Contrary to the universal principles of corporate governance, there is a glaring evidence of absence of such in Oriental Energy Resources Limited as Court papers obtained in connection with the legal tussle between the children of Alhaji (Dr.) Muhammadu Indimi and Oriental Energy Resources Limited largely reveal same.
Within the context of business, be it production or service oriented, corporate governance refers to the rules, practices, and processes by which a company is directed and controlled. It ensures accountability, fairness, and transparency in a company’s relationship with stakeholders, including shareholders, management, employees and the public, promoting ethical decision-making and long-term organizational sustainability.
In a bid to enthrone corporate governance in the Nigeria corporate sector, the Financial Report Council (FRC) issued the Nigerian Code of Corporate Governance (NCCG) 2018 to regulate all public companies (whether a listed company or not); all private companies that are holding companies of public companies or other regulated entities; all concessioned or privatized companies; and all regulated private companies being private companies that file returns to any regulatory authority other than the Federal Inland Revenue Service (FIRS) and the Corporate Affairs Commission (CAC).
Admittedly, private companies that do not come within the application of the NCCG are not obliged to adhere to its provisions. However, with the advent of the principles of Environmental, Social and Governance (ESG), the need for corporate entities to be responsible in their business practices and the observance of international best practices demand that all public or private companies observe corporate governance principles.
Private companies operating in the Nigerian petroleum industry are not exempted from adhering to sound corporate governance principles, even though, technically, they do not fall within the entities regulated by the NCCG. In 2023, the Nigerian Upstream Petroleum Regulatory Commission issued the Draft Upstream Petroleum Sector Code of Conduct and Compliance Regulations 2023, which has yet to be gazetted, to provide a framework for applying corporate governance principles in the oil and gas industry. Pending when the draft regulation is gazetted, it shows the intention of the regulator to entrench corporate governance principles in the oil and gas industry.
Corporate governance principles require the company’s board to provide strategic leadership; promote an ethical culture and ensure that management acts in
stakeholders’ best interest. The board oversees company performance, while the
Chairman leads the board, fostering director engagement to guide the company’s long-term success and responsible corporate citizenship.
Ironically, the foregoing seems not to be the case in Oriental Energy Resources Limited. Information in the public domain revealed that there are currently three separate actions filed by Alhaji (Dr.) Muhammadu Indimi’s children against Oriental. Two of the cases are pending in the Federal High Court, Abuja, and one is in the National Industrial Court, Abuja. Ameena Indimi and Zara Indimi are seeking payment of declared but unpaid dividends for 2015, reversing a share increase that was improperly done in 2016, and payment of terminal benefits to Ameena Indimi.
The Dividend Claim
The Dividend claim arose from a long-standing and multifaceted dispute between Alhaji Indimi’s children and Oriental, a private Nigerian oil exploration and production company chaired by their father, Alhaji Indimi. It centers on each of the children’s right to 5% of the dividends declared by Oriental in 2015 as contained in the Company’s audited financial statements for the financial year ended 2015 filed with the CAC.
Ameena Indimi and Zara Indimi (the Plaintiffs) anchored their rights to file the Dividend claims on their status as bona fide shareholders of the Company. The court papers revealed that on 16 December 2011, following a corporate decision to increase the Company’s share capital from ₦10 million to ₦30 million, the Plaintiffs were allotted 1.5 million ordinary shares at ₦1 each. This allotment to each of the Plaintiffs constituted the Plaintiffs as 5% owners of the Company’s equity, respectively. These shares were legally and validly issued, supported by corporate resolutions and filings with the CAC. In 2015, when Oriental declared a substantial dividend distribution, each of the Plaintiffs was a 5% equity holder, with their shareholding status intact and unchallenged. At the time of the dividend declaration, the Plaintiffs held legally protected interests entitling each of them to receive their proportionate share amounting to USD 21 million of the declared USD 420 million.
*Irregular Dilution of* *Shares*
The Plaintiffs also anchored the legitimacy of their claim on the questionable circumstances surrounding a later share dilution exercise. In 2016, Oriental increased its share capital astronomically from ₦30 million to ₦2.45 billion, issuing 2.42 billion new shares. All these shares were exclusively allotted to the Chairman, who allegedly failed to make any financial payment for them. This act effectively diluted minority shareholders, including the Plaintiffs, whose stake was reduced from 5% to 0.06% respectively. The Plaintiffs contend that the share issuance was not supported by any financial consideration and was executed in bad faith to consolidate ownership in the Chairman.
Oriental’s Defence
Although Oriental admitted the allotment of the shares to the Plaintiffs, the papers obtained from the case file revealed that Oriental alleged that the Plaintiffs are not entitled to any benefits in their capacity as shareholders of the Company because they were gifted their shares in the Company by Alhaji Indimi. Oriental also stated that the Plaintiffs and other minority shareholders executed a deed of transfer in 2016 assigning their rights to all prior and future dividend rights to the Chairman of Oriental, Alhaji Indimi. Oriental denied declaring any dividends in 2015 or any other year.
However, Oriental’s audited financial statement for the year ended 2015, prepared by the reputable accounting firm of SIAO Partners and filed with the CAC, which the Plaintiffs tendered during the trial of the case, shows that Oriental declared the sum of USD 420 million as dividends for the year 2015.
*Additional Claims:* *Gratuity and Exit* *Benefits*
Beyond the dividend claim, Ameena Indimi also filed a claim in the National Industrial Court against Oriental, claiming her unpaid employment entitlements. Ameena Indimi stated in the court papers that from 2000 until her resignation in 2018, she played a vital role in Oriental’s operations, ascending from Executive Assistant to the Chairman to Chief Operating Officer (COO) in 2014 and Senior Executive Vice President (SEVP) in 2016. Her responsibilities extended well beyond administrative duties and included strategic oversight of financial compliance and corporate governance.
As Oriental’s COO, she was pivotal in correcting financial misreporting that had significant implications for Oriental’s reputation. Upon her resignation in August 2018, Oriental failed to pay her End of Service Gratuity, despite clear provisions in its Employee Handbook entitling employees to gratuity based on years of service. In addition, she is claiming pro-rated benefits for 2018, including leave allowance and a 13th-month salary, all calculated based on her last known remuneration and period of service.
Oriental denied the claims and stated that the company never employed Ameena Indimi and she is not entitled to her claims for End of Service Gratuity, amongst other claims. However, available documents produced by Ameena Indimi to the court suggest that she was an employee of Oriental.
The claims seek redress for unpaid financial entitlements and underscore the critical importance of transparency, accountability, and the protection of minority
shareholders within Nigeria’s corporate landscape. The claims against Oriental are based on a comprehensive and substantiated framework, corporate laws, shareholders right and employment contract obligations. It suggests arbitrariness in the management and operation of Oriental and the alleged failure of the company to adhere to corporate governance principles.
Given that the matter is subjudice, we cannot comment on the claims but await the Court’s decision.
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