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Oando Plc issues detailed response to SEC’s order

@oando_plc has issued a detailed response to the @secnigeria decisions following the conclusion of a forensic audit.

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Oando Plc has issued a detailed response to decisions taken by the Securities and Exchange Commission (SEC) following the conclusion of a forensic audit.  

The commission had last Friday, given the following directives to the company’s board

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  • Resignation of the affected Board members of Oando Plc
  • The convening of an Extra-Ordinary General Meeting on or before July 1, 2019, to appoint new directors
  • Payment of monetary penalties by the company and affected individuals and directors,
  • Refund of improperly disbursed remuneration by the affected Board members to the company.
  • Bar of the Group Chief Executive Officer (GCEO) and the Deputy Group Chief Executive Officer (DGCEO) of Oando Plc from being directors of public companies for a period of five (5) years.

In a letter dated May 1st 2019, addressed to Mary Uduk, the Acting Director-General
Securities and Exchange Commission and signed by its Chairman, Oba Michael Adedotun Gbadebo, the company gave a rebuttal of each of the SEC’s directives.

 Directives including resignation of Directors from the Board 

Oando hereby states that the SEC did not follow due process in the conduct of this investigation and reserves its rights to challenge the legality of the directives in your Letter. We therefore maintain that such directives from the SEC are invalid, illegal, ultra vires and should be rescinded. 

We reiterate that the SEC’s actions on this matter would have a huge negative impact on the Company’s reputation as a leading indigenous oil and gas company and its shareholders, investors and stakeholders, whose interests the SEC has a duty to protect. We condemn the disturbing pattern in which the SEC has repeatedly taken harsh punitive actions towards the Company without according it the fundamental principle of fair hearing 

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 Corporate Governance Lapses: 

The Company firmly states that the SEC has not substantiated its findings on alleged ‘several corporate governance lapses stemming from poor Board oversight’. Oando prides itself as a pioneer Nigerian company in the adoption of best corporate governance practices. Oando was the first NSE-listed company to achieve a cross-border dual listing of its 100% shares on the Johannesburg Stock Exchange in 2005 and a further listing of 100% shares in its upstream subsidiary on the Toronto Stock Exchange in 2012 

These successful listings required the Company to institute and maintain the highest international standards of corporate governance in its management and business operations. 

Irregular Approval of Director’s Remuneration 

The Company denies that there was any irregular approval of director’s remuneration at any period under review. All payments to directors were in accordance with the Board Remuneration Policy, were approved by the Board of the Company and disclosed in the audited financial statements. 

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Unjustified Disbursements to Directors and Management 

The SEC has failed to furnish instances of such ‘unjustified disbursements’. All remuneration (including expenses) to directors and management are approved and paid in accordance with the approved Delegation of Authority document of the Company. 

Failure of the Audit Committee to hold meetings with Management, Internal Auditors and External Auditors 

This is completely false and raises quality assurance concerns on the SEC’s findings. The records of the Audit Committee meetings of the Company clearly shows that the Committee holds regular meetings with the Management of the Company and its internal and external auditors. In addition, the Audit Committee meets separately with the internal auditor and the Management is absent at such meetings. The rationale behind this is to reinforce the independence of the internal auditor in compliance with the requirements of the Audit Committee. 

Directors’ participation in conflicted matters 

The SEC has again failed to provide details of this allegation, which is denied. It is the practice and tradition of the Board of the Company to have as the first item on the agenda in all Board Meetings, the disclosure of any interest they may have in the business of the day. Any director(s) of the Company who disclose an interest in a matter before the Board always recuse themselves from exercising their right to vote on that matter. 

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 Failure of Internal Controls 

The Company denies the allegation in your Letter that it does not have an effective internal control process in place as required by S61 of the Investments and Securities Act 2007 (“ISA”). In the absence of any specific instances or examples, the Company is of the position that there is no basis for this finding. The SEC is therefore put to further proof of this allegation. 

 Incidental Issues arising from the sale of a Subsidiary 

The accounting treatment accorded to the sale of Oando Exploration and Production Limited (OEPL) was in accordance with the International Financial Reporting Standards (IFRS) and the rules of the Financial Reporting Council 

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The Company rejects the assertion by the SEC that the sale of OEPL in 2013 was fictitious or orchestrated to enable the company to record a profit and pay dividends. 3.3 The 2013 audited accounts and subsequent quarterly reports of the Company were the proper account to be used in the 2014 Rights Circular and at the time of inclusion, did not contain any untrue statement or mis-statement. There was no intention on the part of the Company to mislead the public as alleged by the SEC. 

Suspected Market Abuse and Insider Dealings 

The Company has always maintained that its policy and procedure on Insider dealings and sale of shares during closed periods are in accordance with best corporate governance standards. Oando is however not in a position to provide a response regarding alleged actions of shareholders as these are independent and separate legal entities. 

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Related Party Transactions 

The SEC has again not specified the details of the related party transactions that were undisclosed in 2012 and 2014. As a result, we are unable to respond in detail to this allegation and again put the SEC to further proof of same. 

Payment of Interim Dividends despite liquidity constraints 

The Commission claims that the Company paid interim dividends in 2014 when it was facing liquidity constraints. There is no legal basis for the SEC’s findings. As the SEC should be aware, Section 379 (2) of the Companies and Allied Matters Act permits the payment of dividends from distributable reserves. The interim dividend declared in September 2014 was paid by the Company in November 2014 from the H1 2014 profits of the Company. At that point in time, the Company had sufficient distributable reserves and it is acceptable under the law to pay out dividends if reserves exist at the point of declaration. 

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 False Disclosures 

The SEC’s claim that Oando failed to comply fully with the SEC Code of Corporate Governance for public companies is false, unsubstantiated and for the records, unhelpful. 

Non-disclosure of Beneficial Ownership: 

The SEC would observe that by the Company’s letters dated 21st July 2017, 23rd August 2017, 24th August 2017, 28th August 2017 and 21st September 2017, Oando repeatedly brought to the attention of the SEC the fact that to the best of the Company’s knowledge, Alhaji Dahiru Mangal held less than 5% of the shares in the Company and requested that the SEC compel Alhaji Mangal to disclose his full beneficial ownership in Oando PLC in accordance with Section 95(1-5) of the Companies and Allied Matters Act to enable the Company comply with Rule 17.13 of the NSE Rule book. 

The SEC did not send Oando a response to its request and Alhaji Mangal did not contact the Company until 29th September 2017 and 11th October 2017. We thereafter promptly notified the SEC that his shareholding had exceeded 5% based on his notification. 

Tax-Related Issues 

The Company denies that it deducted and/or remitted any amount in excess of the statutory 10% Withholding Tax deductions from the dividend paid to shareholders in 2014 as required by the Companies Income Tax Act (CITA). We put the SEC to further proof of this allegation. We also note that the SEC has clearly exceeded the remit of its powers by alleging non-compliance with ‘several tax laws such as Companies Income Tax Act, Value Added Tax Act etc’…We respectfully request that the Commission restricts its regulatory oversight to the matters permitted by the applicable law. 

Directives including resignation of Directors from the Board 

Oando hereby states that the SEC did not follow due process in the conduct of this investigation and reserves its rights to challenge the legality of the directives in your Letter. We therefore maintain that such directives from the SEC are invalid, illegal, ultra vires and should be rescinded. 

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Conclusion

 We reiterate that the SEC’s actions on this matter would have a huge negative impact on the Company’s reputation as a leading indigenous oil and gas company and its shareholders, investors and stakeholders, whose interests the SEC has a duty to protect. We condemn the disturbing pattern in which the SEC has repeatedly taken harsh punitive actions towards the Company without according it the fundamental principle of fair hearing 

 

Patricia

Onome Ohwovoriole has a degree in Economics and Statistics from the University of Benin and prior to joining Nairametrics in December 2016 as Lead Analyst had stints in Publishing, Automobile Services, Entertainment and Leadership Training. He covers companies in the Nigerian corporate space, especially those listed on the Nigerian Stock Exchange (NSE). He also has a keen interest in new frontiers like Cryptocurrencies and Fintech. In his spare time, he loves to read books on finance, fiction as well as keep up with happenings in the world of international diplomacy. You can contact him via [email protected]

1 Comment

1 Comment

  1. Anonymous

    June 2, 2019 at 9:26 am

    What sort of nonsense is this, why is that in Nigeria people just take personal matters into the public domain. Why does SEC wants to destroy a national pride of Nigeria because one Alhaji (money miss road) had petition SEC. If SEC wants to keep it’s integrity intact, then let them publish the so called Forensic Audit for all to see.

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Corporate Press Releases

FCMB Group records impressive half year results as Profit Before Tax rose by 26% to N11.1 billion

The Group recorded an increase in gross revenue by 9% to N98.2 billion.

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FCMB Group Plc has again proved its resilience and capability to deliver outstanding performance and returns to customers and shareholders going by the half year results of the financial institution released recently. For the six months ended June 30, 2020, the Group’s profit before tax (PBT) rose by 26% to N11.1 billion compared to N8.8 billion in the corresponding period in 2019. Profit after tax increased by 29% Year-on-Year to N9.7 billion. This translates to a return on average equity (RoAE) of 9.4% and earnings per share of 49 kobo, a Year-on-Year improvement of 16% and 29%, respectively.

FCMB Group is a holding company divided along three business groups; Commercial and Retail Banking (First City Monument Bank Limited, Credit Direct Limited, FCMB (UK) Limited and FCMB Microfinance Bank Limited); Corporate & Investment Banking (the Corporate Banking Division of the Bank, FCMB Capital Markets Limited and CSL Stockbrokers Limited) as well as Asset & Wealth Management (FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited).

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The half year results also showed that the Group recorded an increase in gross revenue by 9% to N98.2 billion as against N89.8 billion for the same period last year. Net interest income equally rose by 17% for the first half of 2020 to N45.4 billion from N38.7 billion posted in the first half of 2019, while non-interest income stood at N17.5 billion, an increase of 14% compared to N15.3 billion within the six months period last year.

Moreover, the financial institution intensified the tempo of its strong commitment and support to the growth of businesses and the Nigerian economy in general. For example, loans and advances grew by 29% Year-on-Year and 4% Quarter-on-Quarter to N794.6 billion. Customer deposits went up by 28% Year-on-Year and 11% Quarter-on-Quarter to ₦1.1 trillion in June 2020, implying a significant increase in confidence in the institution. Total assets surged upward by 31% Year-on-Year and 4% Quarter-on-Quarter to ₦1.97 trillion as at June 2020. The Group’s capital adequacy ratio stood at 17.3%, which is above the minimum requirement set by the Central Bank of Nigeria. Liquidity ratio was 32.2%. Customer base across the Group grew by 29% Year-on-Year from 5.9 million to 7.7 million.

The subsidiaries of FCMB Group, who are market leaders in their respective segments, also performed satisfactorily within the six months period. The Commercial and Retail Banking arm (comprising First City Monument Bank Limited, FCMB UK, Credit Direct Limited and FCMB Microfinance Bank) reported a 42.9% Year-on-Year increase in PBT. This was due to an increase in net interest income, fixed income instruments, trading income and foreign exchange income. PBT also improved by 4.1% Quarter-on-Quarter due to an increase in fixed income instruments, trading income and FX Income, as well as a decrease in expenses due to operational efficiency.

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Corporate & Investment Banking (comprising the Corporate Banking Division of the Bank, FCMB Capital Markets Limited and CSL Stockbrokers Limited) saw its performance improve Quarter-on-Quarter. This was driven by an increase in net interest income and non-interest income. CSL Stockbrokers returned to strong and sustainable profitability, moving from a PBT of N18 million in half year 2019 to N201million in half year 2020, representing a 1034% Year-Year growth.

Investment Management (comprising FCMB Pensions Limited, FCMB Asset Management Limited and FCMB Trustees Limited) grew its Assets Under Management (AUM) by 7% Quarter-on-Quarter and 28% Year-on-Year to N455 billion. The growth in AUM reflects the increasing effectiveness of product sales strategy, which leverages the FCMB Group’s distribution strength and digital innovation. The Group’s Pensions business contributed 75% of half year 2020 AUM, compared with 83% within the same period in 2019. Other business lines accounted for 53% of the N99 billion Year-on-Year growth in AUM.

Analysts are of the opinion that with this impressive performance despite the challenging operating environment, FCMB Group is on a stronger pedestal to sustain its leading position in the financial industry and the Nigerian economy.

Over the years, the institution has created tremendous opportunities and added significant value to customers, shareholders and other stakeholders through innovation and its customer-focused approach anchored on its culture of excellence.

For more information about FCMB Group Plc, visit www.fcmbgroup.com

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Corporate Press Releases

Coronavirus presents a tremendous opportunity to attract domestic investment in Nigeria – by Yewande Sadiku

Increased domestic investor activity can also trigger foreign companies expanding or partnering with Nigerian businesses.

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On Thursday, 16 July 2020, Yewande Sadiku, the Executive Secretary and Chief Executive Officer of Nigerian Investment Promotion Commission (NIPC) was a guest on Arise Xchange, the weekly global business report of ARISE TV Networks where she shared her thoughts on how the coronavirus pandemic has affected Nigeria’s
strategy in soliciting foreign investments and renewed focus in local investors focusing on stimulating local businesses.

Commenting on UNCTAD’s forecast which estimates that foreign direct investment flows will decrease by 30-40% in 2020/2021, Sadiku explained that “as the pandemic worsens and economies further contract, our projection remains that those UNCTAD figures will shrink even further”. She added, “Investment announcements which we track and share daily through our newsletter show that $5.06 billion investment announcements were recorded in the first half of 2020 – this is a third of what was recorded within the corresponding period last year”. Nevertheless, the biggest investments for new entrants from the half-year were recorded from Kaduna, Nasarawa and Ekiti states.

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Addressing the anchor, Boason Onafeye’s question on the 33 projects announced, the importance of tracking investments, she explained that “in the first half of 2020, NIPC tracked 33 projects across 15 states and the FCT, versus in the first half of 2019 where the Commission tracked 43 projects in 10 states and the FCT. Our meticulous
tracking gives the Commission an understanding of the sectors, sub-national areas that excite investors. Additionally, it enables us to advise the government on policy changes that are required to reverse or thrust policy-making.”

While FDI is expected to slow down because of COVID-19, we are also presented with new optimism for local investments and businesses to take advantage of some unique opportunities presented by COVID. In particular, fintech, e-commerce, food processing is witnessing increased consumer activity. Increased domestic investor
activity can also trigger foreign companies expanding or partnering with Nigerian businesses.

On her outlook for the rest of 2020, she expressed her belief that “many economies will be focused on investment-driven growth and getting their investors to look internally and invest inwards to stimulate local businesses. This will also happen alongside a renewed zeal on impact investment, as investors would not only consider the returns on their investments but the impact their capital will have on the overall health of economies.” She further added that there will be a continuous increase in the domestic manufacturing capacity of essential and critical commodities per
country.”

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Yewande Sadiku is the Executive Secretary/CEO of Nigerian Investment Promotion Commission, NIPC. She was appointed in September 2016 by His Excellency, President Muhammadu Buhari, GCFR with a mandate to encourage, promote and coordinate investment in the Nigerian economy. Sadiku a seasoned investment banker with over two decades’ experience until her appointment, was Executive Director, Corporate and Investment Banking at Stanbic IBTC Plc.

During her period at the bank, she was instrumental in several landmark transactions including, the $535m first dual listing of Seplat petroleum on London and Nigerian Stock Exchanges, raising public and private funding for Access Bank, Dangote Sugar, Flour Mills Nigeria, Zenith Bank, MTN Nigeria, Nigerian Bottling Company, but
to name a few.

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Business

Lagos cancels 2018 land use charge

The government reverted to pre-2018 land use charges.

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Lagos cancels 2018 land use charge, LAND USE CHARGE, Lekki sealed buildings, Lagos state governor issues new guidelines for lockdown, consider full reopening of its economy

The Lagos State Government has revoked the 2018 land use charge.

This was disclosed by the Lagos Commissioner for Finance, Dr Rabiu Olowo, on Wednesday. According to him, the government reverted to pre-2018 land use charges.

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READ MORE: Would you have invested in buying a plot of land in Abuja FCT in 1980?

He said, “The penalties for land use charges for 2017, 2018, and 2019 have also been waived, which translates to a loss of revenue amounting to N5.6billion.

“In 2018, there was an increase in the Land Use Charge rate as well as the method of valuation of properties, this shock had a sporadic increase in Land Use Charge payable by property owners. In view of the aforementioned, the current administration decided to review the Land Use Charge law by reversing the rate of Land Use Charge to pre-2018 while upholding the 2018 method of valuation.

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“The reform also considered multiple Land Use Charge payment channels and efficient customer service management by setting up a call centre in other to ensure prompt issue resolution.”

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