Identifier
Created
Classification
Origin
07LAGOS10
2007-01-08 15:27:00
UNCLASSIFIED
Consulate Lagos
Cable title:
CADBURY: NIGERIA'S ENRON?
how-toVZCZCXRO2069 RR RUEHMA RUEHPA DE RUEHOS #0010/01 0081527 ZNR UUUUU ZZH R 081527Z JAN 07 FM AMCONSUL LAGOS TO RUEHC/SECSTATE WASHDC 8337 INFO RUEHZK/ECOWAS COLLECTIVE RUEHUJA/AMEMBASSY ABUJA 8174 RUEHWR/AMEMBASSY WARSAW 0062 RUEHCD/AMCONSUL CIUDAD JUAREZ 0036 RUEHIT/AMCONSUL ISTANBUL 0043 RUEATRS/DEPT OF TREASURY WASHDC RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS SECTION 01 OF 02 LAGOS 000010
SIPDIS
SIPDIS
DEPT PASS TO EX-IM KVRANICH AND BUBAMADU
TREASURY FOR ASEVERENS AND SRENENDER
USDOC FOR 3317/ITA/OA/KBURRESS
PASS OPIC FOR ZHAN AND MSTUCKART
PASS TDA FOR NCABOT
PASS USTR FOR ASST USTR FLISER
E.O. 12958: N/A
TAGS: ECON EINV EFIN PGOV NI
SUBJECT: CADBURY: NIGERIA'S ENRON?
LAGOS 00000010 001.2 OF 002
UNCLAS SECTION 01 OF 02 LAGOS 000010
SIPDIS
SIPDIS
DEPT PASS TO EX-IM KVRANICH AND BUBAMADU
TREASURY FOR ASEVERENS AND SRENENDER
USDOC FOR 3317/ITA/OA/KBURRESS
PASS OPIC FOR ZHAN AND MSTUCKART
PASS TDA FOR NCABOT
PASS USTR FOR ASST USTR FLISER
E.O. 12958: N/A
TAGS: ECON EINV EFIN PGOV NI
SUBJECT: CADBURY: NIGERIA'S ENRON?
LAGOS 00000010 001.2 OF 002
1. (U) Summary: Since 2003, Cadbury Nigeria, Plc. had
overstated its financial position by naira 13bn to naira
15bn. This information came to light following the company's
discovery of accounting irregularities in November. After a
special audit conducted by PricewaterhouseCoopers (PWC),the
company fired its Chief Executive Officer and Finance
Director. Cadbury's handling of this mismanagement is a show
of corporate responsibility and could signal a growing
awareness of Nigerian firms of good corporate practice. End
summary.
2. (U) Since 2003, Cadbury Nigeria, Plc., the local
subsidiary of Cadbury Schweppes, had overstated its financial
position by naira 13bn to naira 15bn. During that period,
Deloitte and Touche was doing the company's regular annual
audits. This massive discrepancy came to light during the
scheduled transition from then-Chief Executive Officer (CEO)
Bunmi Oni to an incoming CEO. Both Oni and Finance Director
Ayo Akadiri were set to retire in November. Heretofore, Oni
personally and Cadbury Nigeria had acquired not only a
reputation of profitability but of corporate integrity and
probity. In September 2006, Oni was named the most respected
CEO in a poll of Nigerian business leaders conducted by
Business Day newspaper. These revelations sent shocks through
the business community as Oni, a leading figure in Nigeria's
business community, had been discredited.
3. (U) Cadbury's Board of Directors promptly contracted
accounting firm Pricewaterhousecoopers (PWC) to conduct an
audit. In response to PWC's findings, Cadbury's Board of
Directors relieved Oni and Akadiri of duty. Cadbury Chairman
Imo Itsueli released a statement declaring the company would
report an underlying loss for 2006 of between naira 1bn and
naira 2bn. The company reported no evidence of theft from its
coffers.
4. (SBU) When asked why Cadbury's external auditor, Deloitte
and Touche, had not caught the irregularities for the past
three years, a Deloitte representative held that the firm
could only audit those records to which it had access. The
records the firm reviewed showed no signs of wrongdoing, he
asserted.
5. (U) A representative of the Institute of Chartered
Accountants of Nigeria (ICAN) said a letter had been sent to
Akadiri requesting the accountant's presence before the ICAN
Board. Akadiri will respond to an inquiry and may face
sanctions by the trade organization. ICAN has taken similar
measures in the past. The organization has yet to determine
whether it will conduct an inquiry of Deloitte and Touche.
6. (SBU) Meanwhile a few observers in the corporate world are
claiming that Oni is being scapegoated. They maintain that
there has been a corporate tug-of-war for control of Cadbury
Nigeria, with Oni allied with one faction of investors and
the incoming CEO more closely associated with the other.
These observers contend that Oni has been a casualty in a
power-play by the opposing investors who have stirred up
these allegations to help them wrest control of the company.
(Comment: While there has been disharmony among the Board of
Directors, that disharmony does not account for the damaging
PWC special audit. The weight of evidence suggests something
went awry at Cadbury. End comment)
--------------
Comment
--------------
7. (SBU) The timely way in which Cadbury's Board dealt with
its discovery of accounting malpractice is an encouraging
demonstration of corporate responsibility in Nigeria. That
the company acted swiftly upon the discovery of discrepancies
and hired an independent auditor to determine the extent of
the misdeeds could become a standard for other companies to
follow. Unfortunately, there will be some in the corporate
world who also see this as the discovery of a new sword with
which to smite internal competition. Yet, weighing all of
this in the balance, we view this as a positive indication of
greater corporate governance. End comment.
LAGOS 00000010 002.2 OF 002
BROWNE
SIPDIS
SIPDIS
DEPT PASS TO EX-IM KVRANICH AND BUBAMADU
TREASURY FOR ASEVERENS AND SRENENDER
USDOC FOR 3317/ITA/OA/KBURRESS
PASS OPIC FOR ZHAN AND MSTUCKART
PASS TDA FOR NCABOT
PASS USTR FOR ASST USTR FLISER
E.O. 12958: N/A
TAGS: ECON EINV EFIN PGOV NI
SUBJECT: CADBURY: NIGERIA'S ENRON?
LAGOS 00000010 001.2 OF 002
1. (U) Summary: Since 2003, Cadbury Nigeria, Plc. had
overstated its financial position by naira 13bn to naira
15bn. This information came to light following the company's
discovery of accounting irregularities in November. After a
special audit conducted by PricewaterhouseCoopers (PWC),the
company fired its Chief Executive Officer and Finance
Director. Cadbury's handling of this mismanagement is a show
of corporate responsibility and could signal a growing
awareness of Nigerian firms of good corporate practice. End
summary.
2. (U) Since 2003, Cadbury Nigeria, Plc., the local
subsidiary of Cadbury Schweppes, had overstated its financial
position by naira 13bn to naira 15bn. During that period,
Deloitte and Touche was doing the company's regular annual
audits. This massive discrepancy came to light during the
scheduled transition from then-Chief Executive Officer (CEO)
Bunmi Oni to an incoming CEO. Both Oni and Finance Director
Ayo Akadiri were set to retire in November. Heretofore, Oni
personally and Cadbury Nigeria had acquired not only a
reputation of profitability but of corporate integrity and
probity. In September 2006, Oni was named the most respected
CEO in a poll of Nigerian business leaders conducted by
Business Day newspaper. These revelations sent shocks through
the business community as Oni, a leading figure in Nigeria's
business community, had been discredited.
3. (U) Cadbury's Board of Directors promptly contracted
accounting firm Pricewaterhousecoopers (PWC) to conduct an
audit. In response to PWC's findings, Cadbury's Board of
Directors relieved Oni and Akadiri of duty. Cadbury Chairman
Imo Itsueli released a statement declaring the company would
report an underlying loss for 2006 of between naira 1bn and
naira 2bn. The company reported no evidence of theft from its
coffers.
4. (SBU) When asked why Cadbury's external auditor, Deloitte
and Touche, had not caught the irregularities for the past
three years, a Deloitte representative held that the firm
could only audit those records to which it had access. The
records the firm reviewed showed no signs of wrongdoing, he
asserted.
5. (U) A representative of the Institute of Chartered
Accountants of Nigeria (ICAN) said a letter had been sent to
Akadiri requesting the accountant's presence before the ICAN
Board. Akadiri will respond to an inquiry and may face
sanctions by the trade organization. ICAN has taken similar
measures in the past. The organization has yet to determine
whether it will conduct an inquiry of Deloitte and Touche.
6. (SBU) Meanwhile a few observers in the corporate world are
claiming that Oni is being scapegoated. They maintain that
there has been a corporate tug-of-war for control of Cadbury
Nigeria, with Oni allied with one faction of investors and
the incoming CEO more closely associated with the other.
These observers contend that Oni has been a casualty in a
power-play by the opposing investors who have stirred up
these allegations to help them wrest control of the company.
(Comment: While there has been disharmony among the Board of
Directors, that disharmony does not account for the damaging
PWC special audit. The weight of evidence suggests something
went awry at Cadbury. End comment)
--------------
Comment
--------------
7. (SBU) The timely way in which Cadbury's Board dealt with
its discovery of accounting malpractice is an encouraging
demonstration of corporate responsibility in Nigeria. That
the company acted swiftly upon the discovery of discrepancies
and hired an independent auditor to determine the extent of
the misdeeds could become a standard for other companies to
follow. Unfortunately, there will be some in the corporate
world who also see this as the discovery of a new sword with
which to smite internal competition. Yet, weighing all of
this in the balance, we view this as a positive indication of
greater corporate governance. End comment.
LAGOS 00000010 002.2 OF 002
BROWNE