Over the last six months we have watched the Securities & Exchange Commission (SEC) investigation into Oando PLC play out in the media contrary to best practice and consequently, the investment of over 270,000 Nigerians depreciate drastically. The Commission saddled with the responsibility of protecting investors and maintaining orderly and efficient markets has been called-out on doing the contrary with regards to this investigation.
The SEC finally publicized the acclaimed findings of its 6 months long investigation into Oando in the past week, with steep penalties which the company has rebutted in a press statement. Amongst other things, the company has been slammed with a 160 million naira bill to enable the SEC conduct a forensic audit on its financials. This penalty begs the question, is this the most effective use of shareholders money? How independent and objective is the process?
According to Oando, ‘the cost implication of the forensic audit (N160,000,000) which is to be borne by the Company is onerous, unnecessary and irresponsible in light of the above submissions and not the best use of shareholder funds at this time.’
Information reaching the media shows that the SEC has already selected a five companypanel of forensic auditors. However, Oando is fighting back this decision. Oando has confirmed that they weren’t carried along on the panel selection, they have not received a scope of work and timeline for the audit and accordingly a justification for the N160,000,000 bill.
In Oando’s most recent statement it states ‘having declared to the public that it has acted drastically to suspend the shares of Oando PLC due to its “weighty” findings in the course of its investigations, SEC then concludes that a forensic audit is necessary in order to investigate whether its findings are true. This is a clear contradiction.’
Oando questions how the SEC has arrived at its findings if it cannot be sure of the veracity or otherwise of those findings and how did it ascribe the appropriate level of weight to be given to those findings, enough to warrant an immediate suspension followed by a technical suspension of the shares of the Company, if those findings are still mere allegations at this point.
Oando flaws the decision of the SEC to conduct a forensic audit on the basis of bias; by publishing its findings, requiring an audit to validate these findings and then selecting the panel that will conduct the audit, the SEC has already skewed the results of the audit. What’s more, by making its findings public it would be difficult for the forensic audit panel to truly act independently. Put together and at this time there is a clear conflict of interest with SEC overseeing this forensic audit.
In a press statement issued on October 24, 2017, Oando responded in detail to the SEC’s finding’s giving reasons why the penalties are unjustifiable and unnecessarily steep.
A shareholder of Oando who chose to remain anonymous has expressed displeasure at the SEC’s neglect of minority shareholders in favour of the majority shareholders. They’ve also expressed distaste at the public display of unprofessionalism stating that the leak from the SEC on the proceedings of the investigation is mind boggling. They claim the SEC can’t have reached an objective conclusion especially because it’s clear they’ve been working in favour of the majority shareholders to the detriment of the over two hundred and seventy-thousand shareholders whose investments are languishing as a result of the saga.
Another shareholder said “The financial results in contention was approved by the NSE, the SEC and audited by leading international auditors.If financials of the company was truly ‘cooked’, then all the regulatory bodies should also bare the cost as well and be investigated.” Further expressing delight at the Company’s decision to fight back.