The Securities and Exchange Commission (SEC) has sacked the Board of Afroil Plc and Mr Ishaq Olakunle Sanni, Managing Director (MD) of the company maybe facing the Economic and Financial Crimes Commission (EFCC) for further investigation and criminal prosecution.
This was contained in a Statement signed by Lanre Oloyi, Head, Media of SEC and made available to Proshare NI.
The Release affirmed that a five (5) man Interim Management Committee (IMC) has been jointly constituted by the Commission (SEC) and Corporate Affairs Commission (CAC) for the management of Afroil following the indictment of Mr. Sanni and other Directors in the sale of the illegally warehoused shares of the company and other violations of the Investments and Securities Act, 2007 and the Rules and Regulations of the Commission.
SEC affirmed that the IMC is to take over the affairs of the company and organise an Extra-Ordinary General Meeting (EGM) within ninety (90) days in the interest of shareholders of the company.
The Administrative Proceedings Committee (APC) has confirmed Mr. Sanni, have fraudulently converted the sum of N185, 224,660.22
(One hundred and eighty-five million, two hundred and twenty- four thousand, six hundred and sixty Naira, twenty-two kobo) belonging to the company.
Following this development, SEC has disqualified him from operating in the Nigerian Capital Market (NCM) and from holding Directorship position in any Public Company in Nigeria for a period of five (5) years.
These were some of the decisions of the APC of SEC that investigated the alleged illegal sale of Afroil shares and other violations of the ISA 2007 and the Rules and Regulations made thereto.
As earlier reported, SEC had on December 2007, announced that it has observed an unprecedented upsurge in the share prices of some quoted companies including that of Afroil and consequently constituted an Investigative Committee to among other things, ascertain the basis of the price movement, establish any possible price manipulation and identify those responsible.
The Committee, after reviewing documents obtained from the Central Securities Clearing Systems Limited (CSCS), and some Brokers/Dealers, found among others that Reward Investment and Services Limited and PSL Securities Limited illegally offered for sale on the floor of the Nigerian Stock Exchange (NSE) shares of Afroil, which were illegally warehoused in the name of Prudent Bank Plc (now Sky Bank Plc).
Based on the report and findings of the Committee, the Commission on March 17 2008 directed the NSE to suspend trading in the shares of Afroil Plc.
Following this, the parties involved were invited before the APC of the Commission, via letters dispatched to each of them personally and publications in two national daily newspapers, to explain why sanctions should not be imposed on them for violating the provisions of the ISA 2007, the SEC Rules and Regulations 2000 (as amended), as well as the Code of Conduct of Corporate Governance in Nigeria.
At the conclusion of the hearing, the APC reviewed the oral and documentary evidence before it and made the following major decisions:
1. That Afroil Plc, a public quoted company, the securities of which are registered by the Commission, offered 165,000,000 (One hundred and sixty five million) ordinary shares of 20k each at 40k per share at its Initial Public Offering, which was not fully subscribed. Whereof 69,730,000 (Sixty nine million, seven hundred and thirty thousand) units were unsubscribed, not underwritten but illegally warehoused.
2. That out of the illegally warehoused shares of Afroil Plc, 29 million units of the shares were illegally sold and its proceeds misappropriated by Mr. I. O. Sanni, the Managing Director;
3. Mr. I. O. Sanni, who masterminded the illegal sale of the 29 million units of the shares, has been directed to refund the proceeds of the illegal sale and banned from holding directorship position in any public quoted company for five (5) years;
4. Mr. I. O. Sanni, be and has been referred to the Economic and Financial Crimes Commission (EFCC) for further investigation and prosecution for fraudulent conversion of N185, 224,660.22 (One hundred and eighty-five million, two hundred and twenty-four thousand, six hundred and sixty Naira, twenty-two kobo) only belonging to the company being the amount realized from the sale of Afroil Plc illegally warehoused shares.
5. K.S. Fund Managers Limited (a company wholly owned by Mr. I. O. Sanni) was unable to prove how it acquired 49 million units of shares of Afroil Plc credited to it, which enabled it to have a Board seat in the company. Consequently, the shares credited to it are to be forfeited.
6. The Auditor, Odili Okechukwu & Co who signed the Annual Report and Accounts of Afroil Plc which contained irregularities and financial misstatements has had his application for registration as an Auditor with the Commission deferred for three (3) years and has been referred to the Institute of Chartered Accountants of Nigeria (ICAN) for appropriate disciplinary action for professional misconduct.
7. Sundry fines were imposed on the other Respondents found liable.
The detailed decisions have been communicated to all the parties and Regulatory Authorities for implementation.