Nigeria's Securities and Exchanges: How Tinubu, Boyo, other directors ruined OANDO
Fresh facts have emerged concerning the alleged infractions and false disclosures by Oando Plc which prompted the Securities and Exchange Commission (SEC) to mandate the oil firm's Group Chief Executive Officer, Wale Tinubu, his deputy, Omamofe Boyo, and other board members to resign.
SEC had barred Tinubu and Boyo from being directors of public companies for a period of five years.
SEC recalled that following the receipts of two petitions from Dahiru Mangal and Ansbury Incorporated, the Commission in 2017 conducted an investigation into the activities of Oando Plc and observed certain infractions of securities laws by some members of the board of Oando Plc.
SEC noted that its findings were communicated to Tinubu through a letter dated July 10, 2017.
In the letter, the commission also noted that it engaged Deloitte and Touche to conduct a forensic audit of the activities of Oando Plc, through which findings were made.
SEC disclosed the infractions in a six-page letter dated May 31, 2019, which was addressed to the Chairman, Oando Plc, obtained by Sahara Reporters. The letter was signed by Mary Uduk, the acting Director-General of SEC.
According to the letter, the findings from the investigations revealed nine major infractions such as alleged corporate governance lapses, failure of internal controls and incidental issues arising from the sale of a subsidiary.
Others are suspected market abuse and insider dealings, related party transactions, payment of interim dividends despite liquidity constraints, false disclosure, non-disclosure of beneficial ownership and tax-related issues.
The letter partly read, “There were several corporate governance lapses stemming from poor Board oversight.
These include irregular approval of director's remuneration, director’s participation in matters in which they had declared an interest, unjustified disbursements to directors and management of the company, failure of the audit committee to hold meetings with management, internal auditors and external auditors.
“Oando Plc failed to establish an effective system of internal controls as required under Section 61 of the ISA 2007, over its financial reporting thereby compromising the integrity of the company's financial controls and reporting as revealed by the misstatements in the financial statement, a high number of related party transactions and unjustified disbursement to directors.
“In 2013, Oando Plc reported the sale of its subsidiary, Oando Exploration and Production Limited (OEPL), to Green Park Management Limited without obtaining the approval of the commission, (in violation of the provisions of the Investment and Securities Act (ISA) 2007) and the consent of the Minister of Petroleum (As required under the Petroleum Act,1969).
“In 2012, 2013 and 2014 and 2015, certain insiders of Oando PLC sold shares of the company during “close period” despite having knowledge of active closed periods by the company and contrary to the Rules of the NSE. The insiders include Ocean an Oil Investment Limited (OOIL – represented by Jubril Adewale Tinubu and Godwin Omamofe Boyo), Ocean and Oil Development partners (OODP – represented by Jubril Adewale Tinubu, Godwin Omamofe Boyo, Francesco Cuzzocera), and ECP African Fund II PC (a Company in which Nana Appiah-Korang wards Director).
The letter also detailed how the OODP, the major shareholder in Oando PLC represented by Jubril Adewale Tinubu, Godwin Omamofe Boyo and Francesco Cuzzocera authorized the sale of 1,210,000,000 units of OODP shares in Oando Plc valued at N21,455,909,256.
The trades purportedly took place between January and October 2015, preceding the release of the 2014 audited financial statements on October 23, 2015, in which Oando Plc declared an unprecedented loss of N183 billion.
SEC further noted that during this period, these representatives of OODP were insiders of Oando Plc and had access to material non-public information regarding the poor financial status of the company commencing December 2014, in violation of the provisions of the ISA 2007 regarding insider dealing.
This violation is being referred to the appropriate law enforcement agency, SEC says.
Oando PLC was also allegedly involved in several related party transactions linked to key Board members, particularly Jubril Adewale Tinubu and Godwin Omamofe.
According to SEC, some of the related party transactions were not disclosed in the 2012 and 2014 financial statements, adding that an impression was created in the 2013 and the 2015 financial statements that these disclosures had been accurately reported.
SEC also says Oando Plc failed to fully comply with the SEC Code of Corporate Governance for public companieskk”.
Other infractions highlighted in the letter were that Alhaji Dahiru Baraú Mangal failed to disclose his substantial ownership in Oando Plc as required by CAMA.
Similarly, Oando allegedly Plc failed to notify the Nigeria Stock Exchange (NSE) of his shareholding of 5% and above as required by the rules of the NSE.
“This is being referred to the Corporate Affairs Commission (CAC) and the Nigerian Stock Exchange (NSE),” SEC notes in the letter.
There were also some tax-related issues mentioned in the letter. According to SEC, Oando Plc deducted an amount representing 24% of the dividend paid to shareholders in 2014 as withholding tax.
This exceeded the statutory requirement of 10% as required by the Compliance Income Tax Act (CITA).
Oando PLC also allegedly failed to comply with several tax laws such as Companies Income Tax Act, Value Added Tax Act etc.
Tinubu and Boyo have refuted SEC's allegations.
In view of the above violations, SEC has since directed Oando Plc to pay the total sum of N417,692, 316 as fine.
Here is the breakdown below as contained in the letter obtained by Sahara Reporters.
“SEC has since directed Oando Plc to pay the total sum of N8,450,000 to the Commission (SEC) for publishing untrue statement in its 2012 Financial Statements, in violation of Rule 3 (4) of the SEC Rules and Regulations, made pursuant to the ISA 2007.
“ N7,850,000 to the Commission for publishing untrue statements in its 2013 Financial Statements, in violation of 3 (4) of the SEC Rules and Regulations, made pursuant to the ISA 2007.
“ N42,750,000 to the Commission, for non-disclosure of related party transactions in its 2012 Financial Statements, in violation of Rule 39 (1&7) of the SEC Rules and Regulations, 2013, made pursuant to the ISA 2007
“ N30,625,000 to the Commission, for non-disclosure of related party transactions and its 2014 Financial Statements, in violation of Rule 39 (1&7) of the SEC Rules and Regulations 2013, made pursuant to ISA 2007.”
SEC also ordered the directors of Oando Plc to immediately refund to Oando Plc, the total sum of N145,767,316, being remuneration and other benefits paid to them above the provisions of the Board Charter.
The letter further added, “In view of the gravity of the corporate governance lapse and internal control failures observed in the company, every person who sat on the Board of the company when the failures occurred to wit:
Oba Micheal Adetoun Gbadebo CFR
Mr Mobolaji Osunsanya
Mr Olufemi Adeyemo
Mr Oghogho Akpata
Chief. Sena Anthony
Mrs Ammuna Lawan Alli OON
“For certification of untrue statements of materials facts in the 2013, 2014 and 2015 financial statements of Oando Plc in violation of Section 60 (2 (b) (ii) of the ISA 2007, Mr. Jubril Adewale Tinubu (Group Chief Executive Officer) and Mr Olufemi Adeyemo (Chief Financial Officer) are ordered to the sum of N91,125,000 (each) to the commission.”