Post-Forensic Exchanges: The SEC Letter to Oando Plc and The Oando Rebuttal


Sunday, June 02, 2019   /  01:57AM  /  By Proshare Research   / Header Image Credit: Oando


The Securities & Exchange Commission (SEC), on May 31, 2018 wrote to The Chairman of Oando Plc on the findings of the forensic audit conducted by Deloitte & Touche; and its decisions therefrom. Oando Plc has since responded to the contents of the letter. We present below both statements on an issue by issue basis.  






You would recall that following the receipt of two petitions by the Securities and Exchange Commission (SEC) from April from Alhaji Mangal Dahiru and Ansbury Incorporated, the Commission in 2017, conducted an investigation into the activities of Oando PLC and observed certain infractions of securities laws by some members of the Board of Oando PLC Additionally, the findings of the Commission were communicated to the Group Chief Executive Officer of Oando PLC by letter dated July 10, 2017.


The Commission further engaged Deloitte & Touche to conduct a forensic audit of activities of Oando PLC.


The findings from the investigations were as follows:


Oando’s Response

We refer to your letter dated 31st May 2019 (“your Letter”) wherein you communicated the findings relating to certain infractions on securities laws by members of the Board of Directors of Oando PLC (“the Company”).


You will recall that following SEC’s receipt of two (2) petitions from Ansbury Incorporated and Alhaji Dahiru Mangal, SEC wrote to the Company requesting responses to the petitions. The Company responded to the allegations in its letter dated 21st July 2017. However, SEC only responded by communicating its interim findings in its letter dated 17th October 2017 wherein it stated that its findings are “weighty and therefore need to be further investigated to ascertain their veracity…”. The SEC thereafter suspended the Company’s scheduled Annual General Meeting (AGM) and ordered the appointment of a forensic auditor into the affairs of the Company. In October 2017, the Company filed a suit before the Federal High Court to challenge the SEC’s directives which later went on appeal to the Court of Appeal.


The Company later withdrew the appeal from the Court of Appeal on the strength of the assurance given by the SEC that the forensic investigation will be impartial and independent. Please note that we are aware that a copy of the forensic report was submitted by the forensic auditors to the SEC in December 2018. The Company has never at any time been furnished with the forensic report neither has it been afforded the opportunity to defend or make any representations on the final findings therefrom.


Having stated our general position on your Letter and without waiving our rights to receive the full report pursuant to which your Letter was issued, we respond to the specific points raised in your Letter below as follows.



1.              Corporate Governance Lapses


There were several corporate governance lapses stemming from poor Board oversight. These include irregular approval of Director’s remuneration, Directors participation in matters in which they had declared interest, unjustified disbursements to Directors and Management of the company, failure of the Audit Committee to hold meetings with management, internal auditors and external auditors.


Oando’s Response

The Company firmly states that the SEC has not substantiated its findings on alleged ‘several corporate governance lapses stemming from poor Board oversight’. Oando prides itself as a pioneer Nigerian company in the adoption of best corporate governance practices. Oando was the first NSE-listed company to achieve a cross-border dual listing of its 100% shares on the Johannesburg Stock Exchange in 2005 and a further listing of 100% shares in its upstream subsidiary on the Toronto Stock Exchange in 2012. These successful listings required the Company to institute and maintain the highest international standards of corporate governance in its management and business operations.


1.1    Irregular Approval of Director’s Remuneration


Oando’s Response

The Company denies that there was any irregular approval of director’s remuneration at any period under review. All payments to directors were in accordance with the Board Remuneration Policy, were approved by the Board of the Company and disclosed in the audited financial statements. 


1.2    Unjustified Disbursements to Directors and Management


Oando’s Response

The SEC has failed to furnish instances of such ‘unjustified disbursements’. All remuneration (including expenses) to directors and management are approved and paid in accordance with the approved Delegation of Authority document of the Company.


1.3    Failure of the Audit Committee to hold meetings with Management, Internal Auditors and External Auditors


Oando’s Response

This is completely false and raises quality assurance concerns on the SEC’s findings.  The records of the Audit Committee meetings of the Company clearly shows that the Committee holds regular meetings with the Management of the Company and its internal and external auditors. In addition, the Audit Committee meets separately with the internal auditor and the Management is absent at such meetings. The rationale behind this is to reinforce the independence of the internal auditor in compliance with the requirements of the Audit Committee.


1.4    Directors’ participation in conflicted matters


Oando’s Response

The SEC has again failed to provide details of this allegation, which is denied. It is the practice and tradition of the Board of the Company to have as the first item on the agenda in all Board Meetings, the disclosure of any interest they may have in the business of the day. Any director(s) of the Company who disclose an interest in a matter before the Board always recuse themselves from exercising their right to vote on that matter.



2.      Failure of Internal Controls


Oando PLC failed to establish an effective system of internal controls as required under Section 61 if the ISA 2007, over its financial reporting thereby compromising the integrity of the company’s financial controls and reporting as revealed by the misstatements in the financial statement, high number of related party transactions and unjustified disbursement to directors.


Oando’s Response

The Company denies the allegation in your letter that it does not have an effective internal control process in place as required by S61 of the Investments and Securities Act 2007 (“ISA”). In the absence of any specific instances or examples, the Company is of the position that there is no basis for this finding. The SEC is therefore put to further proof of this allegation.



3.      Incidental Issues Arising From the Sale of a Subsidiary  


3.1.      In 2013, Oando PLC reported the sale of its subsidiary Oando Exploration and Production Limited (OEPL), to Green Park Management Limited without obtaining the approval of the commission, (in violation of the provisions of the Investment and Securities Act (ISA) 2007) and the consent of the Minister of Petroleum (As required under the Petroleum Act,1969)


Oando’s Response

The accounting treatment accorded to the sale of Oando Exploration and Production Limited (OEPL) was in accordance with the International Financial Reporting Standards (IFRS) and the rules of the Financial Reporting Council. 


3.2.     The purported sale of OEPL enable Oando PLC to report a profit instead of a loss, thereby misstating its Financial Statements in 2013 and 2014 and consequently misleading investors. This ‘fictitious’ profit reported in 2013, enabled Oando PLC to declare dividends.


Oando’s Response

The Company rejects the assertion by the SEC that the sale of OEPL in 2013 was fictitious or orchestrated to enable the company to record a profit and pay dividends.


3.3.     The 2013 misstate accounts and quarterly reports of Oando PLC were include in the 2014 rights circular, thereby misrepresenting the financial status of the company to the public in violation of Section 86 of the provisions of the ISA 2007.


Oando’s Response

The 2013 audited accounts and subsequent quarterly reports of the Company were the proper account to be used in the 2014 Rights Circular and at the time of inclusion, did not contain any untrue statement or mis-statement. There was no intention on the part of the Company to mislead the public as alleged by the SEC.



4.      Suspected Market Abuse and Insider Dealings

4.1.            In 2012, 2013 and 2014 and 2015, certain insiders of Oando PLC sold shares of the company during “close period” despite having knowledge of active closed periods by the company and contrary to the Rules of the NSE. The insiders include Ocean an Oil Investment Limited (OOIL – represented by Jubril Adewale Tinubu and Godwin Omamofe Boyo), Ocean and Oil Development partners (OODP – represented by Jubril Adewale Tinubu, Godwin Omamofe Boyo, Francesco Cuzzocera), and ECP African Fund II PC (a Company in which Nana Appiah-Korang wards Director).

This violation is being referred to the Nigerian Stock Exchange.

4.2.           OODP, the major shareholder in Oando PLC represented by Jubril Adewale Tinubu, Godwin Omamofe Boyo and Francesco Cuzzocera authorized the sale of 1,210,000,000 units of OODP shares in Oando PLC valued at N21,455,909,256.  The trades took place between January and October, 212015, preceding the release of the 2014 audited financial statements on October 23, 2015 in which Oando PLC declared an unprecedented loss of N183 billion.  During this period, these representatives of OODP were insiders of Oando PLC and had access to material non-public information regarding the poor financial status of the company commencing December 2014, in violation of the provisions of the ISA 2007 regarding insider dealing.

This violation is being referred to the appropriate law enforcement agency.


Oando’s Response

The Company has always maintained that its policy and procedure on Insider dealings and sale of shares during closed periods are in accordance with best corporate governance standards. Oando is however not in a position to provide a response regarding alleged actions of shareholders as these are independent and separate legal entities.



5.       Related Party Transactions


Oando PLC was involved in several related party transactions linked to key Board members particularly Jubril Adewale Tinubu and Godwin Omamofe.  Some of the related party transactions were not disclosed in the 2012 and 2014 financial statements.  However, an impression was created in the 2013 and the 2015 financial statements that these disclosures had been accurately reported.


Oando’s Response

The SEC has again not specified the details of the related party transactions that were undisclosed in 2012 and 2014. As a result, we are unable to respond in detail to this allegation and again put the SEC to further proof of same.



6.      Payment of Interim Dividends Despite Liquidity Constraints


In 2014, Oando PLC paid interim dividends when the Company was facing liquidity constraints.


Oando’s Response

The Commission claims that the Company paid interim dividends in 2014 when it was facing liquidity constraints.  There is no legal basis for the SEC’s findings. As the SEC should be aware, Section 379 (2) of the Companies and Allied Matters Act permits the payment of dividends from distributable reserves. The interim dividend declared in September 2014 was paid by the Company in November 2014 from the H1 2014 profits of the Company.  At that point in time, the Company had sufficient distributable reserves and it is acceptable under the law to pay out dividends if reserves exist at the point of declaration.



7.       False Disclosures 


Oando PLC failed to fully comply with the SEC Code of Corporate Governance for public companies.  The Company falsely indicated full compliance with the code in its Annual Reports for 2012 and 2013.


Oando’s Response

The SEC’s claim that Oando failed to comply fully with the SEC Code of Corporate Governance for public companies is false, unsubstantiated and for the records, unhelpful.



8.      Non-Disclosure of Beneficial Ownership


Alhaji Dahiru Baraú Mangal failed to disclose his substantial ownership in Oando Plc as required by CAMA. Similarly, Oando PLC failed to notify the Nigeria Stock Exchange (NSE) of his shareholding of 5% and above as required by the rules of the NSE.

This is being referred to the Corporate Affairs Commission (CAC) and the Nigerian Stock Exchange (NSE).


Oando’s Response

The SEC would observe that by the Company’s letters dated 21st July 2017, 23rd August 2017, 24th August 2017, 28th August 2017  and 21st September 2017, Oando repeatedly brought to the attention of the SEC the fact that to the best of the Company’s knowledge,  Alhaji Dahiru Mangal held less than 5% of the shares in the Company and requested that the SEC compel Alhaji Mangal to disclose his full beneficial ownership in Oando PLC  in accordance with Section 95(1-5) of the Companies and Allied Matters Act to enable the Company comply with Rule 17.13 of the NSE Rule book.


The SEC did not send Oando a response to its request and Alhaji Mangal did not contact the Company until 29th September 2017 and 11th October 2017. We thereafter promptly notified the SEC that his shareholding had exceeded 5% based on his notification. 



9.      Tax-Related Issues

i.   Oando PLC deducted an amount representing 24% of the dividend paid to shareholders in 2014 as withholding tax. This exceeded the statutory requirement of 10% as required by the Compliance Income Tax Act (CITA)

ii.  Oando PLC failed to comply with several tax laws such as Companies Income Tax Act, Value Added Tax Act etc.

These tax related violation are being referred to the Federal Inland Revenue Service (FIRS).


Oando’s Response

The Company denies that it deducted and/or remitted any amount in excess of the statutory 10% Withholding Tax deductions from the dividend paid to shareholders in 2014 as required by the Companies Income Tax Act (CITA). We put the SEC to further proof of this allegation. We also note that the SEC has clearly exceeded the remit of its powers by alleging non-compliance with ‘several tax laws such as Companies Income Tax Act, Value Added Tax Act etc’…We respectfully request that the Commission restricts its regulatory oversight to the matters permitted by the applicable law.



10.    Directives including Resignation of Directors from the Board


In view of the above violations, the Commission hereby directs as follows:


1.       Oando PLC to pay the sum of:

a.      N8,450,000 to the Commission for publishing untrue statement in its 2012 Financial Statements, in violation of Rule 3 (4) of the SEC Rules and Regulations, made pursuant to the ISA 2007.

b.      N7,850,000  to the Commission for publishing untrue statements in its 2013 Financial Statements, in violation of Rule  3 (4) of the SEC Rules and Regulations, made pursuant to the ISA 2007.

c.       N42,750,000 to the Commission, for non-disclosure of related party transactions in its 2012 Financial Statements, in violation of Rule 39 (1&7) of the SEC Rules and Regulations, 2013, made pursuant to the ISA 2007

d.      N30,625,000 to the Commission, for non-disclosure of related party transactions and its 2014 Financial Statements, in viatioon of Rule 39 (1&7) of the SEC Rules and Regulations 2013, made pursuant to ISA 2007.


2.      The under listed directors of Oando Plc shall immediately refund to Oando PLC, the total sum of N145,767,316 (One Hundred and Forty-Five Million, Seven Hundred and Sixty-Seven Thousand, Three Hundred and Sixteen Naira, Only) being remuneration and other benefits paid to them above the provisions of the Board Charter:


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3.      In view of the gravity of the corporate governance lapse and internal control failures observed in the company, every person who sat on the Board of the company when the failures occurred to wit:

·         HRH. Oba Micheal Adetoun Gbadebo CFR

·         Mr. Mobolaji Osunsanya

·         Mr. Olufemi Adeyemo

·         Mr. Oghogho Akpata

·         Chief. Sena Anthony

·         Mrs. Ammuna Lawan Alli OON

a.      Should reign his/her position from the Board of Directors of Oando PLC, failing which such person would be barred from serving as a director in any public company for a period of five (5) years.

b.      Oando PLC should convene an Extra-Ordinary General Meeting (EGM) on or before July 1, 2019 to appoint new directors and articulate remedial measures for the observed corporate governance lapses.


4.      For Certification of untrue statements of materials facts in the 2013, 2014 and 2015 financial statements of Oando PLC in violation of Section 60 (2 (b) (ii) of the ISA 2007, MR. Jubril Adewale Tinubu (Group Chief Executive Officer) and Mr. Olufemi Adeyemo (Chief Financial Officer) are ordered to the sum of N91,125,000 (each) to the Commission.


5.      Mr. Jubril Adewale Tinubu and Mr. Godwin Omamofe Boyo are hereby barred from being directors of public companies for a period of 5 years for improper conducts in managing the affairs of Oando PLC to wit: market abuse, related party transactions not conducted to arm’s length, misstatements in financial statements of Oando PLC.


6.      All monetary penalties referred to in 1 above, should be paid to the Commission immediately.


Please accept the assurance of the Commission’s highest regards.


Oando’s Response

Oando hereby states that the SEC did not follow due process in the conduct of this investigation and reserves its rights to challenge the legality of the directives in your Letter. We therefore maintain that such directives from the SEC are invalid, illegal, ultra vires and should be rescinded.


We reiterate that the SEC’s actions on this matter would have a huge negative impact on the Company’s reputation as a leading, indigenous oil and gas company and its shareholders, investors and stakeholders; whose interests the Securities & Exchange Commission (SEC) has a duty to protect. We condemn the disturbing pattern in which the SEC has repeatedly taken harsh punitive actions towards the Company without according it the fundamental principle of fair hearing.



Proshare Nigeria Pvt. Ltd.


The above ad verbatim report was compiled by Proshare Research for information curation and research purposes only. For enquiries, kindly contact or/and  


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Related News on SEC Investigation Report

1.       Oando Challenges SEC’s Ruling On The Outcome Of The Forensic Audit Into Oando PLC – May 31, 2019

2.      SEC Announces Far Reaching Decisions On The Investigation Of Oando Plc – May 31, 2019


Proshare Reports - Oando Investigation

3.      Memo to The Market: The Oando Corporate Journey – At the Regulators Gate – Nov 22, 2017

4.      Download Full (PDF) Report - Memo to The Market: The Oando Corporate Journey – At The Regulators Gate – Dec 2017

5.      Review of the SEC Technical Committee Recommendations, Opinion and Final Report – Dec 08, 2017


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Quick Recall of Past Market Memorandum(s)

6.      Beyond The Noise: MTN’s Post Listing Reactions, Gaps in Rules and Lessons LearntMay 25, 2019

7.      The Bull in the China Shop – A New Paradigm in the Banking Sector (analysis of the SLS Intervention) ... - Proshare Aug 21, 2009

8.     Fundamental Considerations for Capital Market Reforms in Nigeria ... - Proshare Sept 06, 2010

9.      Memo to the Market: Reappointing Arunma Oteh as DG, SEC - Proshare Dec 31, 2014

10.  Where Nigeria got it Wrong - Proshare Dec 01, 2014

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List of Appendix

12.   Corporate Governance Rating System (CGRS)

13.  Facts Behind the Figures (FYE 2016 & Q1 2017 Performance Review)

14.  Oando Plc Half Year Update Call (FYE 2015 & Q1 2016 Performance Review)

15.   NSE X-Compliance Report February 21, 2014

16.  NSE X-Compliance Report August 7, 2015  


Proshare Nigeria Pvt. Ltd.

Related News on Oando

17.   Oando Optimises Value From Midstream Business – Apr 26, 2019

18.  OANDO Declares N4.63bn PAT in Q1'19 Results (SP:N4.85k) – Apr 25, 2019

19.  Oando PLC Announces Divestment of its Residual 25% Interest in Axxela Limited – Apr 04, 2019

20. Oando’s Plan to Deleverage and Remain Profitable – Apr 04, 2019

21.  Axxela Now 100 Percent Owned by Helios – Apr 04, 2019

22. Oando Plc Announces FYE 2018 Results, Posts N28.8 Billion Profit-After-Tax – Apr 02, 2019

23. OANDO Declares N28.79bn PAT in 2018 Audited Results (SP:N5.65k) – Apr 01, 2019

24. Oando PLC, Canadian Government and Accountability Lab Champion the SDG 16 Innovation Challenge 2019 – Mar 26, 2019

25.  OANDO Declares N28.79bn PAT in 2018 Audited Results (SP:N5.65k) – Mar 15, 2019

26. Oando Female Engineers Mentor Female Pupils in Celebration of International Day of Women in Science – Mar 08, 2019

27.  Oando Employees Donate Relief Materials to Flood Victims in the Niger Delta – Jan 31, 2019

28. Oando, NAPIMS and NAOC JV Celebrate Green River Project and 22nd Annual Farmers Day – Dec 03, 2018

29. NNPC, NCDMB, Oando, Seplat And Many More Push The Nigerian Agenda At The 25th Africa Oil Week – Nov 12, 2018

30. Oando PLC, Nestle Nigeria, Union Bank and others lead conversations on Heritage Branding – Nov 01, 2018

31.  OANDO Declares N10.39bn PAT in Q3 2018 Results (SP:N5.05k) – Oct 31, 2019

32. Oando Plc Eyes Growth After Curbing $2.5 Billion Debt – Aug 28, 2018

33. Oando Plc Successfully Concludes 41st Annual General Meeting  - Jul 28, 2018

34. Oando Plc Sets the Record Straight Regarding the LCIA’s Ruling on Whitmore, OODP BVI and Ansbury – Jul 16, 2018

35.  Oando Plc Awarded EPC Mandate to Develop Ajaokuta-Kaduna-Kano Gas Pipeline Project by the NNPC – Apr 19, 2018

36. Oando PLC Announces YTD September 2017 Results; Gives Operational Highlights

37.  Oando Plc state Positions on the Securities and Exchange Commission Alleged Findings

38. Oando Secures Court Injunction, restraining SEC, NSE

39. Oando Shares Now Available for Trading, No Price Movement During Technical Suspension

40. JSE Follows NSE, Suspends Trading in the Shares of Oando Plc

41.  Oando Gives Holding Response on SEC’s Directive to NSE to Suspend Trading of Its Shares

42. Oando PLC’s Official Statement on the SEC’s Directive to The NSE to Suspend Trading of Its Shares

43. NSE, SEC Confirm Decision To Suspend Trading On The Shares of Oando Plc

44. Trading on the Shares of Oando Plc Suspended; Reasons Unknown

45.  Oando Gas & Power Rebrands as Axxela

46. House of Reps gives SEC Two weeks to submit Report on Oando PLC

47.  Oando Plc. - AGM Resolution

48. Oando Plc holds 40th AGM, engages Shareholders on the Progress of its Restructuring Plan

49. Oando Plc's 40th AGM To Hold As Planned Following SEC Confirmation

50. Oando Plc to Hold 40th AGM on Sept 11, 2017

51.   Oando Plc Issues an Update on Claims of a SEC Investigation

52.  OANDO Declares N4.56bn Profit in Q2 2017 Results,(SP:N7.80k)

53.  Oando Issues Press Release over SEC Investigation

54.  Corporate Earnings for the Week Ending 140717 – UCAP declares N1.99 billion Profit in Q2'17 Results

55.  SEC Investigating Oando Plc

56.  OANDO Plc Announces Closed Period

57.  Oando Provides Clarifications on its Refinery Ambitions

58. OANDO Declares N1.71bn Profit in Q1 2017 Results,(SP:N5.80k)

59.  OANDO Plc Announces Closed Period

60. Oando Plc to Hold 2016 AGM on Tuesday 2nd August

61.  Oando Plc Key Highlights on Q4 15 and Q1 16

62. OANDO Concludes Recapitalization Partial Divestment of Equity Stake in Its Downstream Operations

63. Material Uncertainty May Cast Doubt on Oando’s Ability to Continue as a Going Concern – Ernst & Young

64. OANDO Releases Q4 15 and Q1 16 Results Declares N4.10bn PAT in Q1 SP N6.50k

65.  Oando Plc Secures 5 Year N94.6 Billion Medium Term Facility with 10 Nigerian Banks

66. Oando explains what Deregulation of Petrol Price means for its Downstream Operations

67.  OANDO to acquire OER Minority Shares for a Consideration of US 1.20 per share in Cash

68. The Corporate Governance Rating System – Proshare

69. ETI, Oando Plc under Fire over Ownership, Governance


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Related News on SEC Laws and Corporate Governance


71.   Corporate Governance and Directors' Remuneration

72.  SEC Proposes New Rules & Amendments to Rules on Book Building, Corporate Governance

73.  Good Corporate Governance is Good Business

74.  SEC, Udo Udoma And Corporate Governance: The Fact Files

75.  Enabling Law – Investment and Securities Act (ISA) 2007

76.  SEC Nigeria’s Executed Rules and Regulations as at June 2017

77.  SEC Nigeria’s Consolidated Rules and Regulations as at 2013

78. Code of Corporate Governance for Public Companies_4 April 2011


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Related News on Oando from Other Sources

79.  N236bn Liability: Oando Shareholders Protest in Ibadan – Independent

80.Intel’s Volpi Steps Up Battle Against Wale Tinubu over Control of Oando - ThisDay

81.  Suspension of OANDO PLC – SEC

82. Oando Shareholders Set To Sack Wale Tinubu, Board – Independent

83. Notice to the General Public on Oando Plc – SEC

84. So what’s happening at Oando (2)? – Business Day

85. So what’s happening at Oando (1)? – Business Day

86. The inside story: Why SEC ordered a Forensic audit of Oando Plc – Business Day

87. Corporate Stories: Under siege, the battle for Oando - Nairametrics

88.Oando and IAS 24: What the law cannot do by @Doubleeph - Nairametrics


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Acknowledgement/Research Links

89. Securities and Exchange Commission, Nigeria  

90. The Nigerian Stock Exchange

91.  Oando Plc

92. Convention for Business Integrity

93. Vetiva Capital Management Ltd

94. Oando’s Investors Relation Page - TheAnalyst

95.  Oando Plc Audited Financial Statements – 2012

96. Oando Plc Audited Financial Statements - 2013

97.  Oando Plc Audited Financial Statements - 2014

98. Oando Plc Audited Financial Statements - 2015

99. Oando Plc Audited Financial Statements - 2016


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