One on One with Bunmi Oni - 2
Doctoring the Books, what you will not be told.
One of the first things I realized in my discussion with Bunmi, which I didn’t hesitate to tell him, was that it would take a lot of business education to explain things to the average employee. How would you ever explain some things to people. Well, maybe that’s why some of us are passionate about educating people, else how will you explain what I’m about to do. Somehow I felt I could only relate to some of those things because, first I had worked in a manufacturing company, and now own a business. Irrespective of why I feel I understand however, I’ll do my best to be as explanatory as possible.
I’ll like to say as well that I am not biased. This is the first time I’ll ever speak with the man for more than 2 minutes. In previous times, all that I have ever done, had been to walk up to him and greet him, like I have done to many other MDs that have crossed my path. Where there is smoke, there is certainly fire, I’ll try as much as possible to share my perspectives about the smoke as well.
Again, these are merely my perspectives, the impressions I got when i spoke with the man. They in no way form the court’s discoveries or 100% of Bunmi’s views as I did not hold a recorder when speaking with him. I’m not his lawyer as well, so be easy on judgment 
And of course, measure based on your measure. I expect that the cleanest people are usually the most intolerant of any spec of dirt.
Bunmi Oni became the MD of Cadbury by his own records in 1995. When he came in, he set a 5yrs goal for the company together with top management. By the year 2000 they exceeded their goals, both for profit and company growth and he was very excited about it. He went ahead to set a 10yrs goal for the company, knowing also that the goal would outlive him, as he would have handed over to a successor. The goal was to build Cadbury Nigeria into a $1Billion company by 2010. He this was a very stretch goal, considering their size at the time, but he and his team were passionate it could be achieved. Confirmation came for them in 2003, when to the amazement of the onlooking world, MTN came to Nigeria and achieved beyond their 10yrs goal in their second year, without bringing a dime of foreign money into Nigeria. It reaffirmed his fate in the possibilities of growth in Nigeria as all that money was inside the system. At this time they reviewed how they were doing as well, and reviewed the plan to achieve the goal latest by 2012.
In line with this stretch goal, one of the things he knew would have to change were some of the machines they were working with. There was no way they could build a 21st century $1Billion business using the current equipment. The machines they used for making Bournvita were old technology plant that used a coal oven. He believed they needed a machine with better throughput. He realized that they were not skilled enough to design what they needed, and decided to seek help from Cadbury Schweppes UK. These agreed to design the plant, that would give them their required results. Cadbury Schweppes designed but where not willing to pay for the development, but recommended another company in Europe that was great in implementing designs. This company developed to specification, the machine was transported to Nigeria, set up, powered, but refused to work! An investment of £4.8Million Pounds was not working, this created a lot of concerns.
It took quite a lot of back an forth convincing the development team that it was not due to operational competency. They finally came down to operate it themselves with some of their consultants, only to finally open up to Cadbury Nigeria that the design was faulty. This was a shocking revelation which they took up with Cadbury Schweppes UK. Cadbury UK, switched to denial. They kept denying until after a while they decided to concede without committing it to writing, and agreeing to help fix the line. Because it was a line with a continuous automated process, they had to fix each module before they discover the issues with the next module. They also had to waste a lot of cocoa and other raw materials testing the line. This gulped some other millions of pounds and 18 months! The machine was finally fixed but with a capacity only 60% of initial design specifications requested. This also gave Cadbury a liability of 300 extra staff that were supposed to be replaced or redeployed to other sides of the business with the coming of the automated line.
Here is where the misstatements started…
Bunmi out of no fault of his own, save a desire to grow the business, is left with a messy situation. About N2billion had been expended on a line project that he went into with the full alignment of the board, but that Cadbury UK had fouled on. He decided to take responsibility for it, and work with his team to progress inspite of the shortfalls. Since the entire process took 18 months, he and his team ( I believe with the boards approval) decided to depreciate the costs incurred in procuring the machine and the entire design exercise over 2yrs+. They recorded a part of it in 2006, were going to do the rest in 2007 and if there was any excess capture it 2008. IMO, this is allowed in accounting. I say this not as an accountant, but as one who has seen many books and worked closely with a good number of highly rated financial analysts and accountants. Multinationals that score number 1 in integrity globally do these things, and I have worked with one of them. This however is the case that looks most like it can win a case for miss statement. But I’m open to expert views from accountants on this, particularly those familiar with the manufacturing environments.
When the investigations were done, the people who had the brief (PWC UK) decided to look for other opportunities to position for miss statement… and found some interesting ones. Due to regulatory changes for example, many companies had a gratuity liability that was huge. A number of companies in the Manufacturers Association of Nigeria and many others not in, decided to approach the body in charge to negotiate for an opportunity to clear the liability over 3yrs. They agreed and gave Cadbury Nigeria, together with a number of companies this waiver. The investigators got the letter, reported that the decision of the body was wrong and that the full amount for 5yrs be taken out of the companies books in 1yr. This accounted for a few billions of Naira in the eventual 13 Billion Naira misstatement.
They went through he books, and even though they had just cleared their income tax liabilities with the Tax bodies, they said that the staff had still underpaid tax and they had an exposure of over N1billion.
They also discovered that Cadbury distributors were only rewarded for their performance and given their bonuses in the next year after they had done the work. Experts (Gamaliel Onosode for example) says this is typically the same way dividend is done. The consultants decided against it and said is should be charged into the books in the same year. In their zeal, they decided to charge for 2005 and for 2006 all in 2006. This accounted for a few billions miss statement as well.
They also went through the books and reviewed some of their policies. In Nigeria for example, they defined a bad debt from their clients to any amount that was not paid in 180 days. the consultants (PWC UK) came, and said it should be 90/60 days (sorry I didn’t write it down, just listened hard), and counted everything above these number of days as bad debt and captured it, also a few billions as miss statement.
They found or invented, a number of these type of things, pulled them together and called it N13billion miss statement. I’m an HR specialist and business man, I need the help of an accountant here to let me know if what I have watched done all my multinational career was actually wrong. If they are, then is there any clean? Before you jump into attack mode, please find out what your accountants are doing, find out what’s keeping them in the office late at night. I’ve worked somewhere before when if you make a forecast, it must never be wrong! In fact you must not even make much more profit that you forecasted. Wrong forecast they say is an indicator to your investors that you are not on top of your business, and if good mistakes can happen bad ones can too, and a process of creative, yet ethical (I’m made to believe) accounting occurs and it’s never missed, at times, we sell of things whose book values have reached zero for profit, pressure a few of our receivables to come in, initiate projects that make our distributors buy more e.t.c.
I’m sure there are some fine lines that have been crossed here, and if anybody decides to witch hunt the cleanest of CEO’s in the world, we’ll find some of these things. If we look closely at clean water, we might see micro-organisms. Scientists even say that there is no liquid water without life. Is Bunmi Oni being measured by the same standards by which we measure all the companies on SEC? Are the punitive measures taken against him not tantamount to using bullets to kill ants? Are we inventing another measure for him for no reason? When I heard him, I felt that going the length they went to prove a point, and clear evidence of motive says to me, was this a routine check? Did SEC check Cadbury out indpendent of the report PWC UK submitted to it?
Before I start sounding like a lawyer before a jury trying to establish the presence of reasonable doubt. Let me restate the facts of this matter. No money was made. Something questionable was done, Bunmi took accountability for it and asked that his team be spared of any punitive measures due, as it happened under his watch. Bunmi Oni did not act based on the motivation of personal gain, security, survival or sex (the human motivations), he acted according to him, in the integrity of his heart. Cadbury UK pounced on him, perhaps before the issues blew in their face. Why would you miss state? Why? Just for the fun of it? To defraud the shareholders? To get people to buy and dump your shares? Or to steer the company carefully into your dream for it? And was it really a miss statement? And why are they making it so big by making other things miss statements? Would it have made a super star out of the Next MD if the previous year had taken a big deep of amounts that were supposed to be spread? Would the next MD not make profit already from day 1? Was it planned that the next MD would be… let me guess from UK? Now it has all become a matter of yam pepper scatter scatter…
Please forgive my errors… I’m in the office after 10pm and need to rush home.
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Goodmorning,
Thanks for giving insights into “ünder the table facts”.
Personally, i was dissapointed in Mr. Bunmi Oni by the account we got in public domain.
Realy, when it comes to accounting, there can be “no clean” person. Accounting is based on conventions and concepts which every company are at liberty to define in the way it suits their business. What is right to you may be unacceptable to others (if such a person becomes your judge, you are already doomed before trial). However, the judges are supposed to see if they have been consistent in the way they do things.
Inspite of this, the man, like so many MDs in the WORLD will fall in the area of tax. Tax planning, tax avoidance are common thing but as I said earlier, if the judge is already bias abinitio, you are guilty abinitio.
On distributors’ performance bonus, cadbury nigeria was wrong. “Matching Concept” of account states that all expenses incured in generating revenue must be matched before profit can be realised. If distributor’s sold goods produced in 2008, their commission or bonus must be provided for/charged to books (even if to be paid in 2009 or later) as part of the SELLING EXPENSES for 2008 not the following year. It is wrong to charge 2008 sales expenses to 2009..that is mistatement - rubbing the future to pay for/enjoy today.
On bad debt, the consultants are wrong except an analysis of the company’s books shows that amount standing in the books as outstanding for over 60/90 days are always bad debt or the business of the company is on “ädvance payment basis” or “cash n carry basis”. if not, 180 days debt is not a bad debt.
Sincerely speaking, we all need God so that the devil does not rob us of our harvest when it is matured. The case of Bunmi Oni is that of thief waiting for a man at pay day to rob him of his hard earned reward (29 years service is not a joke).
I hope (and pray) that he will get favour in the court. With a good lawyer he can be nailed. No body will listen to the background of the case. whether Cadbury UK like his face or not is not an issue in this case and obviously not a defence.
God help us all. My prayers are with Mr. Oni. May he find the favour & mercy of God and man.
In my short years of working,in business there is no such thing as acting in good faith.Innocent people have been messed up.I need to ask what did the board do in respect of the faulty equipment supplied?
Hi Deolu,
I must commend you diligence and efforts in pulling these facts together even without a tape recorder or jotter.
Well i am not an accountant but it is obvious that PWC UK was doing a hatchet’s man job. Why wasn’t the faulty machine design with its attendant costs taken in cognizance. On a good day, Cadbury UK should bear full responsbility for the faulty design unless there was no contractual agreement bw them and Cadbury Nigeria prior to the execution of the project.
IMO, i think “Cadbury UK pounced on him, perhaps before the issues blew in their face” as you suggested.
A “crime” of such magnitude should warrant an independent investigation on the part of SEC rather than relying on the “findings” of PWC UK to pass judgement.
Mind you, this is not a justification of Bunmi but just my own piece of mind.
@abidemi,
thumbs up! love ur analysis.
Insightful, yet lacking a few fine details here and there (I know you didn’t have a tape recorder) but it would have been helpful to know what My Oni (who I have very high regard for….and I can’t say that for even 100 people in Nigeria……yet) did in the circumstances following the events of the witch-hunt(?) from PwC UK.
I should also state that it’s also not the place of Cadbury Schweppes to take up payment for the liability for the faulty equipment but the design company (if it was agreed in the initial contract). It’s easy with the benefit of hindsight to apportion blame here and there, but many of the issues here can be taken up with the external and internal auditors of Cadbury Nigeria (which I believe a company like Cadbury should possess).
Issues like the distributors’ bonuses (as Abidemi stated earlier - matching concepts is a not a new concept in the good auditing and tax firms in the country) should not require the intervention of a PwC UK to detect and act on.
The issue of how long a debt runs before it is moved to the bad debt column is an issue to be determined by the company and its auditors based on the business climate it operates in, its target customers and some other factors so I don’t believe a company outside the shores of this country can correctly say what the right time line is for considering some debits as bad debts, EXCEPT there is a written rule from the global Cadbury company clearly stating otherwise.
As Deolu aptly put it at the end, it’s now a case of Yam pepper scatter scatter (I actually laughed when I read that); and as Abidemi prayed “May Mr Oni find favour in God and man’s eyes”.
Ces’t finis
Hmmmmmm, Really management issues; not here or there but must comply with the company policies, procedures and standards, which of course are always in line with goverment regulations and proffessional ethics. Can not say more than what Abidemi has already said; and for the sake of this discussion, we may have a second look at SEC findings and decision (on Cadbury and Bunmi only) attached below.
FINDINGS:
CADBURY NIGERIA PLC AND ITS DIRECTORS
1 That the Bunmi Oni, the company’s former managing director in concert with the company’s Board since year
2002 used stock buy backs, cost deferrals, trade loading and false suppliers stock certificates to manipulate its
financial reports that were issued to the public and filed with the Commission.
2. That both Bunmi Oni and Ayo Akadiri,a former executive director stated that the use of the sale and stock buyback
as well as the issuance of false stock certificates schemes were motivated by what they called “profit
management desire/action” and that off-shore payments were made to Executive Directors to cushion the
devaluation of their pay by soaring inflation.
3 That an undocumented and undisclosed offshore account was maintained and operated by the company from
which Bunmi Oni, Ayo Akadiri and other executive directors were paid offshore remunerations without the
approval of the Committee responsible for fixing remunerations of Executive Directors and not recorded in the
company’s financial report and account.
4 That the company as Issuer and Uduimo Itsueli, Bunmi Oni and other members of the board, some
management staff and audit committee members, in 2005 authorized the issuance of a Rights Circular dated
August 24, 2005 which contained untrue statements.
5 That Bunmi Oni, Ayo Akadiri, Olusegun Aina, Senior financial Accountant/Head of Accounts; Akinbode
Gbolahan, Sales operations and development controller and Tunde Egbeyemi, head of internal audit were the
master minds of the financial malpractices perpetrated through the falsification of sales figures, over statement
of profits/assets and false suppliers certificates to manipulate its financial records/report.
6 That the company failed/refused and/or neglected to deliver funds en-bloc to Union Registrars for the payment
of dividends declared to shareholders within 7 working days after the Annual General Meeting.
7 That Uduimo Itsueli, the company’s chairman stated in the 2001 annual report and account that the company
had taken over the payment of dividend and this continued up to 2006 despite the Commission’s letter directing
it to allow the Union Registrars Ltd to perform its statutory function.
8 That messrs Olusegun Aina, Akinbode Gbolahan and Tunde Egbeyemi being heads of accounts, sales operation
and internal audit respectively generated incorrect data and were also involved in the preparation of the false
report and statement filed by the company with the Commission.
9 that messrs Thomas A. Ayorinde, Z.C. Enunwa and S.J. Balogun as members of the Audit Committee of the
company failed and neglected to discharge their statutory responsibilities as specified under section 359(4) and
(6) of the Companies and Allied Matters Act (CAMA) by:
a Failing or neglecting to examine the auditor’s report and making proper recommendations thereon to the Annual
General Meeting;
b Failing or neglecting to review and make proper findings on management matters in conjunction with the
External Auditors and departmental responses thereon;
c Failing or neglecting to keep under review the effectiveness of the company’s accounting and internal control
system and ensuring that appropriate investigations are carried out by the internal auditors into some aspects of
the company’s activities which ought to be of interest or concern to the Committee.
10 That the Tunde Egbeyemi, Cadbury’s Head of Internal Audit, Thomas A. Ayorinde, Z.C. Enunwa, S.J. Balogun
(Audit Committee Members) and Akintola Williams Deloitte did not follow up available leads which ought to
put them on enquiry in respect of the company’s accounts.
11 That Uduimo Itsueli, other board members and the three management staff of the company- Olusegun Aina,
Akinbode Gbolahan and Tunde Egbeyemi used stock buy backs, cost deferrals, trade loading and false suppliers
stock certificates to manipulate its financial reports which conduct is fraudulent and needs to be further
investigated by the Economic and Financial Crimes Commission (EFCC).
DECISIONS:
1. Cadbury Nigeria Plc to:
a. 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 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.
b. 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.
c. 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.
2. 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.
I read with amazements at the things “our” expatriate community will do to keep the local community subservient and dominated.
For those of us who work in the Jungle of manufacturing (Plants, factories, works - however it is called), these are no news. It’s a question of kill or be killed.
If every MD/CEO/GM is to be audited, not only will the scales be wanting, it will BREAK!
I’ve seen brand new CAT generators Depreciated to zero on account of running hours versus the normal convention of 5 years just to protect an expatriate Technical manager when the expatriate plant manager saw that the power network design done by an expatriate engineer was putting production loss at an all time high.
It’s unfortunate that we locals see the dark side of politiking and still plunge head long into it without adequate cover.
I feel for Bunmi Oni and I truly hope he comes out of this triumphant.
If you see a local sending a “minutes of meeting” after a hall way chat with a senior expatriate colleague, don’t think he/she is taking it too far.The yoruba’s will say ” Ifura ma l’oogun agba”.Simply put, caution is the charm that an aged man keeps around himself.
Someday, we will overcome!!
Deolu,
I really dont know why Bunmi Oni who has been, painfully to me,silent all along now considers u a veritable medium to defend himself. Is it that he doesnt trust the Nigerian media?
What is it with this sight-tight attitude of our Nigerian leaders even in corporate world? Can they just resign when things are going wrong or their integrity is being questioned? Must they wait till they are disgraced or booted out?
I sincerelly agree with kroy’s comment, (even though i still believe in accepting 100% responsibility of leadership) why did he keep silent all the while and what for this “dance of shame”
@ deolu
i must commend you for giving us the lowdown…
@ abidemi
nice take…
@ all
what can i say?the corporate world is dirty but that dont mean that we dont have clean CEOs/MDs.jus like jide said,”If every MD/CEO/GM is to be audited, not only will the scales be wanting, it will BREAK”…only God know what happens at our vey own NSE daily.i wonder why there is a conflict betwen the SEC findings and that of PWC Uk?shouldnt the design team bear responsibility for the unsuccessful design implementation?did SEC carry out indepth investigations before handing out such penalties?multinationals dont fancy having locals heading their companies?
in the corporate world,things go wrong..ENRON the 7th largest US company in its days wasnt just a case of mismanagement and fraud it also got dirty(lots of politics) because Enron and its officers were among the biggest donors to U.S. political campaigns over the past decade and the CEO enjoyed close relationship with Pres Bush and Vice Dick Cheney.To cap it all,Arthur Andersen, the company that audited Enron’s books, at best neglected to recognize the company’s problems. At worst, investigators now say, the auditor was complicit in perpetrating one of the biggest frauds in corporate history…
what more can i say?welcome to the sleazy world and murky waters of accounting?
May God help Mr Oni…
true, most companies listed on the NSE are guilty of different atrocities. they just they obey the 11th commandment- though everyone does it doesn’t make it right.
i don’t know why a lot of spotlight and hammer is on Cadbury and its management, rather than a overhauling of their own regulatory systems.
i just think Bunmi Oni had better start blowing his whistle beyond the internet community, because the world and media needs to know.
@ Deolu,
Very commendable; your bringing this to the fore. Discussions like this would (hopefully) help budding entrepreneurs distill the values which should be entrenched in the hearts of those whose successes endure.
@ All
I have worked in a multi-national myself and seen firsthand the real muck that goes on behind the scenes all in the name of delivering results. I dare say most (if not all) the multi-nationals have such issues in their books. Students of history and observers of current happenings would also agree that the original motivations of the promoters of these organizations (greed and exploitation) has not changed one bit. Even though, today these organizations may have evolved into firms that bear little resemblance to their origins.
The real picture beneath the buzz and Hype?
So what obtains now? Sadly we now see a crop of Nigerian managers in such organizations who see through the crap and have resorted to ’settling’ themselves (perhaps they’ve always existed). Indeed there has arisen an unspoken agreement between these ’smart’ Nigerian managers and the leadership of the multi-nationals. The unspoken agreement? -”Deliver consistent profits/targets and we would caste a blind eye to your ‘runs’. Indeed understanding the rules of these game is increasingly the basis for entry into ’senior management’.
I would like to believe Bunmi Oni knew the rules, he played the game and got caught on the wrong side of events. If events had turned otherwise we would probably still be celebrating him as Nigeria’s most respected CEO. Natural law suggests that one who comes to equity must come with clean hands. Contravening policies and regulations, deliberate misstatement of facts cannot be justified by the profit objective whether obtained or anticipated.
It all goes to show the dearth of value based leadership in Nigeria. We need leaders who would challenge the status quo on and lead the upholding of the rule of law.
Thanks for bring this truth out for some of us that have wonder all this while, what went wrong
Like you said there is no “pure water” anywhere. Bunmi may just be a victim of some calculated attempt to put a “few good men” down .
I’m sure he’ll rise above it
Dear Deolu,
Its been a while. Many thanks for your overdue yet timely write-up on Bunmi Oni. I was around and corresponded briefly with him for a few years and can vouch that OOO is one of the few people with intrinsic integrity. It pervades his talk, gestures and very person; making it very difficult to reconcile with the negative news in the media. I for one still hold him in very high regard and wish him all the best as he attempts to set the records straight. May the LORD vindicate him. Well done Deolu; a lesser mortal may have reconsidered doing this write-ups. May the LORD strenghten your spine! Keep it up!!