SEC Wields Big Stick, to Conduct Forensic on Oando

•  Intels: House urges FG to revert to status quo, to probe contract termination

Goddy Egene in Lagos and James Emejo in Abuja

Following its probe into two petitions received from Alhaji Dahiru Barau Mangal and Ansbury Inc., the Securities & Exchange Commission (SEC) Wednesday directed the Nigerian Stock Exchange (NSE) to place the shares of Oando Plc on full suspension for 48 hours, effective Wednesday, 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, which has dual listings on the Nigerian bourse and the Johannesburg Stock Exchange (JSE).
Oando is an integrated energy firm with expansive operations in the downstream, midstream and upstream segments of the Nigerian oil and gas sector.

It grew its portfolio in 2014 with the $1.5 billion acquisition of ConocoPhillips’ upstream assets when the U.S. firm left Nigeria.

“To ensure the 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 Wednesday.
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 boats pilotage monitoring and supervision services 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 logistics and real estate spanning 40 years in Nigeria.
The lower legislative chamber passed a resolution Wednesday urging both parties – Intels and NPA – to immediately revert to the status quo ante on the termination to prevent 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 in two weeks.

SEC, in its statement on the suspension of trading on Oando shares, explained that it carried out a comprehensive review of the petitions from Mangal and Ansbury and found a breach of the provisions of the Investments & Securities Act (ISA) 2007; breach of 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 needed further investigation.
The market 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 need 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 is 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 Wednesday 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 a drop in the share 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 early this year, 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 urged SEC to stop Oando from holding its Annual General Meeting (AGM), which still went ahead 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 in Uyo, Akwa Ibom State, the meeting was disrupted by protesting shareholders who cried out over the alleged 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 Wednesday 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 also 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 in two weeks.
Membership of the proposed committee is yet to be announced.
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 Nigerians and their dependants, who are employees of Intels since the inception of its services to the NPA in the maritime sector.

The contract was terminated by NPA last week over what it termed Intels’ refusal to comply with the Treasury Single Account (TSA) policy of the federal government, an allegation the company has disputed.
Douye claimed that the federal government has since sealed off all the port terminals of the logistics firm as a result of the termination of the contract without due consultations with Intels before the decision to seal its terminals.

Based on his motion, the House resolved to set up the ad hoc committee to probe the termination of the contract and urged the federal government to revert to status quo ante.

The committee was given two weeks to report its findings.
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 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 motion on the urgent need to pay outstanding compensation to poultry farmers affected by the bird flu was moved by Hon. Abdulrazak Namdas who said the farmers had still not been paid despite the fact that the leadership of the Poultry Farmers Association of Nigeria (PFAN) alongside the relevant officials of Ministry of Agriculture had met with Vice-President Yemi Osinbajo who approved the payments when he was acting president.

He expressed concern that nothing had been done since the joint committee constituted by both ministries was said to have sourced the amount for the compensation of the already screened farmers.
The House noted that the inability to pay the compensation could spell doom for the affected farmers alongside their employees who depend on the poultries for their livelihoods.

Early last year, poultry farmers lost 3,682,726 birds as a result of the outbreak of bird flu.

Maritime Workers Plead for Intels

Meanwhile, the Maritime Workers Union of Nigeria (MWUN) joined the fray Wednesday when it appealed to the federal government to resolve its problem with Intels to save more workers from losing their jobs.
The president of MWUN, Mr. Adewale Adeyanju, made the appeal while speaking with reporters in Lagos on the lingering problem between Intels and the government.
He said the problem could also hinder investors from coming into the country if not resolved soon.
According to Adeyanju, the union as part of organised labour was concerned about the job security and welfare of its members in Intels, reported the News Agency of Nigeria (NAN).
“Today, we are aware that Intels has over 5,000 direct employees and over 6,000 indirect employees, which makes it up to 11,000 workers.

“Most of these employees are Nigerians with families and responsibilities. We are worried that if this issue is not resolved amicably, their jobs can be on the line,” he said.
Adeyanju warned that the socio-economic implication of most of the workers losing their jobs in a volatile area like Rivers State would have a negative impact.

He said the union was also worried over the negative message the contract termination would send to investors locally and globally.

“We want to advise the government to avoid anything that will send the wrong signals to investors that Nigeria’s environment is not safe and conducive for business,” the union leader said.
He appealed to the government through the NPA to resolve the issues soonest to ensure that calm is restored at the ports.