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Oando Crisis Deepens As SEC Suspends Trading On Its Shares

Stakeholders Welcome Action
By The Nigerian Voice

Lagos – The Securities and Exchange Commission (SEC) on Wednesday directed the Nigerian Stock Exchange (NSE) to place the shares of Oando Plc on technical suspension.

In responding to the directive, the NSE subsequently implemented the suspension as the shares of the company were not traded on Wednesday.

A technical suspension is the interruption of price movement in a listed security for a period so that any dealings in the securities which occur during the period of the suspension will not result in any change in price.

Change may occur if the suspension order is not implemented.

According to information sent to dealing members, trading of the shares of Oando will be fully suspended for 48 hours, effective October 18 to 20, 2017.

Thereafter, from October 20, 2017, and until further directive, the Exchange will implement a technical suspension in the shares of Oando.

“Hence, in the 48-hour period commencing today, there will be no trading in the shares of Oando.

“However, effective October 20, 2017, investors will be able to trade in Oando’s shares but such trading will not result in any movement in the price of the shares,” the order stated.

SEC said it received two petitions from Alhaji Dahiru Barau Mangal and Ansbury Incorporated and that it had carried out a comprehensive review of the petitions.

It added that in the course of its review, it discovered the company had breached the provisions of the Investments & Securities Act 2007 and that of the SEC Code of Corporate Governance for Public Companies.

SEC added that coupled with the fact that there were discrepancies in the shareholding structure of the company, it also suspected insider dealing while related party transactions were not conducted at arm’s length.

SEC said: “The commission’s primary role as apex regulator of the Nigerian capital market is to regulate the market and protect the investing public.

“The commission notes that the above findings are weighty and therefore needs 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.

“To further ensure that the interests of all shareholders of Oando Plc are preserved during the course of the exercise, the commission directed the Nigerian Stock Exchange to place the shares of Oando Plc on technical suspension.

“However, in view of the fact that it is not technologically feasible for the Exchange to effect a technical suspension except after 48 hours, the commission directed that effective for forty-eight (48) hours from today, 18 October, 2017, to 20 October, 2017, The Nigerian Stock Exchange should implement a full suspension in the trading of the shares of Oando Plc.”

Oando is one of the largest integrated energy solutions providers in Africa.

The company operates in the upstream, midstream and downstream segments of the oil & gas sector.

In its recapitalisation and restructuring drive, Oando divested 49.0 percent stake in its downstream as well as 49.0 percent stake in its midstream operations to a consortium led by Helios Investment Partners in 2016.

Reacting to the suspension, shareholder activists said the decision was a good one that would protect the investment of millions of Oando’s investors.

Sir Sunny Nwosu, National Coordinator Emeritus, Independent Shareholders Association of Nigeria (ISAN), said the decision of SEC was meant to ensure the stability in the shares of Oando.

“There has been a lot of publicity surrounding Oando and, you know, the market itself works on information, whether negative or positive.

“Definitely, something must be done so that shareholders do not continue to lose money from their investments in the company, pending when the whole issue will be settled.

“I don’t know what they really meant by that, but the fact is that there is a technical suspension on the shares of the company to edge the company from being pulled down because some people will want to punish an institution, but my own concern is that when it was very sweet, nobody heard of it, but shareholders continued to suffer left, right, and centre.

“So they have to be very careful in ensuring that the right thing is done.

“As far as I’m concerned, that has nothing to do with the AGM.

“The AGM went very well; so, if SEC, through petition or anything, now feels that there’s reason to actually clear the air once and for all, so it be.”

Another shareholder activist, Boniface Okezie, said it is a good one for the investors.

He said: “I think it is a good one for the investors not only shareholders, so that their investments will not go down the drain.

“I think it is part of their findings that further escalate the issues so that independent auditors will come in and do their investigations properly.

“I commend SEC for being proactive and the decision they have taken is for the good of the market, because Oando shares will be distributed no matter what comes.

“And if this is not done, then people will now begin to dump their shares.

“So, this technical suspension is good and we are grateful to SEC.

“SEC, under the leadership of Mounir Gwarzo, is doing a good job for the industry, and that’s the only way that investment could be protected.”

Few months ago, petitions by two of Oando’s shareholders triggered SEC’s investigation of the oil firm.

The two petitioners were Dahiru Barau Mangal and Ansbury Incorporated, owned by Italian businessman, Gabriel Volpi.

Aside the petition, both petitioners have filed at least four lawsuits against Oando following a wrecked business move in which the firm acquired oil infrastructures from CONOCO Phillips in Nigeria.

The questionable deal cost Oando $1.5 billion. Volpi reportedly gave Oando the sum of $900 million to effect the deal.

In addition, Mangal reportedly contributed $250 million while former Vice President Atiku Abubakar contributed $50 million to the purchase which allegedly proved a disastrous investment for Oando.

The petitioners are alleging mismanagement and ownership fraud on the part of the company’s operators.

A source at SEC told our correspondent that the commission’s investigators had so far found evidence that Oando had “been cooking its books for the past six years, creating the impression that it was making a profit when, in fact, the company was swimming in debts and overburdened by mismanagement.”

Wale Tinubu, Group Chief Executive Officer, is believed to be neck deep in Oando’s financial and investment crisis.

Our SEC source stated that Tinubu’s stake in the company fell to a minuscule one percent after he secured funds from Volpi, Atiku, and Mangal.

While reacting to the petition last month, Oando said Ansbury Inc is not a shareholder of the company, but a shareholder in a company domiciled in a jurisdiction outside Nigeria which, in turn, holds shares in a Nigerian investment company that is a shareholder in Oando.

Alhaji Dahiru Mangal is an individual who requested clarification from the SEC on issues which he could easily have obtained from the company and indicated in his petition to the SEC that he holds a 17.9 percent interest in Oando.

“The company’s position remains that these petitions have no merit as the issues raised have received board, shareholder and, where required, SEC’s approval.

“Other matters highlighted by the petitioners could have been directed to the company and would have received the necessary clarification,” Oando said then.