On Sunday, June 9, 2019 the Securities & Exchange Commission (SEC) via a press statement published on its website indicated that “Oando PLC was given sufficient opportunity of being heard and accorded several opportunities to rebut the issues revealed by the investigation.” The Commission goes on to say that these opportunities were via engagement with Deloitte & Touche in the course of its audit into the company’s business.
A hearing can only be said to be fair when all the parties to a dispute are given an opportunity to present their respective cases, and each side is entitled to know the details of the case/findings being made against it and is given an opportunity to reply thereto.
Oando was not accorded a fair hearing because we simply co-operated with the process and responded to questions posed by the auditors in the course of their fieldwork for findings in a report that the Company has still not seen.
Consequently, Oando disagrees with the statement “Oando PLC was given sufficient opportunity of being heard and accorded several opportunities to rebut the issues revealed by the investigation” based on the following facts:
1. Prior to the commencement of the forensic audit the Company was not afforded the same opportunity to meet with the SEC as was afforded to the petitioners, despite repeated written requests to that effect. The first of these requests was on Thursday, August 24, 2017 from the Chairman, HRM Oba Michael Adedotun Gbadebo CFR who wrote to the then SEC Director General as follows “We would like to request for a meeting with you, in your capacity as Director General of the SEC and regulator on matters involving the securities of our Company, to formally table our concerns to you and clarify any further questions that you may have in respect to the issues that we have raised in this and previous letters to the SEC.”
2. During the 18 month long forensic audit exercise, the Company was never given an opportunity to present its case based on the concerns or findings of the Forensic auditor to the SEC.
3. In the kick off meeting with Deloitte on the 29th of March 2018 they assured the Company that we would be allowed to read their report on the forensic audit and give further clarification or comments on matters raised in their report. Minutes from the meeting which was shared with parties in attendance state “Deloitte concluded by repeating that the audit will be done fairly and from a factual perspective. There will be ‘no surprises’. Oando will be allowed to read their report on the Forensic Audit and give further clarification or comments on matters raised in the report.”
4. In the course of Deloitte’s forensic audit exercise, the Company had a second meeting with Deloitte on the 1st of November, 2018, and this was at the Company’s insistence. At the said meeting Deloitte promised that on the conclusion of its audit it would hold a close out meeting with the Company, however this meeting never took place.
5. With the exception of the aforementioned meetings, all other engagements with both the SEC and Deloitte were via letters and emails
6. On Monday, February 11, 2019 at Oando’s request the Company’s management team met with the SEC for the purpose of getting approval for certain proposed transactions as part of our corporate strategy pending the release of the Forensic Audit. At the said meeting the Company was assured by the Acting Director General (DG), Mary Uduak that they would call us in to defend the findings from the forensic report before making a final conclusion. A promise that she has not honored.
The Company also disagrees with the assertion by SEC in its press release that “The actions of the Commission were properly effected pursuant to the provisions of the Investments and Securities Act (ISA) 2007 and the SEC Rules and Regulations mad pursuant to the ISA 2007”.
Rule 599(1) of the SEC Rules and Regulations establishes the Administrative Proceedings Committee (“APC”) and states as follows:
“1) Pursuant to sections 310 of the Act, there is hereby established an administrative body to be known as Administrative Proceedings Committee (the Committee) for the purpose of hearing capital market operators and institutions in the market who are perceived to have violated or have actually violated or threatened to violate the provisions of the Act and the rules and regulations made there under and such operators or persons against whom complaints/allegations have been made to the Commission”
By virtue of this provision, it is evident that SEC circumvented its own rules and procedures when it failed to invite Oando to appear before the APC and hear its position. The Commission instead approached the media to publish the purported findings and punitive directives against the Company.
We are aware that the APC forum was rightly adopted by the SEC in the case of Mr. Olubunmi Oladapo Oni vs. Administrative Proceeding Committee & Securities and Exchange Commission (2014) N.W.L.R. (part 1424) 334 “The Cadbury Case”, the case of Afolabi Gabriel Oluwaseyi & 9 others vs. BGL Securities Limited & 22 others as well as in the case of the investigation of a certain financial institution. In these aforementioned cases cited, the parties involved were afforded opportunities to be heard before the panel prescribed appropriate punishments.
For the avoidance of doubt, Schedule VIII of the SEC Rules stipulates as follows:
“The Administrative Proceedings Committee of the Commission is a body established pursuant to the Investments and Securities Act for the purpose of resolving disputes in the capital market and giving opportunity for fair hearing to capital market operators and other institutions in the market who are perceived to have violated or have actually violated or threatened to violate the provisions of the ISA and the Rules and Regulations made thereunder or such operators against whom investors have lodged complaint.”
It would have therefore been in line with due process for the aforementioned Committee to have been rightly constituted by the SEC in accordance with the ISA, in order to afford Oando the opportunity to present its case.
We maintain that the SEC has not followed due process, failed to grant Oando a fair hearing, has acted in a way that is contrary to best practice and has not proven itself to be a fair and reasonable regulator acting in the best interest of the capital market and minority shareholders, in all its dealings on this matter.