ETI, Oando Plc under Fire over Ownership, Governance

Proshare

Wednesday, September 25, 2013 1:01 PM  / By Kingsley Ighomwenghian, Daily Independent

 

Last week was indeed eventful for two major companies- Ecobank Transnational Incorporated (ETI) and Oando Plc, with their shares traded on the Nigerian Stock Exchange (NSE). Both companies came on the firing line, going by sporadic attacks, particularly by foreign media organisation who took both to task for different reasons, forcing them to open up on corporate issues believed to have been misrepresented.

 

While that of ETI, the holding company of the Ecobank Group, with footprints in 34 countries across West, Central and East Africa, bordered on governance; Oando, an integrated energy group had to defend ownership and money laundering issues, following which it published significant ownership structure as contained in its register.

 

Top officials of both companies arranged media parleys to explain their side of the stories, which were deliberately not reflected in the various reports for public consumption.

 

Specifically, ETI’s trouble, which began June/July this year, is believed to be vengeance by a troubled executive, whose competence was questioned by her boss, the chief executive.

 

As a result, a lot of dust has been raked, including suggestions of an insider loan obtained at less than arms length, and almost being written off. There are also issues of ETI’s chairman reworking the contract terms of the CEO to cheat shareholders, the CEO’s fat underserved performance bonus; planned sale of the group’s shareholding in telecommunication giant- Airtel; among others.

 

In the case of Oando Plc, the company denied claims by prosecution counsel in the ongoing three-week confiscation hearing that former Delta State Governor, Chief James Ibori, owns 30 per cent of its shares.

 

Claims by the prosecution in at the London Southwark Crown Court, included that the former governor “hid some of his assets in the oil firm Oando, and money passed from the company’s accounts to Ibori’s Swiss accounts, a British prosecutor told a court (last) Monday.”

 

This was immediately greeted by a steep drop in Oando’s share price which fell 21 per cent in two days on the NSE, even as some investors saw it as an opportunity to make an entry, following which it gained 10 per cent on the third trading day after the revelation. Following the recovery, the stock lost 77 kobo or 6.56 per cent for the week, closing at N11 each.

 

company’s board met last Friday in Lome, Togo, to among others, review the situation, which resulted in the appointment of audit and consulting firm- KPMG Professional Services to join a team from the Nigeria’s Securities and Exchange Commission (SEC) to audit ETI’s corporate governance structure.

 

Addressing newsmen at his Lagos office last week, ETI’s Chairman, Kolapo Lawson, noted that the said N1.6 billion loan obtained from Ecobank Nigeria Limited in 2007, was not due before being tagged “bad” in foreign media reports. He denied ever seeking to have it written off, just as the loan, due on July 31 according to the contract, was repaid four days early. This, he said, has been acknowledged in a letter to the Managing Director of Ecobank Nigeria Limited (a subsidiary of ETI), dated August 16 (a copy of which was seen by our correspondent). The letter was signed by Mrs. Tokunbo Martins, director, Banking Supervision Department, Central Bank of Nigeria (CBN), acknowledging that the matter has been resolved.

 

The letter titled “Re: Kolapo Lawson,” expressed the CBN’s “desire to maintain close co-operation with you (Ecobank Nigeria) and your bank for the good of the financial system.”

 

The ETI chair also welcomed the corporate governance audit of the group by the Securities & Exchange Commission (SEC), for which the firm of KPMG has been engaged.

 

The probe, followed a petition by ETI’s Executive Director of Risk and Finance Laurence do Rego, alleging insider dealings, a unilateral alteration of the CEO’s contract, bonus payment, and a planned sale of the group’s non-core assets.

 

Do Rego who is currently on suspension, Lawson continued, had been invited to meetings over her allegations twice, which she failed to honour and instead sending medical reports as excuses each time. She promised to come the third time, but later asked the board to meet her in Paris, or send questions so she would respond, which was done. She was also given till last Friday to provide answers. But she waited until 7 pm that day to say her petition was to the SEC and as such she would not deal with the commission.

 

He said do Rego’s suspension also followed her failure to present her certificate along with other senior officials of the group who were required to by the new CEO, Thierry Tanoh, who joined ETI in July 2011 from the International Finance Corporation.

 

Taking the allegations one after another, Lawson, who has been associated with the Ecobank Group for 31 years, said the renegotiation of the CEO’s contract was with board approval, just as the bonus review was decided by the board’s Governance and Remunerations Committee.

 

He also said talks of plan to sell two non-core assets of the group was laughable because they are very prominent, including a building in Lagos, which Tanoh had earlier urged the board to develop and lease to earn income.

 

The other asset, he said, “are shares in Airtel. When we acquired Oceanic Bank, we acquired the (Airtel) shares along with it. The previous CEO had started negotiating with others shareholders of Airtel. The shares are under litigation and it could result in a loss (if they had been sold at the time), hence the need to wait,” he explained further.

 

International newswire, Bloomberg, at the weekend quoted ETI’s spokesman Jeremy Reynolds, as saying Oba Otudeko, chairman, Honeywell Flour Mills sought to buy 16 million units of Airtel Nigeria at $88 each, a discount, compared with the 2011 cost price of $101.

 

Oando Plc

In a media chat on the London trial, Omamofe Boyo, deputy chief executive of Oando Plc lamented that prosecution is aware that Ibori had less than 400 units in the company.

“We are not a party to the case… we do not have the opportunity to put the facts to the court. The UK Police came to Nigeria to ascertain the shareholding of Ibori in Oando. To put the facts straight, in 2012, we saw inference to Crown Court as per the transfers (and) we approached them to show there were no truth, we showed them there was no evidence of the transfer to any company related to Ibori.

 

Boyo regretted that “the sensationalism around the way the case is being run is very reckless, because it has had effect on an innocent third party (Oando Plc).”

 

He insisted that “Ibori does not own 30 per cent of Oando or Ocean & Oil (the core investor in Oando) from our records.”

 

Boyo said the prosecution lawyers had all the evidence of the true situation, describing what had happened in the first three days of the trial started in London as “very bizarre.”

 

He stressed that the company had even checked its share register in South Africa and Nigeria, and that “there was no Ibori on that register… We have no obligation, nothing binds us to check… We know all of those shareholders that have stake from 0.5 per cent, because there are few shareholders holding one per cent and above.

 

“The mention of Oando in the case came as a very big surprise.”

 

He stressed that when officials of the Metropolitan Police visited Nigeria for the case, all available evidences were placed before them, wondering why the prosecution is bent on misleading the court by trying to blur the distinction.

 

Happily, he said, unlike in the past when the company’s legal team was barred from getting involved in the proceeding and get a protection from the judge, Oando is now  allowed to sit in court as a friend.

 

“We are exploring civil and criminal proceedings in the matter… shareholders’ register is a public document and can be accessed. If Ibori wants to buy shares in Oando, which is a public company, you cannot restrict him…” he stressed further.

 

The Real Issue

In a review of the scenario at the weekend, Olufemi Awoyemi, CEO, Proshare Nigeria, noted that an analysis of Oando’s share price movement showed that “common (retail) investors who appeared worried naturally went into a panic mode in the last few days.”

 

The coast, he stressed, “appears settled and confidently so – for what we had was a storm in a tea cup. That said, while we remain of the opinion that the current sentiments towards the stock confirms that only short term investors acted on the news, the low attractive price of the stock played a key role in overriding the panic sell that ensued.

 

Despite the gains, he warned that “the stock does not have very far to go, since the most recent high was N11.80k.

 

“As we grow into gains, the stock is still faced with the challenge to find its true value. We must find a way to provide answers to the most pertinent question – How do reverse the share price collapse from about N80 level in 2010 to the Tens now experienced?  How come Oando Plc share price is low relative to other companies ( i.e. Total, Mobil, FO, etc) in the petroleum sector?”

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