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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

  • 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 We therefore maintain that such directives from the SEC are invalid, illegal, ultra vires and should be rescinded.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. 

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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. 

 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 

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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. 

 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 

 

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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Financial Services

Niger Insurance Plc gets shareholders nod to restructure business

Niger Insurance Plc has announced plans to restructure its insurance business into distinct but mutually dependent business entities.

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Edwin Igbiti

Niger Insurance Plc has obtained shareholders’ approval to restructure its insurance business into general, life and business insurance, with each segment to be structured as a separate legal entity.

This is part of the resolutions passed at the 50th Annual General Meeting of Niger Insurance Plc., held on 20th of January, 2021 at Peninsula Hotel in Lekki, Lagos.

The decision to restructure the company is in a bid to make it more efficient and profitable to stakeholders, especially as efforts are geared towards overturning a loss of about 1,1723.2% Year-on-Year, earlier made by the company in its last reported financial statement, Q2, 2020, as reported by Nairametrics.

Other key decisions reached at the 50th AGM include;

  • The re-appointment of Mr Ebi Enaholo and Mrs. Olufemi Owopetu as Directors of the company.
  • Acceptance of the presented financial statement for the year ended December 31, 2019 and the report of the audit committee, directors and auditors.
  • Directors were authorized to fix the remuneration of the auditors.
  • Directors were authorized to appoint external auditors to replace retiring auditors of the company.
  • The appointment of four individuals as members of the audit committee.
  • A decision to restructure the company’s business capital was also reached.

In case you missed it: The shareholders of Niger Insurance Plc in the 49th Annual General Meeting approved the decision by the company’s board to raise additional capital to the tune of N15 billion, in a bid to meet the revised recapitalization targets for general and life insurance companies.

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What you should know: The House of Representatives had in December 2020 directed NAICOM to suspend the mandatory deadline for the first phase of 50%-60% of the minimum paid-up share capital for insurance and reinsurance firms.

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Energy

Nigeria’s Qua Iboe crude exports resume as ExxonMobil lifts force majeure

ExxonMobil has lifted a force majeure on Nigeria’s Qua Iboe crude oil exports as production resumes.

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ExxonMobil has lifted a force majeure on Nigeria’s Qua Iboe crude oil export terminal, as crude exports resume for the first time in almost six weeks after a fire at the terminal halted operations.

This is according to a company spokesman yesterday, who confirmed the company had lifted force majeure on Qua Iboe crude loadings.

Qua Iboe production started to ramp up to normal levels of 200,000 b/d in the past week, according to sources, with the release of both the February and March loading programs.

The VLCC Dalia was also in the process of loading a 1-million-barrel stem at the Qua terminal since January 21, 2021, according to data intelligence firm Kpler. This will be the first export of Qua Iboe since December 15, 2020, after a fire hit the facility and injured two workers.

The company has been under pressure since the closure and prices have taken a hit as a result of the disruption. S&P Global Platts last assessed the grade at a discount to Dated Brent of 50 cents/b, down from a premium against the benchmark in December.

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Bonny Light, a mainstay Nigerian crude which typically trades at roughly the same level as Qua Iboe, was last assessed 30 cents/b higher.

What they are saying

One trader said: “If you get a cargo of Qua now it could be 50 cents to a dollar below Bonny even – a January cargo is completely out of cycle and the reliability issues mean people won’t touch it.”

Another trader stated that: “[The return of Qua Iboe] is not what West African crude assessments (WAF) differentials needed.”

What you should know

  • Qua Iboe is one of Nigeria’s largest export grades, and is very popular among global refiners, with India, the US, Canada, Italy, Spain, Indonesia, and the Netherlands being key buyers.
  • Qua Iboe is light sweet crude, which has a gravity of 36 API and sulfur content of 0.13%. The crude, produced from fields 20-40 miles off the coast of southeast Nigeria, is brought to shore at the Qua Iboe terminal via a seabed pipeline system.
  • Indian demand has steadied following a buying spree late last year, and European demand has been hit by renewed coronavirus lockdowns in the region.
  • Prices for Nigerian crude have suffered in recent weeks, even with lower supply due to the outage.
  • February and March loading programs have been issued for Qua Iboe averaging 169,643 b/d and 153,226 b/d respectively.
  • Production of this key grade ranged between 180,000-220,000 b/d in 2020, according to S&P Global Platts estimates.

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Financial Services

CBN says revised new cheque book to become fully operational from April 1, 2021

The CN has announced plans to discontinue the use of old cheque books with effect from March 31, 2021.

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The Central Bank of Nigeria (CBN) has in a circular to all Deposit Money Banks (DMBs), accredited Cheque Printers/Personalisers, and the Nigeria Interbank Settlement System (NIBSS), stated that the revised cheque book will become fully operational from April 1, 2021.

The apex bank has directed all DMBs to enlighten their customers on the revised cheque book, introduced across all banks as full enforcement of its usage will commence on the stated date.

READ: CBN reviews minimum interest rates on savings deposit to 1.25%

The disclosure is contained in a circular that was issued by the CBN and signed by its Director Banking Services, Mr Sam Okojere.

The CBN in the circular noted that the clarification became necessary as some stakeholders had been interpreting the circular differently from the intended purpose.

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The CBN in the circular stated, ‘’Please refer to our circular dated 9th December, 2020, referenced BKS/DIR/CIR/GEN/02/042 on the above subject.

It has come to our notice that some stakeholders interpret the circular differently from the intended purpose. Consequently, it has become imperative for the CBN to issue the following clarifications;

  1. The parallel run, in which old and new cheques are allowed to co-exist, will end on 31st March 2021, and thus only new cheques would be allowed in the clearing system from 1st April 2021.
  2. Full enforcement of the second edition of the Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) Version 2.0 will commence April 1, 2021 and the NCS/NICPAS 2.0. Sanction grid will be fully operational on April 1, 2021.
  3. All deposit money banks are (therefore) directed to actively enlighten their customers and ensure necessary provisions are put in place for a smooth migration to the New standard.
  4. The extension of full implementation date from Jan. 1 to April 1, 2021 is due to outbreak of the Covid-19 pandemic and the impact it had on the Nigeria Cheque Standard (NCS) and Nigeria Cheque Printers Accreditation Scheme (NICPAS) Version. 2.

READ: CBN grants approval for banks to debit accounts of loan defaulters 

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What you should know

  • It can be recalled that in an earlier circular issued on the revised cheque book, the CBN had put the cut-off date for the parallel run of the old and new cheques at August 31, 2020.
  • This was further extended to December 31, 2020, with only new cheques intended to be allowed in the clearing system from January 1, 2021, due to the outbreak of the coronavirus pandemic and the impact it had on the project.
  • This further adjustment of the deadline gives room for more sensitization by the deposit money banks to their customers, taking into consideration the disruptions that have happened in the economy.

READ: CBN temporarily suspends cheque clearing during Coronavirus lockdown

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