Anxiety looms over result of forensic audit as Oando begins AGM

By Chioma Obinagwam

More and more shareholders of Oando Plc, one of Nigeria’s indigenous oil and gas companies, are expressing so much concern over the outcome of the highly speculated forensic audit on the accounts of the company.

These concerns are coming barely few hours to the company’s 41st Annual General Meeting (AGM) slated for July 27, 2018 in Lagos State.

Confiance News gathered that shareholders under the aegis of Constance Shareholders Association of Nigeria are calling on the Securities and Exchange Commission of Nigeria (SEC)- Nigeria’s highest capital market regulator, to give a hint on the extent of the audit in addition to the rationale for the company to hold an AGM since the company is still under investigation.

National President of the shareholder group, Mikhail Shehu frowns at SEC for keeping shareholders in the dark and allowing the company to go ahead with the AGM.

In a Short Message Service (SMS) sent to the Ag. Director General (DG) of SEC, Mary Uduk, he said, “Good afternoon ma, I called this morning and you said we talk later. Now is SEC really working or adhere to issues related to transparent and accountability in relation to corporate governance? It is total Capital NO because the issue of OANDO PLC the forensic Auditing has not been reported and you are given the permission to OANDO to hold AGM on 2017 A/C, Why? Do you understand the implication on our economy control policies? Awaiting your response….”

This kind of reaction is not unlikely since the company did not indicate any item on the ongoing forensic audit in the agenda of the 41st AGM of the company.

Moreover, as at the time of filing in this report, Shehu told Confiance News that he had not got feedbacks from the Ag. DG regarding the SMS sent to Uduk on July 26, 2018.

Other concerns raised by the National President with respect to the upcoming AGM, is the inability of the company to disseminate or publish the full content of the annual reports intended for deliberations at the AGM prior to the AGM date to enable shareholders have a grasp of what to be discussed and be armed with the relevant questions for the Board of Directors of the company.

How the crisis began

Worried over the state of affairs of the company, two stakeholders- Alhaji Dahiru Barau Mangal and Ansbury Incorporated wrote petitions to SEC.

In a public notice dated October 18, 2017 , the SEC stated: ” The Securities & Exchange Commission received two petitions from Alhaji Dahiru Barau Mangal and Ansbury Incorporated. The Commission carried out a comprehensive review of the petitions and made the following findings amongst others,” the notice disclosed.

“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. Etc,” it highlighted.

The SEC, however, decided that based on the above findings there was need for a forensic audit to be conducted on the company to further investigate the matter.

” After due consideration, the Commission believes that it is necessary to conduct a forensic audit into the affairs of Oando Plc. This is pursuant to the statutory duties of the Commission as provided in section 13(k), (n), (r) and (aa) of the ISA 2017,” the notice indicated.

Hence, the directive to conduct a forensic audit on Oando was officially given on December 5, 2017.

“The Securities and Exchange Commission has reiterated its decision to conduct a Forensic Exercise into the activities of Oando Plc.
This commitment is contained in a letter dated December 5, 2017 addressed to Oando Plc,” the Commission stated.

Other issues

Recently, a London Court of International Arbitration (LCIA) issued an award against two companies owned by the Chief Executive Officer (CEO) of Oando Plc, Mr. Wale Tinubu, and his deputy, Mr. Mofe Boyo, to pay a total debt of US$680 million (N244.8 billion) to Ansbury Investments, owned by Mr. Gabriele Volpi.

In its ruling on July 6, 2018, the LCIA held that Ocean and Oil Development Partners (OODP), British Virgin Islands, which owns 55.96 per cent of Oando Plc through a holding company named Ocean and Oil Development Partners (OODP) Nigeria Limited, is indebted to Ansbury Investments Incorporated to the tune of US$600 million (equivalent of N216 billion).

An international lawyer and counsel to Ansbury Investment, Mr. Andrea Moja, confirmed the LCIA award in a recent statement.

According to Moja, the Arbitration Court also held that a company known as Whitmore Asset Management Limited, whose ultimate beneficial owners are Tinubu and Boyo, were also indebted to Ansbury Investment to the tune of another US$80 million (N28.8 billion).

This made the total debt owed by the Oando chief executives to Ansbury Investment US$680 million.

Documents obtained from the LCIA, which is reputed to be one of the world’s leading international institutions for commercial dispute resolution, identified the family of Volpi, a Nigerian-Italian, as the ultimate beneficial owner of Ansbury, while Tinubu and Boyo were identified as the ultimate beneficial owners of Whitmore Assets Management Limited.

The London Arbitration Court held that an existing “Third Shareholders Agreement” between the parties is fully and legally binding on the parties as claimed by Ansbury Investment.

The documents indicated that a Final Award in which the court would pronounce on accrued interests on the debts owed and legal expenses incurred by Ansbury would follow in the next few days.

The LCIA award was communicated to the parties concerned on July 9, 2018.

The statement added, “The award has been communicated to the parties on July 9th, 2018 and the key terms are as follows:

“The claim of Whitmore Asset Management Limited that the parties agreed to a binding Fourth Shareholders Agreement was rejected. The court upheld the position that the third shareholders’ agreement is fully and legally binding between the parties as stated by Ansbury Investments Inc.

“The alleged agreement by which Whitmore Asset Management Limited was to hold 60 per cent of Ocean and Oil Development Partners (BVI) Ltd. is not binding on the parties.

“Ocean and Oil Development Partners (Bvi) Ltd. owes a debt to Ansbury Investments Inc. for an amount of US$ 600 million.

However, in a statement titled: ‘Oando Plc. Sets the Record Straight: We Do Not Owe Ansbury Any Money, We Have No Dealings With Ansbury,’ issued by the company on July 16, 2018, it refuted the ruling by the LCIA.

Reacting, Head of Corporate Communications for Oando, Alero Balogun, categorically stated, “the ruling by the LCIA does not involve Oando as Oando was not and has never been party to the arbitration, the ruling states that Whitmore and Ocean and Oil Development Partners are indebted to Ansbury Inc., nowhere is there mention of Oando Plc. It is critical that people understand that not only are we not involved in this dispute, we do not owe money to any of the parties involved. The continued mention of our name in what is a 3rd party dispute is unfortunate and damaging to the brand and shareholder value.”

Financials

Listed on both the Nigerian Stock Exchange(NSE) and the Johannesburg Stock Exchange, the company in its half year (H1) result for the period ended June 30, 2018 announced that it recorded an 11 per cent increase in Turnover from the N267 billion it posted in the corresponding period of 2017.

The result also showed that Gross Profit followed the same pattern, jumping by 53 per cent compared to the N33.4 billion increase in the preceding year.

Again, the company noted that Profit After Tax (PAT) increased by 86 per cent or N5 billion as against the N4.6 billion gain in the erstwhile year of 2017.

The company indicated that the positive performance was largely due to improvement in global oil prices.

“The first half of 2018 picked up on the industry recovery witnessed in 2017. Brent prices averaged $69.87 per barrel, resulting in a 38 per cent increase in realized crude selling price compared to the same period in 2017. Performance was further buoyed by sale price increases of 19 per cent for NGL and 13 per cent for our natural gas deliveries,” it disclosed.

Also commenting on the results, Wale Tinubu, Group Chief Executive, Oando Plc. said,

“I am pleased to report that Oando Plc. has made significant progress in 2018, evidenced by our substantial free cash flow generation and profitability. Oil prices have rallied over the last year, a direct consequence of increasing demand and reduced supply. Higher oil prices, and the resolution of Joint Venture funding challenges with the Nigerian National Petroleum Corporation has driven increased investment in the upstream sector. This stable operating environment, coupled with our fiscal prudence, has reinforced our solid financial footing as we continue to build on the momentum garnered in 2017.”

He added that the company has current plans for growth include expansion of its trading structures in Africa, capitalising on expanding scope in Southern and East Africa, as well as developing key supply mechanisms into the Middle East and North Africa.

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