Oando shareholders want thorough forensic audit
Ahead of the commencement of forensic investigations into the operations of Oando Plc, minority shareholders have urged the appointed auditors to be thorough with their investigations and opinion.
The Securities and Exchange Commission (SEC) ordered a forensic investigation into the operations of Oando Plc and directed the Nigerian Stock Exchange (NSE) to suspend trading on the shares of Oando Plc for 48 hours, after which a full technical suspension should be placed on the shares until the forensic investigations are completed.
A forensic audit is an examination and evaluation of a firm’s or individual’s financial information for use as evidence. A forensic audit can be conducted in order to prosecute a party for fraud, embezzlement or other financial claims.
The Securities and Exchange Commission forensic audit on Oando Plc follows its investigations of two petitions received from one Dahiru Barau Mangal and Ansbury Incorporated.
Mangal and Ansbury Investment Incorporated had petitioned SEC, citing gross abuse and mismanagement by the management of Oando.
SEC said it carried out a comprehensive review of the petitions and made the following findings amongst others; Breach of the provisions of the Investments & Securities Act 2007; Breach of the SEC Code of Corporate Governance for Public Companies; Suspected insider Dealing; Related party transactions not conducted at arm’s length; and Discrepancies in the shareholding structure of Oando Plc.
“SEC decision is a welcome development which is expected of a regulator. It is commendable,” Boniface Okezie, President, Progressive Shareholders Association of Nigeria (PSAN) told BusinessDay on phone.
Okezie believes that the technical suspension placed on Oando shares, “helps to ensure that some investors do not leverage the current squabble and mop up the shares of the company against the minority.
“The SEC action shows they are proactive. The forensic audit will leave the market with an independent opinion that will put the company in the proper perspective. The leadership of SEC is alive to its responsibilities and we hope that other related issues in the market, such as this, will be handled speedily.”
Godwin Oyedokun, president, Association of Certified Fraud Examiners of Nigeria (ACFE) who also spoke to BusinessDay on the possibility of having unbiased opinion by forensic auditors, without interference of parties involved, said, “It is possible. That is why it is called forensic audit and not just ordinary audit.”
According to him, “The main purpose of calling it forensic is to ensure that the principle of who pays the piper dictates the tune is ignored. The forensic investigators are expected to go straight to investigate the particular issues raised, concerning the company. It also depends on the size of the institutions, but opinion of forensic auditors are unbiased.”
Shola Aboderin, the immediate past chairman, Ibadan Zone Shareholders Association (IZSA) told BusinessDay on phone that “If the regulator has found some irregularities, the decision to do a forensic audit is right but has to be properly investigated. It is in the interest of the shareholders. Let the forensic auditors go and look at the issues and come out with an independent report on the allegations.”
Alex Adio, National Chairman, Dynamic Shareholders Association of Nigeria (DSAN) who also spoke to BusinessDay, believes that investors should “allow the forensic auditors to do the necessary things and come out with their findings.”
Oando troubles started in connection with controversy surrounding the ownership of some Oando shares bought through an investment vehicle at the time the company bought ConocoPhillips’ Nigerian business for $1.65 billion in 2014.
Oando, in a statement said the company is currently reviewing correspondence received on October 18, 2017 from the Nigerian Stock Exchange (NSE) and SEC and will provide a full statement of the company’s position as soon as possible, adding that “the company remains committed to act in the best interests of all its shareholders”.
Another shareholder who spoke on the condition of anonymity, warned SEC to ensure that the interest of one beneficiary (petitioner) does not override that of over 240,000 other shareholders. She noted that as a company listed on both the Nigerian and Johannesburg Stock Exchanges, the continued existence of Oando Plc as a company remains paramount to other shareholders.
Meanwhile, the Johannesburg Stock Exchange, JSE, yesterday (Thursday) suspended trading in the shares of Oando.
This follows an order by Nigeria’s Securities and Exchange Commission, SEC, prompted the Nigerian Stock Exchange, NSE, to suspend the company on Wednesday.
A notice by the JSE states that the suspension was effected based on a correspondence between the Nigerian bourse and JSE.
“The Company has received communication from its primary listing, the Nigerian Stock Exchange (NSE), that the Securities and Exchange Commission (SEC) have issued a directive to immediately suspend the trading of Oando shares, a directive to which the NSE has complied,” the JSE said in its notice.
“The JSE has accordingly suspended trading of the Oando shares with effect from 09:00 a.m. SA time, pending clarification, following the review of subsequent correspondence received on 18 October 2017 from the NSE and SEC and will provide a full statement of the Company’s position as soon as possible.”
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