Resentful Shareholders as Agents of Destabilisation

CAPITAL MARKET

In any private liability company, directors and shareholders have very distinct roles to play within the company. However, when some shareholders within the ranks of Seplat management struggle to usurp the role not assigned to them, it is capable of undermining the gains of the company if not nipped in the bud, writes Wale Igbintade 

Just last week, some shareholders of Seplat Energy PLC and civil society organisations under the aegis of Make a Difference Initiative (MADI) called on President Bola Tinubu to direct the anti-corruption agencies to investigate the N16 billion professional legal fee allegedly paid by the company to lawyers handling their court cases.

The groups who alleged foul play in the $19.4million professional legal fee published in the half-year report of the energy company, further called for the immediate probe of alleged breaches of the Nigerian Code of Corporate Governance (NCCG) by the company’s board to “save the company from going down”. 

Even though the disgruntled shareholders tried to hide under a pseudo-name, many knew where the allegations were coming from – the same set of shareholders who had filed multiple suits against the company and lost.

But financial and industry analysts condemned the attitude displayed by disgruntled shareholders, stressing that such an approach is capable of weakening Seplat’s investments. Specifically, they insisted that manipulating the court to attack Seplat has negative implications for foreign investment inflows to the economy.

Besides, they stated that the roles of directors and shareholders are distinct within a company, asserting that directors have the responsibility of managing the company on behalf of the shareholders. 

“It is important to stress that the directors owe a duty to the company itself, rather than the shareholders. This is the case for both executive and non-executive directors. As such, they must act within the powers granted by the company’s constitution and seek to promote the success of the company at all times.

They stated that shareholders as owners of a company must allow the board of directors responsibility for the day-to-day running of the company to carry out their responsibilities, and stop being used as agents of destabilisation.

Also, Seplat majority shareholders in a statement upheld the authenticity, sanctity, and correctness of the company’s half-year results, which reported stellar performance, and expressed confidence in management’s capability to deliver superior returns and place the organisation on the path of sustainable growth.

The statement read: “Eagle Eye shareholders described the purported joint press conference by the leader of the Independent Shareholders Association of Nigeria (ISAN), Mr. Moses Igbrude, and one Lemmy Ughegbe said to be the Executive Director of Make A Difference Initiative (MADI) as a platform to regurgitate stale and erroneous allegations against Seplat. 

“The exercise is a continuation of the recent onslaught of series of baseless allegations and ill-motivated lawsuits against Seplat Energy and its Chief Executive Officer Mr. Roger Brown,” it added.

The shareholders’ group emphasised that “As representatives of the majority shareholders of Seplat Energy, we are appalled by this renewed media offensive after a seeming truce ostensibly occasioned by the reversal suffered in the law courts, by this group of individuals led by Mr. Moses Igbrude but being aided and abetted by a former major shareholder of the company. 

“A major plank of the posturing of Igbrude and his co-travelers is the claim that Seplat spent $19.4million on legal fees and the unconscionable demand for a probe and the sack of the Board.  We consider it a travesty that Mr. Igbrude whose initial sponsored petition introduced the flurry of false and orchestrated allegations against Seplat, its CEO, and its directors/officers, still have the temerity to be grandstanding.” 

The group further asserted that it is noteworthy that Igbrude’s obvious lies and deception, formed the basis of the initial regrettable actions taken by the Ministry of Interior and the criminal charge brought against Seplat and its officers, which was promptly withdrawn by the Nigerian Immigration Service, while Seplat and its officers were entirely discharged by the Federal High Court (Abuja) in April 2023.

According to the group, “It is also an irony that Igbrude and his cohorts will be talking glibly about the provision for legal fees made in the company’s Half Year report when they were the same people who ignited an avalanche of lawsuits that necessitated the need for Seplat to defend its hard-earned reputation and the high integrity of its officials.  The chicanery, which the cases evinced, just like this recent joint press conference, offended civilised conduct even as it stretched freedom of expression to an absurd limit. 

“As representatives of the majority shareholders, we were alarmed that a company in which we have made a significant investment and from which we derive ample returns will be unduly maligned and castigated in public by a clique of 13 minority shareholders holding less than 800 shares out of 589m shares (0.0001% of the company’s issued shares)”. 

“Seplat’s half-year results showed strong cash generation of $259 million and demonstrated continued operational excellence and resilience as evidenced by an unrivaled safety record having now clocked up a commendable 4.2 million hours without a Lost Time Injury.

“It is clear from the excellent results for the first half of 2023 that Seplat has put its recent travails behind it, delivering good returns despite the distractions faced as a handful of shareholders orchestrated jumped-up allegations against the company and its leaders and successfully defended.

A future assured company, of which every well-meaning shareholder should be proud of, Seplat extended the Share Sale and Purchase Agreement (SSPA) for the acquisition of ExxonMobil’s share capital of Mobil Producing Nigeria Unlimited (MPNU) to preserve the transaction.  Revenues rose by 3.8% to $547.0m (including overlight of $504m on improved production, offset by lower oil price, cash generation of $259.1m, funding capex of $80.8m, and improved shareholder returns. The company’s balance sheet remains strong with $381.0m cash at the bank, despite the impact of the devaluation of the Naira on USD cash balances.  

“That ISAN and MADI or people acting at their behest, as disgruntled minority shareholders, would disparage such a high-performing company beggar’s belief. Their desperation also led them to query the noble intention of the Nigerian Immigration Service (NIS) as well as the federal government in toeing the path of fairness and patriotism. We urge the Financial Reporting Council of Nigeria (FRC), Securities and Exchange Commission (SEC), Corporate Affairs Commission (CAC), and other responsible government agencies like the Independent Corrupt Practices and Other Related Offences Commission (ICPC) and the Economic and Financial Crimes Commission (EFCC) to roundly ignore Igbrude and his likes whose penchant of crying wolf where there is none is becoming legendary. 

Similarly, a group of ‘Concerned Shareholders of Seplat Energy’, in a statement signed by Mr. Adeleke, stated that the allegations made against the management were strewn in half-truths, largely fabricated and maliciously projected to diminish the stature of Seplat Energy and tarnish the image of its officials.

“We wish to state unequivocally that the allegations are strewn in half-truths, largely fabricated and maliciously projected to diminish the stature of Seplat Energy and tarnish the image of its officials. If anything, the unfounded allegations depict blatant ignorance of financial management. As Concerned Shareholders of Seplat Energy, we are unfazed by the orchestrated ceaseless attacks on Seplat Energy by both Igbrude and Ughegbe and a handful of misguided minority shareholders of Seplat Energy. 

“As Concerned Shareholders of Seplat, we will no longer sit by and watch our company and its management which we hold in high esteem come under constant attack especially when the allegations, instigated by some self-serving interests, are bereft of truth and are outrightly false. We make bold to stay that as representatives of some majority shareholders, we will not allow a coterie of 13 minority shareholders holding less than 800 shares out of 589m shares (0.0001% of the company’s issued shares) to succeed in their plot to smear or bring down the reputation of a company that is doing Nigeria proud in all ramifications. 

“It is evident that shareholders of Seplat have consistently enjoyed high dividend payouts while capital appreciation on our stocks has been largely phenomenal, a reflection and testament to the management’s capability, market confidence, bright future, and sustained progress of the company. We, therefore, use this opportunity to reconfirm our support for the leadership of Seplat ably led by Mr. Roger Brown. We urge them not to be distracted but to continue the good work. 

“We believe that no genuine investor in his normal sense will do anything that can bring down the fortune of a company that he has investments in, and this calls to question the motives of those behind the incessant accusations and relentless attacks on the company in the last few months,’’ they added.