Oando PLC has approached the Court of Appeal for the review of sanctions imposed on it by the Securities & Exchange Commission (SEC).
Following an investigation into the company, which began in May 2017, the SEC had issued a technical suspension order of Oando’s shares and ordered a forensic audit of the oil firm.
But a statement published on Oando’s website on December 15, 2017, said it had asked the appellate court to reverse the sanctions, particularly the technical suspension of its shares as well as the forensic audit of its affairs.
According to the press statement, the company has in addition to the legal action, written several petitions to various arms of government, expressing concern at the way the SEC under the leadership of ex-Director General, Mr. Mounir Gwarzo, managed the investigation, complaining that it believed the investigation was biased, did not follow due process and was not fair.
It said a recent leak of an endorsed September 18, 2017, report of the Technical Committee that was set up by Gwarzo to investigate the company was further proof that the actions taken by the Commission were illegal, invalid and calculated to prejudice the business of the company.
Gwarzo had set up a 5-man committee to investigate Oando, which submitted a report with findings and recommendations for several sanctions against the company.
According to the statement, the investigative committee found that Oando had satisfactorily responded to all the issues raised by the petitioners and had further recommended that the responses provided by the company and its independent external auditors be forwarded to the petitioners for their information and further escalation if they deemed it necessary.
It said the report made neither a recommendation for the shares of the company to be suspended nor for a forensic audit of the company to be conducted.
Instead, it added, the committee recommended that certain unresolved issues be forwarded to the Securities and Investment Services (SIS) Department of the Commission to determine whether there was, in fact, a breach of the ISA or SEC Rules.
It said: “On 27 September, 2017 the Committee of the House of Representatives on Capital Markets and Institutions summoned Gwarzo and mandated him to complete his investigation into Oando and issue a report within 2 weeks of that meeting.
“It also requested that it should be sent a copy of the report of the investigation, its findings and recommendations. It is interesting to note that Gwarzo failed to inform the House of Representatives that at the time the meeting was held, the signed Technical Committee report had already been submitted.
“It wasn’t until a month after, on Wednesday, 18 October 2017 that the SEC published a statement on its website detailing alleged infractions committed by Oando and weighty penalties, which included a directive to the Nigerian Stock Exchange (NSE) for a 48-hour full suspension followed by a technical suspension in the trading of Oando shares and for a forensic audit into the affairs of the company to be conducted.”
Listing other reasons it felt the investigation was biased and thus flawed, Oando said some of the actions taken by the then DG were against SEC’s rules and regulations.
It said: “Under SEC’s rules the Administrative Proceedings Committee (APC) is the committee empowered to look into matters of the nature of which the petitioners alleged, however, Gwarzo did not utilize this committee but instead set up a Technical Committee and later a Special Task Force to investigate Oando.
“SEC laws state that the DG does not have the legal or administrative authority to set up committees only the Board can do this, however at the time of the investigation, SEC had no Board and even if it did, there was a committee already in place that could investigate the company.
“There is also the legality of SEC investigating a petition brought by an indirect shareholder and one that is currently in arbitration when SEC’s rules categorically state that it will not consider any complaints regarding matters that are already the subject of arbitration or court proceedings.”
The statement cited the example of MRS Oil and Gas PLC, where the SEC stopped the investigation and a call for a forensic audit into MRS when it was brought to the regulator’s attention that there were ongoing arbitration proceedings in France between Petroci Holdings and MRS.
Oando said it had repeatedly complained about the frequent leaks of the committee’s investigation quoting its Group Chief Executive Officer (GCE), Mr. Wale Tinubu once saying: “the SEC investigation and continued media leaks have had a deleterious impact on market confidence, our share price and a negative impact on other critical stakeholders.”
Saying the company’s biggest concern was that because all SEC’s actions to date had been illegal and biased, a forensic audit could also be biased, Oando added that it was opposed to the forensic audit because SEC would have to conduct an audit to confirm the weighty findings by its investigative committee.
“It is unjust to make a company pay N160 million to be investigated so the regulator can confirm whether its findings are indeed correct or true,” Oando said, adding: “It begs the question how did the regulator come about its weighty findings?”
This is not the first legal action taken by the company against SEC on this investigation but its recent actions are evidence that it won’t back down and will fight SEC until justice prevails.
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