Following the technical suspension placed on its shares and the decision to undertake a forensic audit into its affairs, Oando Plc has claimed it has obtained an interim injunction from a Federal High Court restraining the Nigerian Stock Exchange (NSE) and any other parties working on its behalf from giving effect to the directive of the Securities and Exchange Commission (SEC) to implement the suspension, pending the hearing and determination of the motion for injunction.

The court, Oando further claimed, has also issued an order restraining SEC and any other parties claiming to or working on behalf of the commission from conducting any forensic audit into the affairs of Oando, pending the hearing and determination of the motion for an injunction. Oando, in a statement Tuesday, said it obtained the interim injunction and restraining order from a Federal High Court, but failed to indicate the jurisdiction of the court. SEC last week had placed the company’s shares on full suspension for two days, then a technical suspension thereafter, pending the forensic audit into the affairs of the company.

The decision followed its investigation into two petitions sent to the commission by Mr. Dahiru Mangal and Ansbury Incorporated respectively, a shareholder and an indirect shareholder of the energy firm.
SEC’s probe threw up several regulatory infractions committed by Oando, which has dual listings on the Nigerian and Johannesburg Stock Exchanges (JSE), and the commission’s instruction to the firm that it must bear the N160 million cost of the forensic audit to be handled by a team of independent experts to be led by the audit firm, Akintola Williams Deloitte.

But in a statement Tuesday on SEC’s findings, Oando’s Chief Compliance Officer and Company Secretary, Ayotola Jagun, provided clarifications to all the points raised in the commission’s findings as outlined in their correspondence to Oando’s Group Chief Executive (GCE) Mr. Wale Tinubu, on October 17, 2017. Oando also noted that SEC had announced that a forensic audit into the affairs of the company will be conducted by a team of independent professional firms. But Oando described SEC’s directives as illegal, invalid and calculated to prejudice its business.

To safeguard the interests of the company and its shareholders, Oando said it took the step to file an action against SEC and NSE.“The NSE and SEC were served with the enrolled court order today Tuesday, October 24, 2017, after the technical suspension was carried out by the NSE on Monday, October 23, 2017. In our view both the NSE and the SEC are legally obliged to comply with the interim order, pending the substantive determination of the suit,” the company added.

Oando said it resorted to the court action because having declared to the public that SEC had ordered the suspension of its shares as a result of its “weighty” findings in the course of its investigations, SEC further concluded that a forensic audit was necessary in order to investigate whether its findings were true.

Oando described SEC’s position on the matter as a clear contradiction.“How did SEC arrive at its findings if it cannot be sure of the veracity or otherwise of those findings and how did it ascribe the appropriate level of weight to be given to those findings, enough to warrant an immediate suspension, followed by a technical suspension of the shares of the company, if those findings are still mere allegations at this point?” Oando wondered.

Oando said it had fully co-operated with SEC since the commencement of this investigation in May 2017 and had provided all the information requested. According to the company, it was evident that the submissions made to SEC had not been duly considered due to the conclusions reached and actions were taken, as all of the matters raised had been responded to in great detail with all supporting documents requested by SEC.

Oando alleged that its chairman had requested an audience with SEC to enable it to present its case before the commission but to date, no invitation has been extended to the company. “Each of the alleged infractions has a penalty as prescribed by the respective provisions of the ISA, SEC Code, SEC Rules and Regulations, NSE Listing Rules and CAMA; none of them whether singularly or together warrant the suspension of free trading in the securities of the company or the institution of a forensic audit. The latest actions taken by the SEC are prejudicial to the business of the company as it would hinder the ability of the company to enter into new business transactions and affect the confidence that existing stakeholders (lenders, JV partners, vendors, etc.) have in transacting business with the company.The company has received numerous queries from critical stakeholders, including its lenders as a result of SEC’s actions and an indefinite technical suspension of its shares, as well as an open-ended forensic audit that will negatively impact the ability of the company to conduct its day-to-day business and meet the expectations of all its stakeholders,” Oando stated.

Oando added that by issuing the two letters dated August 24 and August 28, its chairman had petitioned the Director General of SEC alleging bias and lack of due process in the way and manner in which SEC has conducted this investigation. According to the company, the current action by SEC, despite its internal findings, confirmed that SEC appeared to be working to its own conclusion rather than looking at the facts before it and acting in the best interest of the company and the minority shareholders whom it claimed it sought to protect. Oando further alleged that in its most recent communication to the Group Chief Executive (GCE) dated October 17, SEC unilaterally qualified one of the petitioners, Ansbury Inc. as a whistleblower despite the fact that Ansbury brought its petition to SEC as an indirect “shareholder” of the company.

The company argued that it had from the date of its earliest communication to SEC on this matter, challenged both the legal capacity of Ansbury to bring a petition against the company and SEC’s jurisdiction to consider the petition.“This is because Ansbury is not, in fact, a shareholder of the company and furthermore, there is an on-going arbitration in the United Kingdom in respect of its indirect investment in the company. Under SEC’s Complaints Management Framework, it shall not consider any matter which is currently in arbitration. The unilateral and arbitrary re-classification by the SEC of the basis upon which Ansbury wrote its petition at this late stage is at odds with accepted principles of fairness and due process. It is also difficult to understand how Ansbury can be a whistleblower when the information and allegations contained in its petition were obtained from the publicly disclosed 2016 audited financial statements of Oando and based on Ansbury’s own interpretation of those financial statements,” Oando said.

The company further alleged that the two petitioners, Alhaji Mangal and Ansbury Inc., were copied in SEC’s most recent communication to the company’s GCE on October 17, stressing that it was unheard of and prejudicial to the company’s case for petitioners to be copied on correspondence to the investigated party on findings yet to be concluded.Oando also described as onerous and unnecessary, the cost implication of the forensic audit — N160 million, which it is to bear, saying “it is not the best use of shareholders’ funds at this time”.
Responding to SEC’s findings, as outlined in its correspondence to the company’s GCE on October 17, Oando stated that SEC accused it of breach of corporate governance code.

The commission had informed Oando that it found from the corporate governance return submitted by the company for the period ended December 31, 2016, that the remunerations of the GCEO and the Deputy GCEO were approved by the board, while the GCEO was responsible for fixing the remuneration of other executive directors, which was in violation of Part B, 14.3 of the SEC Code of Corporate Governance. SEC also found out that the last board evaluation of Oando was done by KPMG in 2012, which was a violation of Part B, 15.1 of the SEC Code of Corporate Governance.

Responding to the two charges, Oando stated that it wrote to SEC on July 21, informing it that the remuneration of all executive directors of the company was last reviewed prior to May 2014 before the SEC Code of Corporate Governance was made mandatory. Oando also admitted that its 2016 Corporate Governance Report filing dated January 31, 2017, contained an error which was evident when compared to its previous filings, including the H2 2015 report sent to SEC under cover dated August 31, 2016. On the board evaluation, Oando stated that its understanding was that the SEC Code of Corporate Governance was made mandatory on May 12, 2014, adding that prior to that date, the recommendation for an annual board evaluation was not mandatory.

The company added that even if it had breached provisions of the SEC Code, the commission was under an obligation under s.1.3 (d) of the said Code to notify the company “specifying the areas of non-compliance or non-observance and the specific action or actions needed to remedy the non-compliance or non-observance. The company only received such formal notification from SEC requiring compliance with the SEC Code on these matters on October 17, 2017, five months after the commencement of its investigation.

Uzo Nzeogu
Leave a reply