The last appears not to have been heard about the removal of Mr. Austin Avuru as a Non-Executive Director of Seplat Energy Plc. by the Board of the company, as emerging facts show that the businessman had in March 2020 acquired interest in another oil firm, Chappal Petroleum Development Company LTD, as a founding shareholder and Director even while holding sway as the Chief Executive Officer (CEO) of Seplat, but failed to declare same.
Avuru equally accepted an appointment as Chairman of Chappal Petroleum Development while still holding the position Non-Executive Director of Seplat, which he did not also declare to the Board of the latter.
Both amounted to a conflict of interest in connection with Seplat’s business, especially in its planned acquisition of some Nigerian assets in which ExxonMobil Corporation has interests.
The establishment of the undeclared conflict of interest, which is considered both unethical and inimical to the business interests of Seplat, it was further gathered, led to the resignation of Mr. Xavier Rolet as an Independent Non-Executive Director of Seplat.
It is recalled that Seplat had in a 23rd December 2021 corporate filing to the Nigerian Exchange Ltd. (NGX) announced that its Board had on 22nd December 2021 terminated Avuru’s appointment as Non-Executive Director of the company.
According to Seplat’s Director, Legal and Company Secretary Edith Onwuchekwa, the action was hinged on “breaches of the company’s corporate governance policies and his fiduciary duties”.
“In line with Seplat Energy’s Memorandum and Articles of Association, Platform Petroleum Limited has been asked to nominate a candidate for his replacement on the board, and a further announcement will be made in due course,” the statement read.
However, in a swift reaction, Avuru, through his lawyers rejected the sack, saying it not only breached due process, but also an attempt to tarnish his reputation.
In a statement by Osaro Eghobamien and Folabi Kuti, Perchstone & Graeys, the law firm representing the embattled oil entrepreneur, said the action was aimed at “damaging his hard-earned reputation” relaying on “fictitious allegations”.
Although the law firm’s statement instructively admitted that Avuru had taken a dignified position on the issues leading ‘ill-advised action’ by him, it did not give details of the said “ill-advised action’.
It described Seplat’s action as a “dramatic summersault”, given its alleged January 9, 2021 letter “urging our client to act with confidentiality”, which the law firm said was customary to its client’s “impeccable character”.
It is recalled that Austin Avuru, who is a co-founder of Seplat, had retired CEO of the company on July 31, 2020, but remained on the Board of the Company as a “Non-Executive Director (as appointed in October 2020) until December 22, 2021 when the appointment was terminated by Seplat’s Board over what it described as “breaches of the company’s corporate governance policies and his fiduciary duties”.
The meat of the matter
By the provisions of the Companies and Allied Matters Act (CAMA) 2020, directors owe fiduciary obligations to their company. They are duty bound, among others, to promote the success of the company for the benefit of its members, avoid conflict of interest, declare interest in any proposed transaction, and, in fact, exercise their powers and discharge their duties honestly, in good faith and in the best interests of the company. They are equally expected to exercise that degree of care, diligence and skill, which a reasonably prudent director would exercise in comparable circumstances.
Specifically, Section 305 of CAMA 2020 provides: “A director of a company stands in a fiduciary relationship towards the company and shall observe utmost good faith towards the company in any transaction with it or on its behalf.
“A director shall act at all times in what he believes to be the best interests of the company as a whole so as to preserve its assets, further its business, and promote the purposes for which it was formed, and in such manner as a faithful, diligent, careful and ordinarily skilful director would act in the circumstances”.
Section 306 provides: “The personal interest of a director shall not conflict with any of his duties as a director under this Act.
“A director shall not—(a) in the course of management of affairs of the company, or (b) in the utilisation of the company’s property, make any secret profit or achieve other unnecessary benefits”.
Also, Section 308 provides: “Every director of a company shall exercise the powers and discharge the duties of his office honestly, in good faith and in the best interests of the company, and shall exercise that degree of care, diligence and skill which a reasonably prudent director would exercise in comparable circumstances.
“Failure to take reasonable care in accordance with the provisions of this section is a ground for an action for negligence and breach of duty”.
Likewise, the Nigerian Code of Corporate Governance (NCCG) 2018, makes it mandatory for a Managing Director (MD)/CEO to declare any conflict of interest.
“The MD/CEO should declare any conflict of interest on appointment and annually thereafter. In the event that he becomes aware of any potential conflict of interest at any other point, he should disclose this to the Board at the first possible opportunity. Actions following disclosure should be subject to the Company’s Conflict of Interest Policy”, it states clearly.
However, a search at the Corporate Affairs Commission (CAC) shows that Chappal Petroleum Development Company Ltd., which was incorporated in 2020 with a registered office at No. 12, Oluwole Street, Lekki Phase 1, Lagos, and with N10 million authorised share capital divided into 10 million shares of N1 each, has Austin Avuru as a founding Director.
Section C of the incorporation document (Particulars of First Directors and their Consent Act) names Avuru Ojunekwu Augustine, male, born on August 17 1958 and with international passport number B50004012 as number one on the list. The other founding Director is Imevbore Victor Ohozie.
Also, the form containing names and addresses of subscribers dated February 21, 2020 has Avuru, Imevbore, and SLG Chemicals Ltd as the shares subscribers.
One of the major worries, however, is that Avuru was still the CEO of Seplat at the time and both Chappal and Seplat operate in the same industry. The other, according to available documents, is that he was appointed the Chairman of Chappal, while still a Non-Executive Director of Seplat. Even more worrisome, is that both companies were competing for assets in which ExxonMobil has interest. Chappal’s bid for the said asset has been well reported in the media.
Following the discovery of the undeclared conflict of interest, Seplat instituted an enquiry where Avuru had on December 1, 2020, reportedly admitted his conflict of interest in Seplat’s business, especially in the proposed acquisition of some Nigerian assets in which ExxonMobil Corporation has interests. He equally allegedly confessed on the same day to his appointment as Chairman of Chappal as well as to Chappal’s invitation by ExxonMobil Corporation for discussions and likely access to their database in respect of the said assets it intended to dispose.
The Board was therefore said to have been very peeved by the fact that Avuru had already acquired interest in Chappal as a Director and founding shareholder in March 2020, which was nine clear months as at the December 2020 enquiry and while he was also the CEO of Seplat. He was also serving as Chairman of Chappal while serving as Non-Executive Director of Seplat
Seplat Board was particularly miffed by the fact that he failed to declare his conflict of interest to the company while he sat Seplat’s highly strategic meetings, including meetings where the bid for the ExxonMobil Corporation assets, which Chappal was also biding for, were discussed.
This is therefore seen as flagrant corporate espionage and breach of trust, Seplat conflict of interest policy, Nigeria Code of Corporate Governance (NCCG), Securities and Exchange Commission (SEC) Code, and provisions of CAMA 2020. This is so because whereas Avuru knew that Seplat where he was a Non-Executive Director at the time was equally interested in the assets, he participated in Seplat Board’s discussions relating to Seplat’s bid for the assets in spite of his clear conflict of interest, which he did not declare.
Besides, as a company that enjoys a standard listing on the London Stock Exchange’s Main Market, Seplat is obliged to voluntarily conform with the United Kingdom’s Code of Corporate Governance (“UK Code”) to which it had committed ab initio.
Just as the NCCG, by the provisions of the UK Code, it is expected of directors of Board to maintain highest ethos and integrity and comply with the company law of in their operations.
Meanwhile, the development took a major tool last year as Mr. Rolet, an Independent Non-Executive Director of Seplat, stepped down, citing personal reasons without giving details.
In a notice signed by the Seplat’s Director, Legal and Company Secretary, Mrs Onwuchekwa, and filed with the Nigerian Exchange Limited (NGX), the company said: “The Board of Seplat Energy Plc today announces that Mr. Xavier Rolet, KBE, an Independent Non-Executive Director (“INED”), has decided to step down from the Board of Seplat Energy effective 11th November 2021 for personal reasons.’’
However, sources say Rolet’s resignation was not unconnected with what individual members of the Board see as a major betrayal of trust. The ExxonMobil Corporation asset is a major one that could further raise the profile of the company if successfully bided for, but have been seriously jeopardised.
Shell and ExxonMobil Corporation lead the International Oil Companies (IOCs) seeking to divest from their onshore and shallow water assets in Nigeria. The American oil giant, which boasts of over 100 oil platforms in Nigeria is also seeking to divest from upstream assets not only in Nigeria, but equally in the US Gulf of Mexico, the UK North Sea, Vietnam, Chad, Equatorial Guinea, Germany, Malaysia, Indonesia, Romania, and Azerbaijan to raise USD25 billion by 2025 from such divestments.
Whereas Seplat had last December confirmed through Chief Financial Officer (CFO), Emeka Onwuka, the company’s bid for ExxonMobil assets in conjunction with a partner, media reports are rife that ex-Seplat Non-Executive Director, Avuru had launched a rival bid for the ExxonMobil licenses.
Samuel Ugwu, a Business Analyst writes from Abuja.
