The global architecture of corporate governance is certainly witnessing increased activism as corporations have begun to take drastic measures to check abuse of executive office more than ever before. In recent times, shareholder activism, board diversity and corporate governance enforcement are some themes that have received increased attention in the sphere of corporate governance. With the unfolding trends in corporate governance, it would be safe to say that there is a fundamental change in the way corporations are governed and it is expected that this will keep evolving.
Afren Plc is an independent oil and gas company listed on the main market of the London Stock Exchange. The company is said to be one of AIM’s success stories moving up to main listing on the floor of the LSE and a constituent of the Financial Times Stock Exchange Index of the leading 250 UK listed companies (FTSE250). The company operates a robust production business in West Africa with assets in Nigeria and interests in East Africa, South Africa and the Middle East regions.
Sometime in July, 2014, it was reported that there were unauthorised payments relating to operations at Ebok oil field located in Nigeria. The payments were made to a special purpose vehicle (SPV) in the British Virgin Islands controlled by Osman Shashenshah and Shahid Ullah. In a swift reaction to the unpleasant development following investigations by Willkie Farr & Gallagher (UK) LLP, the company terminated the employment of the former CEO, Mr. Shashenshah, former COO, Mr. Ullah, two associate directors of the company, Messrs Iain wright and Galib Virani as well as some employees who were found culpable for gross misconduct and breach of obligations to Afren. Disciplinary measures have also been meted out to the employees involved in the offending transactions.
According to the Executive Chairman of the company, Mr. Egbert Imomoh:
“The decisive and comprehensive actions we have set out today should leave no one in doubt about how seriously Afren takes the issues uncovered in July and our commitment to rebuild the commitment of shareholders, partners, staff and our other stakeholders. Our focus is now on delivering significant opportunities we have before us with an open and transparent approach based upon mutual respect, the highest standards of ethics, governance and business conduct”
The Afren case reveals the commendable self-regulatory/internal corporate governance enforcement measures which corporations should adopt in order to sustain investor and stakeholder confidence. Although more is required to checkmate incidences of this nature in the future, the action of Afren is a remarkable feat that should send the right signals to all concerned and represent Afren as an ethical and transparent corporation. It further accentuates the global trend of private corporate governance enforcement. Jurisdictions which are more inclined to public regulation and enforcement through governance codes, laws and regulations should take a cue and engender private corporate governance enforcement measures through improved investor relations platforms and shareholder enlightenment as well as improved legal systems & frameworks and functional mechanisms for redress.
Corporate Governance enforcement in the Middle-east & North Africa by Alissa Amico