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#LOCAL NEWS: Why Oando Scandal Matters

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The Verdict By Olusegun Adeniyi, Email: olusegun.adeniyi@thisdaylive.com
Understanding the workings of the Nigerian economy is like trying to read a doctor’s prescription. It is never an easy task. That explains why when I see two or more ‘experts’ arguing about movement of share capital, ‘bullish runs’ and all that, I try as much as possible to keep my distance. Because they could be con-men! The death of a political leader, electricity failure for as insignificant a period as three minutes and even the bedroom antics of political leaders can affect the movement of shares on the Tokyo, London or New York stock exchange markets with far-reaching consequences for the global economy. But the Nigerian Stock Exchange (NSE) is immune to political or economic factors.
In the last two years of democracy, with its deluge of drama, our stock market has remained unmoved. Political intrigues in the National Assembly have seen to the downfall of two Senate Presidents and a House of Representatives Speaker with no effect. Anywhere else these issues would have seriously impacted the trading floor of credible stock markets. But in our country today, quoted prices are rising even for companies that are not producing!
My conclusion is that the Market operates on sentiment, essentially on the whims and caprices of a small group of men and women who have turned themselves to the ‘market forces’–the ‘visible hands’ that Adam Smith made no allowances for in his book, “Wealth of Nations”. They simply allocate share prices based on criteria that cannot be plotted as either supply or demand on what economists describe as ‘curve’…
When I first wrote the foregoing in my 26th April, 2001 column titled, ‘The Nigerian Stock(fish) Market’, it was a response to the absence of transparency and accountability in the Nigerian corporate environment. While cowboy behaviour may be excusable for those who run their private businesses, the moment a company goes to the market to source funds from the public, the rules of engagement should change. It is within that context that we should situate the latest scandal involving Oando Plc, a company that is quoted on both the Johannesburg and Nigerian Stock Exchanges.
In a press statement last Friday, the Securities and Exchange Commission (SEC) released the report of their investigation into the operations of Oando Plc, spanning a period of two years. The findings “revealed serious infractions such as false disclosures, market abuses, misstatements in financial statements, internal control failures, and corporate governance lapses stemming from poor board oversight, irregular approval of directors’ remuneration, unjustified disbursements to directors and management of the company, related party transactions not conducted at arm’s length, amongst others”, said the statement.
On Monday, SEC tightened the noose by constituting an interim management team headed by former Shell Managing Director, Mr Mutiu Sunmonu to oversee the affairs of Oando. The Sunmonu team was further mandated to conduct an Extraordinary General Meeting on or before 1st July to appoint new directors who would subsequently select a management team to replace the Group CEO, Mr Wale Tinubu, his deputy, Mr Mofe Boyo and other affected board members who had been sacked and barred from being directors of public companies for a period of five years.
Although Oando has secured a court injunction to restrain SEC, this is an issue of public interest that will not easily go away. In Nigeria, there is always a focus on public sector corruption with scant attention paid to promoters of private companies who play ‘kalo kalo’ with other peoples’ money. Yet, when most people buy shares in a publicly-quoted company, they do so to secure their future and that of their families. That explains why whatever happens in such companies is of public interest.

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