Oando Gets Court Order to Lift Suspension on Shares, Stop Forensic Audit

Following the technical suspension placed on its shares and the decision to undertake a forensic audit in its operations, Oando Plc 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 has also issued an order restraining the SEC and any other parties claiming through 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 injunction.

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 Oando 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 yesterday on SEC’s findings, Oando’s Chief Compliance Officer and Company Secretary, Ayotola Jagun, provided clarifications to all the points raised in 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 the SEC and the 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 it suspended 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 the 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 the 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 taken, as all of the matters raised had been responded to in great detail with all supporting documents requested by the SEC.

 Oando alleged that its chairman had requested an audience with the SEC to enable it 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 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 two letters dated August 24 and August 28, its chairman had petitioned the Director General of the SEC alleging bias and lack of due process in the way and manner in which the SEC has conducted this investigation.