Nigerian Oil Executives' Firms Ordered to Pay $680 Million

(Bloomberg) -- Nigerian oil executive Wale Tinubu and his deputy at Oando Plc were dealt a court defeat as firms they own or part-own were ordered to pay $680 million in a dispute over corporate shareholdings.

The legal battle revolves around ownership of a holding company that ultimately controls a majority stake in Lagos-based oil and gas producer Oando, which is being investigated over claims of financial mismanagement and had its shares temporarily suspended last year. The beneficiary of the payments is Ansbury Investment Inc., owned by the family of Nigerian-Italian businessman Gabriele Volpi, according to court documents.

Oando sought to distance itself from the ruling, saying in a statement that the company isn’t part of the arbitration and hasn’t been ordered to pay anything. Even so, the stock traded 9.5 percent lower at close in Lagos on Tuesday, extending a two-day decline to 18 percent.

The London Court of International Arbitration ruled that Ocean and Oil Development Partners, a company incorporated in the British Virgin Islands, owes Ansbury $600 million. OODP is a joint venture between Panama-based Ansbury and Whitmore Asset Management Ltd., owned by Oando Chief Executive Officer Tinubu and his deputy, Mofe Boyo. Whitmore itself owes a further $80 million.

‘Owes Itself’

Oando emphasized that the $600 million is owed by the joint venture between Ansbury and Whitmore, which means that in a sense the former “owes itself.”

Oando is the largest listed energy company in Nigeria, Africa’s biggest crude producer, after Seplat Petroleum Development Co. Plc. It has interests in gas pipelines and fuel-retailing as well as oil and gas, according to its website.

“The company should continue on its part to educate investors and bring out more information about what exactly is happening,” Olalekan Olabode, equity analyst at Lagos-based Vetiva Capital Management, said by phone.

Separately to the ownership dispute, Ansbury last year made allegations of financial misconduct against Oando to Nigeria’s Securities and Exchange Commission, which in turn ordered a probe and suspended the stock. While the Abuja-based regulator lifted the trading ban in April, it continued with the investigation into the company.

A forensic audit of Oando officially started in March, the oil firm said in a separate statement. The company will cooperate with the SEC and update investors on any findings that could affect the share price, Oando said. The company stands accused of a range of offences, including insider trading and conducting related-party transactions that were not done at arm’s length.

Ansbury confirmed the court ruling in its own statement.

--With assistance from Paul Wallace.

To contact the reporters on this story: Emele Onu in Lagos at eonu1@bloomberg.net;John Bowker in Johannesburg at jbowker2@bloomberg.net

To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, Sophie Mongalvy, Dulue Mbachu

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