Oando Audit and the Gwarzo-Adeosun Face-off

February 13, 2018
Oando Audit and the Gwarzo-Adeosun Face-off

By Elliot Williams

There is no doubt that President Muhammadu Buhari is bent on ensuring corporate governance in all sectors of the economy to build investors’ confidence and protect the integrity of Nigeria’s investment atmosphere against corporate abusive conducts.

What is indeed doubtful is whether his appointees are on the same page with the President in executing that daunting task.

Recent happenings in the Securities and Exchange Commission (SEC) are disturbing to all stakeholders in the capital market. To say the confidence President Buhari has been trying to build is being eroded by the needless crisis at the SEC is simply calling a spade by its name.

I have been painstakingly observing the drama at the capital market regulatory body since the Oando scandal broke, the statutory steps taken by SEC to remedy the situation, the apparent interference by the Minister of Finance, Kemi Adeosun, and the House of Representatives committee hearing on the issue.

Not to miss any aspect of the drama, I personally attended the hearing by the House of Representatives committee on capital markets, to hear first-hand, all the submissions by the various stakeholders.

In the last two years, the SEC conducted five major investigations on some erring companies in the market.

The SEC investigated BGL Asset Management company limited and sacked its management, and banned its principal promoters from operating in the Nigerian Capital Market and occupying any public office. The two principal officers of the company are Mr Albert Okumagba and Mr Chubundo Edozien.

Oasis Insurance Plc was also investigated and stopped from making a public offer. The company requested for a refund of the non-refundable fees and SEC said by law that could not be refunded. But Minister Adeosun insisted that the company must be refunded. The chairman of the company is Mr Adenrele Tokunbo Kehinde while the MD is Mr Babatunde Oshadiya.

Ikeja Hotels Plc has been in crisis for so many years and a settlement agreement was reached but SEC had to come in to ensure the agreement was implemented, also ordered a forensic audit. The principal promoters of the company are the Ibru Family.

Partnership Investments Limited is a capital market operator and several complaints were lodged with SEC and after investigation, the company and its principal officers were sanctioned. The MD of the company is Mr Victor Ogiewonye.

Oando Plc is a public quoted company that was investigated by the regulatory body. The SEC received a petition from Ansbury Investment Inc an indirect shareholder of Oando and another petition from another shareholder of Oando Plc Alhaji Dahiru Mangal, on May 2 and May 4, 2017, regarding Oando Plc.

SEC reviewed the petitions and constituted a technical committee to examine the conflicts, which recommended a forensic audit of the activities of Oando Plc.

Gwarzo told the House hearing that the Minister orally queried what power he has as DG of SEC to undertake such an exercise. At the meeting, the Minister threatened to relieve the SEC DG of his job.

Mounir Gwarzo, the SEC Director General, responded that the SEC was statutorily empowered to conduct the exercise in line with its statutory mandate.

Again, on October 20, 2017, at about 9am, the Minister summoned the SEC DG over the same Oando Plc issue. The Minister verbally, as Gwarzo told the hearing, instructed the SEC DG to lift the technical suspension placed on the shares of Oando Plc.

But the SEC DG explained to the Minister why the technical suspension should remain in the very best interest of protecting the integrity of the investments market and of protecting investors.

After series of back and forth, the DG received a letter on November 29, 2017, suspending him from office. Surprisingly, the issue of Oando Plc was not mentioned in the letter, instead, it contained three allegations which the Minister used in attempting to intimidate him into submitting to her verbal directive to discontinue the Oando audit.

The above Oando timeline as revealed during the House committee hearing brought to bear so many things.

From all the submissions, five major investigations were conducted by SEC in the last two years when Mrs Adeosun was the minister of finance.

But the Minister only decided to intervene in two, allowing due process to take its course on the remaining three. The promoters of the Oasis and Oando share the same ethnicity with the finance minister. Therefore, they must be protected at all cost and at the detriment of the companies’ investors.

The three other companies, promoted by people outside the Minister’s ethnic group were allowed to face the full wrath of the law without any interference by the finance minister.

This development is indeed a dent in President Buhari’s concerted effort in building investors’ confidence in the capital market. It is by this, that the Minister’s action portends a grave danger to the integrity of the capital market and the market outlook in the international scene.

From the submissions at the National Assembly hearing, I was wondering how the minister tried to accuse the DG of receiving severance allowance and payment of special early retirement package (Golden handshake) which policies approved by the board of SEC years before he started working there.

It is also curious how the Minister, who is deeply involved in this matter, hurriedly set up an administrative panel of inquiry populated by her appointees who are also party to the Oando issue, to probe the DG. Like the DG said at the hearing, “as a regulator, I don’t have a political platform, and as such, black, white, religious and secular, rich and poor, man and woman, disabled and able, are all equal in my eye and should be treated fairly as humans.”

It is time President Buhari act to salvage the capital market from total collapse, by insisting that the institution is bigger than any individual in the country.

The choices, therefore, are two: allow the Oando’s investigation to continue to maintain the integrity of SEC and the market; or stop the Oando’s investigation and allow the integrity of SEC and the market to be rubbished.

Elliot Williams writes from Lagos

Modupe Gbadeyanka

Modupe Gbadeyanka is a fast-rising journalist with Business Post Nigeria. Her passion for journalism is amazing. She is willing to learn more with a view to becoming one of the best pen-pushers in Nigeria. Her role models are the duo of CNN's Richard Quest and Christiane Amanpour.

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