The rift between Nigeria’s capital market apex regulatory body (The Security and Exchange Commissions) and one of Nigeria’s leading indigenous energy group (Oando Plc) is by the day taking a fiercer stance. Rifts emanated from a press release by SEC on the forensic audit against Oando Plc.
Recall, in 2017, Alhaji Dahiru Mangal and Ansbury Incorporated had sent a petition to SEC objecting to the Annual General Meeting (AGM) of Oando Nigeria Plc billed for September 11, 2017, over alleged corporate governance breaches by its management. Alhaji Mangal is a substantial shareholder in Oando Plc.
Ansbury, a majority shareholder in Ocean and Oil Development Partners which owns fifty six percent equity stake in Oando Plc, petitioned the commission to intervene and change the management of Oando. The company alleges that the management wants to continue running the oil firm even when it was not improving its fortunes. Following the receipt of this petitions, in March 2018, SEC engaged Deloitte & Touche to conduct a Forensic Audit of the activities of Oando Plc. From the result of the independent auditor, seeing that Oando, by the reports had committed infractions, SEC sought court support to ban oando management from holding position and asked them to resign. And it is also believed that the law is an ass, anybody can ride, so they ran to court.
We sought the opinions of some market operators.
In the words of Aruna Kebira, a stockbroker and chief dealer with Global View Capital Limited, “It is said that when a kid wrestles with his father, he does not flex muscles. It is unfortunate that the whole situation is like this. Everything that SEC has done as far as Oando is concerned; I think is SEC right because they went through due process. Oando’s account was given forensic audit after they were accused and it was not at the instance of SEC, It was at the instance of shareholders. And I think it is based on the forensic audit that SEC is taking action and they did not take the action solely, they took action through the INVESTMENT AND SECURITY TRIBUNAL which has the same decision power like the high court. I think it’s in the right direction.”
According to SEC, ruling on the outcome of forensic audit of Oando Plc’s is capable of not only destabilizing the operations of the company but also discourage investors from patronizing the capital market. Oando Plc, which is listed on the Nigerian Stock Exchange (NSE) and Johannesburg Stock Exchange (JSE), suffered significant decline in investor confidence and financial performance in 2017 as result of a board crisis due to petitions.
On the implications of possible victory for OANDO on the market and the country’s regulatory scheme at large, as it appears that Oando is fighting back through court action, Aruna Kebira says, “you know I don’t expect Wale Tinubu and Boyo to just be quiet about this and leave. It is better to try and fail than not to try at all. So they have to try as much as possible to see whether they can retain that position. If Oando management through the court, are staying behind, there will be no expectation from the market; it means we are going back to the status quo. We have seen recently Oando trading between N4.80 and N4.40. It was only when this issue entered into the market that share price of Oando dropped as low as N3.50. I think it is trading about N3.80 to N3.90.
If it happens that the management of Oando is victorious as far as the case is concerned, I don’t think that the market is going to have expectation for them.
Peradventure that it is SEC that wins, I think the market will be having an expectation because they believe that the people that are coming on board will try as much as possible to put things in proper perspective to run the organization for profit making. The market will put that in the pricing of Oando and you will see a tick up in the price of the stock going forward”.
On the part of shareholders, there were mixed reactions.
Some shareholders of Oando had raised concerns that if an indirect and foreign shareholder could wield so much power over a public listed company, with the backing of SEC, with no regard for all the other shareholders, then their investments were not safe and secure. “Contrary to their mission to protect the capital market and Nigerian shareholders, the SEC has folded its arms and watch the investment of hundreds of thousands of Nigerian shareholders go down the drain while the public has had to appallingly watch what should have been a closed-door investigation play out in the media. For those of us who have invested in Oando and seen the drastic nosedive that its share price has taken, we are deeply saddened by the SEC’s management of this investigation,” the shareholders said.
Other shareholders had expressed displeasure at the SEC’s neglect of minority shareholders and public display of unprofessionalism stating that the leak from SEC on the proceedings of the investigation was mind-boggling. They said SEC could not have reached an objective conclusion especially because it’s clear the commission had been working in favor of the majority shareholders to the detriment of the over 270,000 shareholders whose investments are languishing as a result of the saga.
The Federal High Court has however adjourned the case between Oando Plc‘s Group Chief
Executive, Adewale Tinubu, Deputy Group Chief Executive, Omamofe Boyo and the Securities & Exchange Commission (SEC) to the 24th of June 2019
The presiding Judge C.M.A Olatoregun, has directed that the Respondents’ Preliminary Objection and the substantive application for enforcement of Fundamental Rights should be taken together at the next adjourned date, with an order that both parties maintain the status quo pending the determination of the Motion.
The hearing has now been set for 24th June 2019, while Oando‘s GMD and Deputy GMD, as well as the regulator of the stock market, have been ordered to maintain the status quo pending the determination of the Motion.