The Securities and Exchange Commission (SEC) yesterday announced that it had concluded its investigation into the activities of Oando Plc., and found its management involved in serious infractions such as false disclosures, market abuses, misstatements in financial statements and corporate governance lapses stemming from poor board oversight.
Consequently, the regulatory agency ordered the oil firm's Group Chief Executive Officer, Mr. Wale Tinubu, the deputy, Mr. Omamofe Boyo and other board members to resign and ordered that an Extra-Ordinary General Meeting be convened to appoint new directors, on or before July 1, this year.
The Commission also barred Tinubu and Boyo, from being directors of public companies for a period of five years.
But in a swift reaction last night, Oando said it would challenge SEC's ruling, saying the alleged infractions and penalties "are unsubstantiated, ultra vires, invalid and calculated to prejudice the business of the company."
The regulatory agency said these were part of measures to address identified violations in the company. It also directed the payment of monetary penalties by the company and by the affected individuals and directors, as well as refund of improperly disbursed remuneration by the affected board members to the company.
As required under Section 304 of the Investments and Securities Act, (ISA) 2007, the Commission said it would refer all issues with possible criminality to the appropriate criminal prosecuting authorities.
In addition, the SEC stated that other aspects of the findings would be referred to the Nigerian Stock Exchange (NSE), Federal Inland Revenue Service (FIRS), and the Corporate Affairs Commission (CAC).
SEC said: Following the receipt of two petitions by the Commission in 2017, investigations were conducted into the activities of Oando Plc., (a company listed on the Nigerian and Johannesburg Stock Exchanges). Certain infractions of Securities and other relevant laws were observed. The Commission further engaged Deloitte & Touche to conduct a Forensic Audit of the activities of Oando Plc.
"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.
"The Commission is confident that with the implementation of the above directives and introduction of some remedial measures, such unwholesome practices by public companies would be significantly reduced.
"Therefore, in line with the federal government's resolve to build strong institutions, Boards of public companies are enjoined to properly perform their fiduciary duties as required under extant securities laws.
"The Commission, as the apex regulator of the Nigerian capital market, maintains its zero tolerance to market infractions, and reiterates its commitment to ensuring the fairness, integrity, efficiency and transparency of the securities market, thereby strengthening investor protection."
Responding to the SEC ruling, Oando said: "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 is unable to ascertain what findings (if any) were made in relation to the alleged infractions and defend itself accordingly before the SEC."
Oando declared that it reserves its rights to take all legal steps to protect its business and assets whilst remaining committed to act in the best interests of all its shareholders.
The Oando problem started in 2017 when two shareholders, Alhaji Dahiru Barau Mangal, and Ansbury Incorporated wrote petitions to SEC alleging financial mismanagement of the company.
The two shareholders had petitioned SEC, claiming majority shareholding in Oando Plc and that the company was being mismanaged by the Wale Tinubu-led management.
They had sought the removal of Tinubu as Group Chief Executive Officer of the company so as to save it from going under.
SEC said it carried out a comprehensive review of the petitions and found: breach of the provisions of the Investments & Securities Act 2007; breach of the SEC Code of Corporate Governance for Public Companies; suspected insider dealing; suspected related party transactions not conducted at arm's length and discrepancies in the shareholding structure of Oando Plc., among others.
According to SEC those findings are weighty and therefore needed to be further investigated.
"After due consideration, the commission believes that it is necessary to conduct a forensic audit into the affairs of Oando Plc. This is pursuant to the statutory duties of the Commission as provided in section 13(k), (n), (r) and (aa) of the ISA 2017.
"To ensure the independence and transparency of the exercise, the forensic audit shall be conducted by a consortium of experts made up of auditors, lawyers, stockbrokers and registrars."
In order to further ensure that the interest of all shareholders of Oando Plc were preserved during the course of the exercise, SEC directed the NSE to place the shares of Oando Plc., on technical suspension in October in 2017.
But the suspension was lifted in April 2018 with SEC explaining that the technical suspension took longer than expected on account of the lawsuits from its shareholders and from the company itself.
"All litigations have now been withdrawn, the independent forensic audit by Deloitte is ongoing and the preliminary result is expected," SEC said back then.