. The Commission notes that the above findings are weighty and therefore needs to be further investigated to ascertain their veracity or otherwise.

After due consideration, the Commission believes that the engagement of a Forensic Auditor to conduct a forensic audit into the affairs of Oando Plc has become necessary. This is pursuant to the statutory duty of the Commission enshrined in Section 13 (k) and (r) of the ISA 2007”.