Nigeria’s apex capital market regulator, Securities and Exchange Commission (SEC), has launched investigations into activities at Lafarge Africa Plc over allegations of poor corporate governance practices and abuses.
Documents obtained by The Nation at the weekend indicated that SEC’s investigation was sequel to a petition written by concerned shareholders of the publicly – quoted company. Shareholders had raised several allegations of infractions and poor practices by the company, urging the SEC to act.
SEC, in response to the petition, stated that the Commission was investigating the issues raised in the petition.
Shareholders called for forensic audit of Lafarge Africa to determine the propriety of the acquisition of Lafarge South Africa, a subsidiary of LafargeHolcim by Lafarge Africa Plc and the subsequent sale of same Lafarge South Africa to LafargeHolcim after many years of losses that negatively impacted Lafarge Africa. LafargeHolcim is the majority core investor in Lafarge Africa.
According to the petition, there is need to ascertain the veracity of the transactions to ensure the minority shareholders were not shortchanged as corporate acquisition of such magnitude ought to have involved comprehensive due diligence to forestall the subsequent round-tripping of assets.
The forensic audit is expected to focus on the nature and independence of due diligence on the transactions, share pricing and valuations, board’s oversight functions and insider dealings, interference of the majority core investor and the current composition of the board of Lafarge Africa.
The petition alleged that the entire transactions on Lafarge South Africa were skewed in favour of LafargeHolcim, leaving the Nigerian minority shareholders with reduction in shareholding and avoidable losses.
SEC is also investigating recent rights issues by Lafarge Africa to determine if the net proceeds were used for the purpose stated in the rights circulars.
Shareholders alleged that LafargeHolcim appeared to have shortchanged the Nigerian company by tactically recouping its initial investment through the various transactions while still maintaining its position as the majority core investor.
They called also for the reconstitution of the board of Lafarge Africa alleging that the board as presently constituted lacks the capability and competence to reposition the company on a solid and competitive base. They alleged that after consenting to transactions that put Lafarge Africa in huge losses, the directors have lost moral justifications to remain on the board.
Lafarge Africa did not respond to media enquiries seeking clarifications on the petition and the allegations.
