Nigerian oil firm, Oando Plc, allegedly declared dividends from unrealised profits and released false financial statements to the public before it was suspended by the Nigerian Stock Exchange, NSE, a correspondence sent to the oil firm by the Securities and Exchange Commission, SEC, shows.
Oando, which was suspended by the NSE on October 19, has been enmeshed in a protracted crisis for a while.
The NSE suspension followed an October 18 directive by the SEC, mandating the Nigerian bourse to sanction the oil firm.
Similarly, the Johannesburg Stock Exchange, following an advice from the Nigerian bourse, also suspended the embattled firm on October 19.
But in a letter sent by SEC to the Group Chief Executive Officer of the firm, Wale Tinubu, and obtained exclusively by PREMIUM TIMES, the commission said it found that the oil firm’s 2014 Rights Issue Circular ”contained misleading information.”
The letter, dated October 17, and signed by Braimoh Anastasia, Head of Legal department at SEC, said the oil company’s disposal of Oando Exploration Production Limited, OEPL, to Green Park Management Limited was done in contravention of the Investment and Securities Act, ISA, 2007 because the regulatory body was not informed.
In 2013, following the structuring of the OEPL transaction in a way SEC said contravened the ISA 2007, Oando recorded a profit of about N6 billion that erased a loss of N4.68 billion which made the company declare a profit of N1.4 billion for the same financial year.
The letter revealed that since the transaction was done in contravention of ISA 2007, Oando Plc restated its 2013 and 2014 audited accounts which contained “…material false and misleading information contrary to section 60(2) of the ISA 2007.”
The letter also revealed that the 2014 Rights Issue Circular of the company contained information on the profit reported by the company in 2013 arising from the sale of the OEPL, which the commission considered “false and misleading.”
This action, it said, amounted to a violation as contained in sections 85, 86 and 87 of the ISA 2007.
In the notice publicly released by SEC on October 18, the regulatory commission said it received petitions from a shareholder, Dahiru Mangal, and Ansbury Incorporated, with allegations of gross misconduct leveled against Oando’s management.
The commission said it regarded Ansbury as a whistleblower.
Similarly, the commission noted that the corporate governance return submitted by the company in December 2016 showed that the renumeration of the GCEO, Mr. Tinubu, and the deputy GCEO were approved by the board while the GCEO approved the renumeration of other executive directors, a clear violation of part B 14.3 of the SEC Corporate Governance Code.
It also revealed that the last audit of the firm was done by KPMG in 2012, a development it also said contravened the SEC regulations.
The letter also said that the firm paid dividends to its registrar in piecemeal, also a clear violation of the SEC regulations, even as independent auditors reported the going concern status of the company in 2016.
Further checks also revealed that certain persons classified as ‘insiders’ within the provision of section 315 of ISA, 2007, and were in possession of confidential price sensitive information not generally available to the public, had between January and October 2015 traded on Oando shares prior to the release of the company’s 2014 financial statement, in which the company reported a loss of N183 billion.
In 2013 and 2014, SEC revealed, Oando also declared dividends from unrealised profits even as certain Related Party Transactions were not conducted on arm’s length basis, all in violation of the SEC rules and regulations.
The commission said the findings were weighty and required further investigation by an independent team of auditors.
The regulatory body sais it had appointed a consortium of Akintola Williams Delloite, United Securities Limited, SPA Ajibade & Co, TJADAP Consulting and Associates, and Nasiru Muhammad and Co. to carry out the auditing.
“The cost implications of the exercises is N160,000,000.00 (One hundred and sixty million naira) and shall be borne by Oando Plc,” the letter stated.
Oando’s Head of Corporate Communications, Alero Balogun, declined comments, but said the company would issue a statement on the matter on Tuesday.