SEC investigate Oando Nigeria for share structure manipulations

SEC investigate Oando Nigeria for share structure manipulations

Oando Nigeria PLC is said to be under investigation by Nigeria’s Securities and Exchange Commission, SEC, for share structure manipulations.

According to media reports who cited reliable sources in the capital markets, the SEC is said to have conducted several weeks of investigations on Oando Nigeria, upon which the Board and Management of Oando Nigeria have been written a formal letter to explain matters relating to observed malpractices in the company’s financial statements.

As reported by Today.ng, the sources add that SEC’s investigations were kicked-off following petitions filed by some foreign investors in Oando Nigeria PLC, in relation shareholding structure following the 1.65 billion Dollars cash that Oando paid in June 2014 to acquire the oil production assets of Conoco-Phillips in Nigeria.

It would be recalled that Oando Nigeria PLC acquired assets of Conoco-Philips using Oando Energy Resources, its wholly-owned subsidiary quoted on the Toronto Stock Exchange, TSX, but was effectively delisted in last year.

In a related report, there are signs that the investigation is far-reaching into the books of Oando Nigeria. The petition that led to the investigations was spearheaded by top shareholders in the company.

According to SaharaReporters, a New York-based news website that focuses on corruption in Nigeria’s socio-political circles, the report claimed that:

The two petitioners are Dahiru Mangal and Italian businessman, Gabriele Volpi.

Both petitioners have filed at least four lawsuits against Oando following a wrecked business move in which the firm acquired oil infrastructures from CONOCO Phillips in Nigeria. The questionable deal cost Oando $1.5 billion. Mr. Volpi reportedly gave Oando’s Wale Tinubu the sum of $900 million to effect the deal. In addition, Mr. Mangal reportedly contributed $250 million while former Vice President Atiku Abubakar contributed $50 million to the purchase which proved a disastrous investment for Oando. The petitioners are alleging mismanagement and ownership fraud on the part of the company’s operators.

A source at SEC said the commission’s investigators had so far found evidence that Oando had “been cooking its books for the past six years, creating the impression that it was making a profit when in fact the company was swimming in debts and overburdened by mismanagement.”

In retrospect, the ConocoPhillips acquisition has indeed cost Oando Nigeria a lot of losses that almost led to its bankruptcy. In its belated 2014 full year result, Oando posted a net loss of NGN184 billion. This shocked the entire market on its ability to exist as a going concern should the rally in global oil price continues to move in negative directions.

To salvage the company’s fortunes, the company took drastic steps to clean up its battered balance sheets. Last year, Oando rallied 9 banks to secure NGN94.6 billion as a five-year Medium Term Note, MTN borrowed at the Nigeria Interbank Offered Rate, NIBOR plus 200 basis points. At the signing ceremony, the company said it would be used to meet its financial obligations in the low crude oil price environment.

It is becoming apparent that the cleaning done to its balance sheet after the ConocoPhillips acquisition went sour, has led to further question marks.

The SEC is said to be waiting for Oando Nigeria’s response before taking a decision on the matter. Neither the SEC nor Oando has made a statement on the matter.