The Securities and Exchange Commission (SEC) is planning to partner the Federal Inland Revenue Service (FIRS), the Corporate Affairs Commission (CAC), and the Nigerian Stock Exchange (NSE), over Oando Plc‘s alleged corporate infractions.
The capital market regulator disclosed that it plans to share findings from Oando Plc’s forensic audit with other regulatory institutions in order for further actions to be taken.
SEC is referring to the alleged corporate infractions leveled against the oil and gas company that include –corporate governance lapses, insider abuse, internal control failure, and capital market abuse.
The Plan: The capital market regulator will refer to the alleged violation involving the over-deduction of withholding tax on dividends paid to shareholders in 2014 to the FIRS. A statement from SEC disclosed the following
“There were several corporate governance lapses stemming from poor board oversight. These include irregular approval of directors’ remuneration, directors’ participation in matters in which they had declared interest, unjustified disbursements to directors and management of the company, and failure of the audit committee to hold meetings with management, internal auditors and external auditors.
“Oando Plc deducted an amount representing 24 per cent of the dividend paid to shareholders in 2014 as withholding tax; this exceeded the statutory requirement of 10 percent as required by the Companies Income Tax Act.
“Oando Plc failed to comply with several tax laws such as the Companies Income Tax Act and Value Added Tax Act, etc. These tax-related violations are being referred to the FIRS.”
[READ MORE: Why SEC ordered Oando’s Wale Tinubu to resign]
More so, SEC will refer to the issue of an alleged failure of internal control, issue arising from the sale of its subsidiary, as well as insider and suspected market abuse. to the NSE.
“Oando Plc failed to establish an effective system of internal control as required under section 61 of the Investment and Securities Act 2007 over its financial reporting thereby compromising the integrity of the company’s financial controls and reporting as revealed by the misstatements in the financial statements, high number of related party transactions and unjustified disbursements to directors.
“In 2013, Oando Plc reported the sale of its subsidiary, Oando Exploration and Production Limited to Green Park Management Limited without obtaining the approval of the commission in violation of the provisions of the Investment and Securities Act 2007 and the consent of the Minister of Petroleum as required under the Petroleum Act, 1969.
“The purported sale of OEPL enabled Oando Plc to report a profit instead of a loss, thereby misstating its financial statement in 2013 and 2014 and consequently misleading investors. This ‘fictitious’ profit reported in 2013 enabled Oando Plc to declare dividends.”
“The 2013 misstated accounts and quarterly reports of Oando Plc were included in the 2014 rights circular, thereby misrepresenting the financial status of the company to the public in violation of section 64 of the provisions of the ISA 2007.
“In 2012, 2013, 2014 and 2015, certain insiders of Oando Plc sold shares of the company during ‘closed periods’ despite having the knowledge of active closed periods by the company and contrary to the rules of the NSE.”
On the issues to be recommended to the CAC for further action, the document said these included alleged false disclosures and non-disclosure of beneficial ownership.
The Genesis: Oando Plc and SEC have been at loggerheads since the regulatory body released its investigation into the activities of the management of the company. SEC accused the management of market abuses and false disclosures, demanding the resignation of Tinubu, the Board chairman, and other executives and directors of the company.