Oando issues official refuter to SEC’s allegations, challenges suspension of shares
Although Oando Plc has obtained an ex-parte order from the Federal High Court restraining the Nigerian Stock Exchange from implementing a technical suspension of its shares, the company has come out with an official refuter of all the allegations leveled against it by the Securities and Exchange Commission (SEC).
The company in a statement late Tuesday specifically presented SEC’s alleged findings as outlined in their correspondence to its group chief executive on October 17, 2017 with its position regarding each allegation.
On breach of SEC Code of Corporate Governance in respect of executive remuneration and board evaluation, Oando stated that the remuneration of all its executive directors was last reviewed prior to May 2014 before the SEC Code of Corporate Governance was made mandatory.
It however stated that its 2016 Corporate Governance Report filing dated January 31, 2017 contained an error, which can be seen when compared to its previous filings, including the H2 2015 Report sent to the SEC under cover dated August 31, 2016, and that it duly informed the SEC that the error in the 2016 filing would be rectified in subsequent filings.
On board evaluation, it said its understanding was that the SEC Code of Corporate Governance was made mandatory on May 12, 2014 and that prior to that date, the recommendation for an annual Board Evaluation was not mandatory.
It said it has always been above board and steadfast in its submissions to the SEC with respect to its Annual Corporate Governance Report filings in compliance with the requirements of the Code prior to and post May 2014 and that SEC has never until now communicated to it the specific areas of non-compliance with the Code from a review of its filed Annual Reports and the actions needed to remedy the non-compliance.
“Although a formal annual Board Evaluation was not carried out for the 2015 and 2016 reporting years, the Board did carry out an internal appraisal of its effectiveness as part of the investigation initiated by the Nigeria Stock Exchange in 2015/2016 and prior to that, as part of its successful participation in the pilot of the NSE’s Corporate Governance Rating System (CGRS) in 2014,” it noted.
On breach of ISA 2007 on disposal of Oando Exploration & Production Limited (OEPL) by Oando PLC 2013, Oando stated that the transaction was terminated and reversed when certain conditions subsequent to the sale could not be satisfied.
“The 2013 and 2014 position had to be restated in the 2015 audited financial statements to show that the transaction, previously recorded as a sale had been reversed in line with IFRS. The treatment of the transaction in 2013 as a sale and its subsequent reversal in the 2015 financial statements were in full compliance with the accounting treatment under IFRS.”
On breach of ISA 2007 regarding misstatements in the 2013 and 2014 audited Financial Statements arising from the OEPL transaction, the company explained that there was no misstatement of profits in the 2013 and 2014 audited statements as the accounting treatment for the transaction was in full compliance with the IFRS standards both in the 2013 financial statement when the sale occurred and was recorded and in the 2015 financial statement when the reversal occurred.
Regarding breach of ISA on misleading information contained in Oando PLC’s 2014 Rights Issue Circular, Oando said it acted appropriately in the way it reported the OEPL transaction, therefore there is no breach of the ISA in respect of providing misleading information in Oando PLC’s 2014 Rights Issue Circular.
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Breach of SEC Rules and Regulations on Payment of Dividends
It said it was the first time SEC is making such an allegation to the company and it was not given an opportunity to respond to this allegation. Nevertheless, it said even if the breach occurred, which it is currently investigating, the penalties for the breach do not require a forensic audit, noting that no shareholder or whistleblower, has petitioned SEC or complained about not having received dividends due to them from the company.
The company in reacting to going concern of Oando PLC raised by auditors, said it is unclear how the issue of going concern is a SEC finding or how it amounts to a breach.
Oando claims it has clear insider trading policies, which it has communicated to all known insiders of the company and that the question as to whether insider dealing occurred in the shares of the company is a matter for the SEC to raise with any affected insider. It also noted that it cannot be guilty of insider dealing since it only issues securities and is not involved in the trading of its own securities.
On related party transactions the company said that it had severally in its correspondences with SEC explained that related party transactions are not in themselves illegal or wrong, and that the only obligation imposed on the company is to disclose all related party transactions entered into during the course of the year and this was properly disclosed.
It also responded to the allegation of declaring dividend from unrealized profits, saying it had repeatedly denied this claim and provided evidence to the SEC in its defense.
On discrepancies in the shareholding structure/register of members of Oando PLC particularly in respect of Alhaji Mangal in Oando PLC which SEC claims requires reconciliation, Oando said it is for him, directly, or through his brokers to seek a reconciliation of the register, providing evidence of the number of shares that he acquired in the Company and when he acquired those shares.
“We do not see how this “discrepancy” should therefore require a forensic audit to ascertain its veracity when the burden is on Alhaji Mangal to show that he acquired those shares,” Oando noted.