SEC Hammers Cadbury, Directors
The Securities and Exchange Commission (SEC) yesterday banned former Managing Director of Cadbury Nigeria Plc, Mr. Bunmi Oni and former Finance Director of the company, Mr. Ayo Akadiri, from operating in the nation’s capital market or hold directorship of any quoted company in Nigeria.
SEC also fined Cadbury for filing financial statements that contained untrue/misleading statements; failing which trading on its shares will be suspended.
In addition, the Commission suspended some of the directors and senior management staff of Cadbury from operating in the market and referred them to the Economic and Financial Crimes Commission (EFCC) for investigation and prosecution for their roles in the financial misstatements of the company’s accounts between 2002 and 2005.
Apart from Oni and Akadiri’s ban, others recommended for investigation and prosecution include Dr. Uduimo Itsueli, Chairman of the company, Mr. J.S. Bogunjoko, Mr. Abiodun Jaji, Mr. Andrew Baker, Mr. Christopher Okeke, Mr. Olatunde Falase, Chief Raymond Ihyembe, Mr. Gabriel Onabote, Mr. Olusegun Oyewole, Mr. Matthew Shattock, Mr.Olusegun Aina, Mr. Akinbode Gbolahan and Mr. Tunde Egbeyemi. SEC also sanctioned Cadbury’s External Auditor, Akintola Williams Delloite and Registrar, Union Registrars Limited.
The capital market apex regulatory body had in June 2006, upon review of the company’s Annual Reports and Accounts for 2005 written to Cadbury to express concern on issues arising from the report in the areas of declining profitability, worsening leverage ratio, deteriorating cash flow, inadequate disclosure, non-compliance with Corporate Governance Code, and obtaining loans for the payment of dividends to shareholders contrary to regulations.
Thereafter, the Chairman of Cadbury, Itsueli, through a letter to the Commission dated November 16, 2006, reported the engagement of an independent firm, PriceWaterhouseCoopers (PWC), to investigate the allegation of overstatement in the company’s financial statements for the period 2003 to September 30, 2006.
Subsequently, the Commission constituted an in-house committee, which carried out a thorough investigation on the matter and confirmed the report of misstatements in the account of Cadbury to the tune of approximately N13 billion. SEC invited the directors, some management staff of the company, its external auditor and registrars, to appear before the Administrative Proceedings Committee (APC) of the Commission. The rationale for the invitation was to explain why sanctions should not be imposed on them for violating the provisions of the Investments and Securities Act 1999, the SEC Rules and Regulations 2000 (as amended), Code of Conduct for Capital Market Operators and their Employees and the Code of Corporate Governance in Nigeria.
The APC sat on May 21, 2007, February 13 and 14, March 27 and 28, 2008.
In a statement signed by SEC’s Head of Media, Mr. Lanre Oloyi, yesterday, the Commission said the suspension of the directors and sanction against other professional advisers to the Cadbury were based on the APC’s findings. According to the statement, SEC found out that Oni, the company’s former managing director, in concert with the company’s board since 2002 used stock buy backs, cost deferrals, trade loading and false suppliers stock certificates to manipulate its financial reports that were issued to the public and filed with the Commission.
“Both Bunmi Oni and Ayo Akadiri, a former executive director, stated that the use of the sale and stock buy back as well as the issuance of false stock certificates schemes were motivated by what they called ‘profit management desire/action’ and that offshore payments were made to Executive Directors to cushion the devaluation of their pay by soaring inflation.
“An undocumented and undisclosed offshore account was maintained and operated by the company from which Bunmi Oni, Ayo Akadiri and other executive directors were paid offshore remunerations without the approval of the Committee responsible for fixing remunerations of Executive Directors and not recorded in the company’s financial report and account.
“The company as Issuer and Uduimo Itsueli, Bunmi Oni and other members of the board, some management staff and audit committee members, in 2005 authorised the issuance of a Rights Circular dated August 24, 2005 which contained untrue statements. “Bunmi Oni, Ayo Akadiri, Olusegun Aina, Senior Financial Accountant/Head of Accounts; Akinbode Gbolahan, Sales operations and Development Controller and Tunde Egbeyemi, Head of Internal Audit were the master minds of the financial malpractices perpetrated through the falsification of sales figures, over statement of profits/assets and false supplier certificates to manipulate its financial records/report,” the statement said.
It added that “the company failed/refused and/or neglected to deliver funds en-bloc to Union Registrars for the payment of dividends declared to shareholders within seven working days after the Annual General Meeting.
“Uduimo Itsueli, the company’s chairman, stated in the 2001 annual report and account that the company had taken over the payment of dividend and this continued up to 2006 despite the Commission’s letter directing it to allow the Union Registrars Limited to perform its statutory function.”
Based on the findings, SEC said Cadbury should pay a fine of N100,000 in the first instance and a penalty of N5,000 per day from June 30, 2002 to December 14, 2006 within 21 days from the date of the decision (March 28, 2008) for filing with the Commission financial statements that contained untrue/misleading statements; failing which trading on its shares will be suspended.
The company is to also pay a fine of N100,000 in the first instance and a penalty of N5,000 per day from August 24, 2005 to the date of the decision (March 28, 2008) within 21 days, for filing a Rights Circular for the N5 billion irredeemable convertible loan stock which contained false/misleading statements, failing which trading on its shares will be suspended.
SEC has equally asked the company to pay a penalty of N5,000 per day from June 30, 2002 to December 14, 2006 within 21 days from the date of the decision for failing to provide funds en-bloc for the payment of dividends to its shareholders despite the Commission’s earlier directive.
On Oni and Akadiri, the commission banned them from operating in the Nigerian capital market, being employed in the financial services sector and holding directorship positions in any public company in Nigeria.
On the other hand, Bogunjoko, Jaji, Baker and Okeke have been suspended from operating in the Nigerian capital market, being employed in the financial services sector and holding directorship positions in any public company in Nigeria for a period of five years.
Similarly, Aina, Gbolahan and Egbeyemi were suspended for three years.
Itsueli, Falase, Ihyembe, Onabote, Oyewole, Shattock, Ayorinde, Enuwa and Balogun are suspended for one year from operating in the Nigerian capital market; employed in the financial services sector; or holding directorship positions in any public company in Nigeria.
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