SEC Wields Big Stick on Oando over Market Infraction • To conduct forensic audit into company’s affairs Intels: House urges FG to revert to status quo, to probe contract

Following its probe into two petitions received from Alhaji Dahiru Barau Mangal and Ansbury Inc., the Securities & Exchange Commission (SEC) on Wednesday directed the Nigerian Stock Exchange (NSE) to place the shares of Oando Plc on full suspension for 48 hours, effective yesterday, and technical suspension from Friday, October 20.

The suspension, according to SEC, is to enable it conduct a forensic audit into the affairs of Oando.

“To ensure the full independence and transparency of the exercise, the forensic audit will be conducted by a consortium of experts made up of auditors, lawyers, stockbrokers and registrars,” SEC said in a statement issued yesterday.

SEC wielded the big stick on Oando’s shares just as the House of Representatives waded into the raging imbroglio between the operator of the oil and gas logistics terminals in Onne, Rivers State and Warri, Delta State, Intels Nigeria Limited and the Nigerian Ports Authority (NPA) over the termination of the pilotage agency agreement handled by Intels on behalf of the ports authority.

Intels and Ansbury Inc. are jointly owned by Mr. Gabriele Volpi, a multi-billionaire who holds dual Italian and Nigerian citizenship, with extensive interests in oil and gas, ports logistic services and real estate spanning 40 years in Nigeria.

The lower legislative chamber passed a resolution on Wednesday urging all parties – Intels and NPA – to immediately revert to status quo ante on the termination to avoid injury.

It further approved the setting up of an ad hoc committee to investigate and determine whether due process was followed in the termination of the pilotage agreement and report back to the House within two weeks. 

SEC, in its statement on the suspension of trading in Oando shares, explained that it carried out a comprehensive review of the petitions from Mangal and Ansbury and found a breach in the provisions of the Investments & Securities Act (ISA) 2007; breach in the SEC Code of Corporate Governance for Public Companies; suspected insider dealing; suspected related party transactions not conducted at arm’s length; and discrepancies in the shareholding structure of Oando Plc, among others.

SEC said these findings were weighty and therefore need to be further investigated.

The capital regulator 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 2007.

“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.”

In order to further ensure that the interest of all shareholders of Oando are preserved during the course of the exercise, SEC said it directed the NSE  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 as follows. Effective for 48 hours from Wednesday, 18 October 2017 to Friday, 20 October 2017, the NSE should implement a full suspension in the trading of the shares of Oando Plc and effective from Friday, 20 October 2017 and until further directive, the exchange should implement a technical suspension in the shares of Oando Plc,” it stated.

Owing to SEC’s directive, the shares of Oando will not be traded between yesterday and Friday, while from Friday when the technical suspension comes into effect, trading will be without movement in the share price.

The shares of Oando closed at N5.99 on Tuesday. The stock had hit a year high of N9.57 before the negative reactions by investors to the petitions led to fall in the price to the current level.

In its unaudited H1 2017 report, due to the partial recovery in global oil prices and improvements in oil production volumes, Oando’s revenue rose 129.7 per cent Y-o-Y to N266.9 billion.

However, the company recorded a loss after tax of N171.9 million – albeit an improvement from a loss of N26.9 million in H1 2016.

This moderation was largely attributed to the impact of the restructuring undertaken on outstanding liabilities in 2016.

While the recent positive strategy by management aimed at recapitalising and de-leveraging the company may appear positive, concerns over corporate governance and the suspension will to a large extent pressure investor sentiment.

Mangal and Ansbury had petitioned SEC, claiming majority ownership in Oando. They had also warned that the company was being mismanaged by the management led by Mr. Wale Tinubu, Oando’s Group CEO.

They had sought the removal of Tinubu and his deputy, Omamofe Boyo so as to save it from going under.

One of the petitioners, Ansbury, had in its petition also urged SEC to stop Oando from holding its Annual General Meeting (AGM) which held on September 11, 2017.

Ansbury had alleged serious financial abuse and accused the management of Oando of gross abuse of corporate governance tenets in its running of the company.

The petition titled, “Serious Concern to Corporate Governance Existence, Gross Abuse of Corporate Governance and Financial Management in Oando Plc – Request for Urgent Regulatory Intervention,” cited page eight of the company’s annual report of 2016, stating that “strong uncertainty regarding the going concern status of the group had already arisen in 2015 and strengthened in 2016 as clearly pointed out by the auditors in their report”.

However, SEC allowed the AGM to hold, saying that after the conclusion of its investigations, decisions taken at the AGM could be reversed.

Explaining their position on the AGM, the management of Oando had said the company had fully co-operated with the SEC, availed the commission of all documents requested, and provided clarification and appropriate rebuttals to the issues raised.

But during its AGM, held in Uyo, Akwa Ibom State, the meeting was disrupted by protesting shareholders who cried out over the mismanagement of the company.

Irrespective of the protest, Oando was able to get its resolutions passed.

 

House Wades into Intels, NPA Spat

 

Just as SEC was wielding the big stick on Oando in which Volpi claims to have majority shares, the House of Representatives yesterday waded into the raging controversy over NPA’s termination of the pilotage agency agreement it had with Intels, another firm founded by Volpi.

The lower chamber passed a resolution urging Intels and NPA to immediately revert to status quo ante to avoid injury.

It further approved the setting up of an ad hoc committee to investigate and determine whether due process was followed in the termination of the agreement and report back to the House within two weeks. 

Membership of the proposed committee is yet to be announced. 

Also, the House passed a motion mandating its Committee on Agriculture, Production and Services to investigate the delay by the Federal Ministries of Agriculture and Finance to pay the sum of N1.81 billion as compensation to 450 poultry farmers who were affected by the avian influenza outbreak, also known as bird flu, in spite of the federal government’s approval to make the payment.  

The lawmakers’ resolution on the Intels-NPA imbroglio was consequent to a motion sponsored by Hon. Diri Douye (PDP, Bayelsa) on matters of urgent public importance on the need to ascertain the process of the termination of the contract between the ports authority and Intels.

The House said it was mindful of the attendant implications of the cancellation of the contract on 7,000