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Stock Exchange suspends Cadbury from trading

Posted by By OMODELE ADIGUN on 2008/07/18 | Views: 2388 |

Stock Exchange suspends Cadbury from trading


Cadbury Nigeria Plc suffered another blow for its sin of account padding on Thursday as the Nigerian Stock Exchange (NSE) clamped down on the conglomerate with a full suspension on trading in its shares.

Cadbury Nigeria Plc suffered another blow for its sin of account padding on Thursday as the Nigerian Stock Exchange (NSE) clamped down on the conglomerate with a full suspension on trading in its shares.
This followed the outcome of its petition at the Investment and Securities Tribunal (IST) which upheld its earlier indictment by the Securities and Exchange Commission(SEC) over its financial misstatement.

The implication of NSE's action is that the name of the company will be completely taken off the daily official list of the Exchange and no transaction whatsoever will be allowed on its shares.

Announcing the decision, the Assistant Director General of the Exchange, Mr. Musa Lance Elakama, said that the ruling of the IST is binding on the Exchange since it is a court of competent jurisdiction on investment matters.
It would be recalled that the NSE had earlier in the year declined an order from SEC to suspend trading on Cadbury shares, stating that the directive was not backed by law.

The apex regulator of the capital market had earlier in the year indicted and banned Mr. Bunmi Oni and Ayo Akadiri from occupying the position of director in any quoted company (NSE) as a result of their involvement in the mis-statement of the financial account of Cadbury Nigeria Plc.The company was indicted over account misstatement amounting to N5 billion.

SEC also declared that the company's directors - Messrs Uduimo Itsueli, Bunmi Oni, Ayo Akadiri, J.S.T Bogunjoko, Abiodun Jaji, Andrew Baker, Christopher Okeke, Olatunde Falase, Raymond Ihyembe, Gabriel Onabote, Olusegun Oyewole, Matthew Shattock, Olusegun Aina, Akinbode Gbolahan and Tunde Egbeyemi- had been referred to the Economic and Financial Crimes Commission (EFCC) for further investigation and prosecution.

Besides, it penalized and reprimanded Akintola Williams Deloitte and Union Registrars for their involvement in the alleged misstatement of Cadbury's result.
Speaking on the suspension, an investor Mr. Paulson Echendu said since the market depends on trust and integrity whenever there is a question boarding on the trust and integrity of a quoted company, it is always a minus on the image of the company.

His words: “NSE is right in its decision because investors have suffered so much in the company; Cadbury had a bad case which is a situation of lack of integrity in a market that depends on trust.
It would be recalled that the commission in a statement said: “SEC in its judgment has imposed a fine on Cadbury Nigeria Plc. It is to pay a fine of one hundred thousand Naira (N100, 000.00) in the first instance and a penalty of five thousand Naira (N5, 000.00) per day from June 30, 2002 to December 14, 2006 amounting to N8.1 million 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."

Other decisions of the commission were that Cadbury should pay a fine of one hundred thousand Naira (N100, 000.00) in the first instance and a penalty of five thousand Naira (N5, 000.00) 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.

"Pay a penalty of five thousand Naira (N5, 000.00) 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."
According to SEC, "Messrs Bunmi Oni and Ayo Akadiri are banned from operating in the Nigerian capital market, being employed in the financial services sector and holding directorship positions in any public company in Nigeria ."

SEC also decided that "Messrs J.S.T. Bogunjoko, Abiodun Jaji, Andrew Baker and Christopher Okeke are 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 5 years from the date of the decision."

Olusegun Aina, Akinbode Gbolahan and Tunde Egbeyemi were 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 3 years from the date of the decision.
"Rt. Hon. Uduimo Itsueli, Messrs Olatunde Falase, Raymond Ihyembe, Gabriel Onabote, Olusegun Oyewole, Matthew Shattock, Thomas Ayorinde, Z.C. Enuwa and S.J. Balogun are 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 one year from the date of the decision."

In the case of Akintola Williams, Deloitte, SEC said it had "ordered it to pay a fine of N20 million within 21 days of the decision for its failure to handle the accounts of the company with high level of professional diligence failing which its registration with the Commission shall be cancelled.
"Strongly reprimanded and warned to desist from engaging in acts that may affect the investing public's confidence in the capital market.
"Strongly advised to be more diligent in carrying out its assignments in capital market related issues.
“Further directed to sign an undertaking to be diligent and of good behavior in its future dealings in the capital market."

It said Union Registrars Limited had been "Ordered to pay a penalty of five thousand Naira (N5, 000.00) per day from June 1, 2002 to June 31, 2006 within 21 days of the decision, failing which its registration with the Commission will be cancelled.Strongly reprimanded and warned to desist from engaging in acts that may affect the investing public's confidence in the capital market.And strongly advised to be more diligent in carrying out its assignments in capital market related issues.”

As a result of the litany of punishments, Cadbury went to court to challenge the decision.
Clarifying this, the company's Corporate Affairs Manager, Mr. Kufre Ekanem, said that “ the discerning public understands the key issues involved in this matter and they applaud our rationale for awaiting the conclusion of the ongoing legal actions while staying focused on our core purpose of creating brands people love.”

According to Ekanem, Cadbury Nigeria Plc discovered the misstatements internally, got an independent investment investigation done and disclosed the findings with all external enquiries and regulatory processes (including the SEC). When the issues of jurisdiction and the legal remit of the SEC came up, we referred the matter to the courts for judicial interpretation and that matter is still in court even till this moment.”

But unfortunately, SEC continued with the APC process and proceeded to reach decisions without hearing or taking the defense/clarifications of Cadbury Nigeria, our directors and officers in the proceedings and without awaiting the end of the legal action. Our company and several other respondents have since filed fresh cases in court challenging the process and outcomes of the SEC on this matter but we are bound by our principles and ethics not to discuss the details in the media and the public sphere until the courts determine them.

“Cadbury is a values-led company and we will not allow expediency to deviate us from our principles no matter the external provocation. We remain focused on rebuilding our business to return to greatness despite a lot of misunderstanding and innuendos occurring externally”, Ekanem concluded.

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Fay(Katy, Texas, US)says...

Actually translates to bravehearted.