Daily Independent (Lagos)
Kingsley Ighomwenghian
29 June 2009
The Securities & Exchange Commission (SEC) at the weekend announced the dissolution of the board of Afroil Plc, just as it slammed a five-year ban on the Managing Director, Ishaq Olakunle Sanni, over the sale of the company's illegally warehoused shares.
The decision followed the outcome of the commission's Administrative Proceedings Committee (APC), which also slammed the directors for violating other provisions of the Investments & Securities Act, 2007, as well as the Rules and Regulations of the SEC.
The APC, according to the statement signed by Lanre Oloyi, the Commission's spokesman, also found Sanni guilty of fraudulently converting the sum of N185,224,660.22, belonging to the company.
According to details of the crime, the APC discovered that 165 million ordinary shares of 20 kobo each at 40 kobo of Afroil were offered during its initial public offering, out of which about 69.73 million units or 42.26 per cent were unsubscribed. Not being underwritten, the shares were illegally warehoused, rather than an outright cancellation.
Of the warehoused shares, the committee found the Managing Director guilty of illegally selling and misappropriating the proceeds of 29 million units.
He has subsequently been directed to refund the proceed of the illegal sale, just as he has been banned from holding a board seat in any public quoted company for five years.
He has been referred to the Economic and Financial Crimes Commission (EFCC) for further investigation and prosecution for fraudulent conversion of the company's N185.224 million, being the amount realized from the sale of the illegally warehoused shares.
Consequently, he has been disqualified from operating in the Nigerian Capital market and from holding directorship position in any public company in Nigeria for a period of five years and he is to be handed over to the EFCC for further investigation and criminal prosecution.
The SEC statement announced the constitution of a five-man interim management committee (IMC) in conjunction with the Corporate Affairs Commission (CAC).
The committee is to run the company and call shareholders for an Extra-Ordinary General Meeting (EGM) within 90 days.
The commission had last year said it was investigating observed the manipulation of company's share price in addition to five others, after which it constituted an investigative committee to, "among other things, ascertain the basis of the price movement, establish any possible price manipulation and identify those responsible."
Continuing, the statement explained: "the Committee, after reviewing documents obtained from the Central Securities Clearing Systems Limited and some brokers/dealers, found among others that Reward Investment and Services Limited and PSL Securities Limited illegally offered for sale on the floor of the Nigerian Stock Exchange (NSE) shares of Afroil Plc, which were illegally warehoused in the name of Prudent Bank Plc (now Sky Bank Plc).
"Based on the report and findings of the Committee, the Commission on March 17, 2008 directed the NSE to suspend trading in the shares of Afroil Plc.
"In view of the foregoing, the parties involved were invited before the APC of the Commission, via letters dispatched to each of them personally and publications in two national daily newspapers, to explain why sanctions should not be imposed on them for violating the provisions of the ISA 2007, the SEC Rules and Regulations 2000 (as amended), as well as the Code of Conduct of Corporate Governance in Nigeria."
Also, "K.S. Fund Managers Limited (a company wholly owned by Mr. I. O. Sanni) was unable to prove how it acquired 49 million units of shares of Afroil Plc credited to it, which enabled it to have a Board seat in the company. Consequently, the shares credited to it are to be forfeited.
The SEC APC also found Odili Okechukwu & Co, Afroil's auditors culpable for signing the annual report and accounts containing irregularities and financial misstatements. The firm's application for registration as an auditor with the Commission was deferred for three years, just as it has been referred to the Institute of Chartered Accountants of Nigeria (ICAN) for appropriate disciplinary action for professional misconduct.
Sundry fines were also imposed on the other Respondents found liable, while details of the decisions have been communicated to all the parties and regulators for implementation.
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