Oando crisis drags down stock 31 percent in two days

By OKEY ONYENWEAKU & OBINNA EZUGWU 

Oando Plc’s stock price has plunged 31.1 per cent since the news of the removal of its board became public. The stock which opened on Friday at N4.65 per share crashed to N3.20 per share at the close of business on Monday June 3, 2019. Many industry analysts have blamed the heavy hit taken by the company to the crisis which engulfed the giant oil firm on Friday.

The Securities and Exchange Commission (SEC)  had on Friday barred the Oando Chief Executive Officer (CEO), Mr. Wale Tinubu, and the deputy, Mr. Omamofe Boyo, from being a director in any public company for the next five years.

SEC subsequently constituted an Interim Management Team (IMT) headed by Mr. Mutiu Sunmonu, to oversee the management of Oando Plc and conduct an Extra-Ordinary General Meeting on or before July 1, 2019.

The commission which announced the decision in a statement on Sunday night, also said the team will appoint new board of directors for the company, which would subsequently select a management team for it.

The head of Oando Plc Interim Management Team (IMT), Sunmonu, was the managing director of The Shell Petroleum Development Company of Nigeria Limited from 2004 to March 1, 2015.

He served as Vice President of Production Sub-Saharan Africa at Royal Dutch Shell Plc and served as its Country Chairman of Nigeria since December 31, 2009.

The company’s stock lost 9.52 per cent on Monday from N4.20 last Friday to N3.80 per share. It had also lost 9.68 per cent from Thursday to close on Friday at N3.20 per share.

Whereas the equities market also eased by 0.45 percent as the All Share Index fell from 31,069.39 to 30,928.29 points. Industry observers believe investors are punishing the company for the recklessness of its management and board.

The crisis which engulfed the oil giant has lingered for some time, almost hampering the focus of its management. However, SEC has hinged its bold decision on the outcome of the investigations of the activities of Oando after a forensic audit carried out by Deloitte & Touche at its instance.
The investigations revealed that the company committed a number of serious infractions ranging from false disclosures to market abuses, manipulation of financial statements and internal control failures. Hence, the shocking statement last Friday announcing the easing out of Oando’s directors which was made to the capital market community.

“Following the receipt of two petitions by the Commission in 2017, investigations were conducted into the activities of Oando Plc (a company listed on the Nigerian and Johannesburg Stock Exchanges),” SEC’s statement had said.

“Certain infractions of Securities and other relevant laws were observed. The Commission further engaged Deloitte & Touche to conduct a Forensic Audit of the activities of Oando Plc.

“The general public is hereby notified of the conclusion of the investigations of Oando Plc. The findings from the report revealed serious infractions such as false disclosures, market abuses, misstatements in financial statements, internal control failures, and corporate governance lapses stemming from poor board oversight, irregular approval of directors’ remuneration, unjustified disbursements to directors and management of the company, related party transactions not conducted at arm’s length, amongst others.”

Meanwhile, a Federal High Court sitting in Lagos has restrained SEC from removing Tinibu and Boyo as Oando Plc’s Group Chief Executive Officer (GCEO) and Deputy Group Chief Executive Officer (DGCEO), respectively.

Justice Mojisola Olatoregun granted an interim injunction following an application by the embattled GCEO and DGCEO.

The duo had applied for enforcement of their fundamental rights. The court also restrained SEC, its servants or agents from taking any step concerning the commission’s letter dated May 31 in which it barred Tinubu and Boyo from being directors of a public company for five years.

It also restrained the commission from imposing a fine of N91.13 million on Tinubu, while ordering it to restrain from all actions on the said letter pending hearing and determination of the applicants’ motion for an interlocutory injunction.

The court also restrained Mr Mutiu Sunmonu from acting as the Head of Oando’s interim management team pending the hearing and determination of the motion.

It urged all parties to maintain status quo ante pending the determination of the motion. The court adjourned the case until June 14.