SEC alleges Oando over-deducted tax from shareholders’ dividend

Documents made available by the Securities and Exchange Commission has shown that Oando over-deducted withholding tax from the dividends paid to shareholders.

The company was reported to have deducted 24% of dividends as withholding tax instead of the 10% stipulated by the Federal Inland Revenue Service (FIRS).

Withholding tax is an informal tax that is usually deducted from fees to be paid by a company that engages the service of another company.

Apart from the over-deducting allegations, the company was also accused of violating other tax laws including those related to company income tax act and value-added tax act.

According to the SEC, the violations have been referred to the FIRS.

In response to the allegations, Oando said: “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 the 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.”

The company was also accused of corporate governance lapses arising from poor government oversight. This, it said, resulted in irregular approval of directors’ remuneration and unjustified disbursements to directors and management of the company.

Within 2012 and 2015, some insiders were alleged to have sold shares of the company during closed periods.

The insiders include Ocean and Oil Investment Limited represented by Jubril Adewale Tinubu, Godwin Omamofe Boyo, Francesco Cuzzocrea and ECP African Fund II PC (a company in which Nana Appiah-Korang was a director).

In response, Oando said it is “not in a position to provide a response regarding alleged actions of shareholders as these are independent and separate legal entities”.

Fictitious profits

“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),” the report read.

“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.

In response, the company denied that the sale of OEPL in 2013 was fictitious or orchestrated to enable the company to record a profit and pay dividends.

The role of Alake of Egbaland

The following directors have been asked to refund N145,767,316 to the company which was paid to them as remuneration and benefits.

“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 (Micheal Adetoun Gbadebo, the Alake of Egbaland, Mobolaji Osunsanya, Olufemi Adeyemo, Oghogho Akpata, Sena Anthony, and Ammuna Lawan Alli) when the failures occurred have been asked to resign or be barred from serving as a director in any public company for a period of five years.

SEC fines

SEC has directed that Oando pay the following fines:

• N8,450,000 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.
• N7,850,000 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.
• N42,750,000 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
• N30,625,000 for non-disclosure of related party transactions and its 2014 financial statements

The company has since said that it would challenge the