Wednesday, July 30, 2008

BUNMI ONI & CADBURY NIGERIA – 2

A lot has been said and written in the media and elsewhere about what has come to be referred to as the Cadbury Saga. First let me state clearly that none of my actions or decisions had anything to do with personal financial gain. Indeed, in an interview published in The Guardian newspaper of Sunday September 30, 2007, the Chairman of Cadbury Nigeria Plc Imo Itsueli affirmed that “…there is no fraud; there is no money missing. A lot of people don’t understand that nobody stole X billions of naira. No, it didn’t happen”. Second, it is not uncommon for businesses to experience challenges in their operations, especially when navigating the tough terrain of profound change management that comes with an aggressive growth and efficiency improvement agenda. In the Cadbury situation of 2002, this programme necessitated major initiatives on many fronts:

a. completely re-building and modernising an archaic manual and inefficient manufacturing plant that had seen no major investment for nearly 20 years,

b. rationalising the brand portfolio and constructing a new brand architecture,

c. designing and implementing a new route to market configuration and a new structure,

d. creating a new modern work environment, learning centre and a fitness centre,

e. upgrading the quality of management and staff to raise talent, as well as

f. building a commensurate IT-enabled business process platform across the commercial, supply chain and functional units.

 

 

Cadbury does not now acknowledge the milestones achieved on most of these projects, which have transformed the business beyond imagination. The task was compounded by incessant demands for more profits from Cadbury Schweppes Group, especially in the wake of the salmonella poisoning of Cadbury’s chocolates from its UK factory, which resulted in about £35m loss. The UK authorities discovered the poisoning and imposed a fine of £1m for Cadbury Schweppes’ failure to disclose the information promptly.

 

Our vision to transform the West African operations of Cadbury into a $1b enterprise in about a decade – approved by the Board – was to be powered by the Nigeria/Ghana hub, two major acquisitions in the region, the opening of new territories and strategies to reach for the fortune at the bottom of the economic pyramid. That goal, though stretching, was deemed achievable, and was later validated by the performance in the telecommunications industry where a single company achieved over $1b in revenue in 2003 – its second year of operation – 98% of which came from prepaid air time, not from big business packages. The success of many Bank IPOs was further proof of what we had known – that the informal economy was awash with cash

 

The genesis of the “saga” was the failed £4.8m continuous plant, designed by Cadbury Schweppes UK engineers, which was to replace a particular 50-year old manual operation. As the design errors surfaced one after the other during commissioning, the UK engineers resorted to denials, and even intrigue – everything to avoid taking responsibility. The only official who dared to acknowledge the design errors arose from Cadbury Schweppes would only “paraphrase for reasons of censorship. This left Cadbury Nigeria carrying the can – having already committed shareholders’ money to procure the kit. We incurred huge additional costs in re-design, replacement plants, wastage of materials, carrying the 300 people that should have been surplus if the new plant had delivered its promise, and also trying to maintain the old kits that were falling apart and for which spares were no longer available. We managed the challenge by isolating the cost impact of the new plant failure and deferring the costs momentarily in the expectation of full recovery when the plant came on stream as assured by the engineers from both Cadbury Schweppes and Cadbury Nigeria. The deferral was to shield the company and its shareholders from the effect of this imposed challenge. As it turned out the verdict of the engineers after 18 months of hard work was that the plant could never attain its rated capacity economically. At this point it became clear that the cost recovery would not happen in the time frame we anticipated, and was then reported.

 

Cadbury instituted an inquiry and paid PWC N148m ($1.25m) to conduct a forensic investigation. PWC did not speak to me at all, nor did Cadbury send me the report of the investigations.  Cadbury chose to go public in the way they did, suggesting an overstatement of N13b.

 

I eventually obtained the report over six months later from other sources. Whatever the brief to the PWC investigators was, they needed to conclude that I ran a solo shop. The report observed that I had an “authoritarian” management style and the only evidence was an extract from a memo I wrote on July 11, 2006 to a manager on a project that had run behind schedule for 3 months:

“I thought I should underscore the challenge you have on the margin-neutral stock depletion plan, and the imperative to ensure the plan delivers completely”

“…the Sales Team has a big agenda at this time, and you need to ensure high visibility and attention for this project, for which you have full accountability. A deviation from the agreed KPIs will not bring you any commendation”

 

The report criticised the accounting treatment of staff gratuity, for which we had the written approval of the Nigerian Accounting Standards Board. PWC investigators from UK disagreed with the NASB advice!! There were observations about revenue recognition, debtors, customer bonuses, stocks, and payment of allowances to Executive Directors, etc

 

A number of events paint the background more vividly.

 

1. Our resistance of Cadbury Schweppes determined effort to re-charge the cost of engineering and technical services in addition to Royalties and Technical Services Fees each amounting to 2% of sales revenue.

2. Cadbury Schweppes auditors had conducted two Balance Sheet audits in March and June 2006, with a final report in July. With regard to revenue recognition, the audits had concluded that “recognised sales are valid”.

 

Sunday, April 13, 2008

BUNMI ONI & CADBURY NIGERIA PLC

The following statement is being issued by C. A. CANDIDE-JOHNSON ESQ., S.A.N., Counsel to Olubunmi Oni:

BUNMI ONI & CADBURY NIGERIA PLC
We represent Bunmi Oni, whose actions as Managing Director & Chief Executive Officer of Cadbury Nigeria Plc have been the subject of public speculation since 2006 and very public legal activity and comment in the past few days.

In December 2006 his exemplary career, spanning over 29 years of unblemished service to Cadbury Nigeria Plc was terminated on account of a judgment exercised by the management of the company in the face of a design and production crisis which challenged the company between 2002 and 2003. As CEO at the time, Bunmi Oni accepts his share of management responsibility. He also accepts his share of blame for collective actions taken in good faith, without intention for, and in respect of which no personal profits were made.

In November 2006 Bunmi Oni was expelled peremptorily and violently by Cadbury Nigeria, without any of his rights, entitlements or even a pension and has been legally isolated since that time. He has not been accused of stealing and indeed, in an interview published in The Guardian of Sunday September 30, 2007, the Chairman of Cadbury Nigeria Plc Imo Itsueli affirmed that “…there is no fraud; there is no money missing. A lot of people don’t understand that nobody stole X billions of naira. No, it didn’t happen”. This notwithstanding, public opprobrium and the burden of all responsibility has been designed to rest solely on him, for internal commercial or political or personal reasons. Added to this, and in an apparent object of rendering him completely destitute, SEC has until this time and without any order of court frozen dealings in his personal investments in publicly quoted Nigerian stocks unrelated to Cadbury Nigeria Plc.

Following the very harsh decision published on 10th April 2008 by the Administrative Proceedings Committee of the Securities & Exchange Commission purporting to ban him from corporate service for life, it is necessary to do the following:
1. To acknowledge responsibility for his own judgment and its impact on unknowing shareholders and other stakeholders.

2. To thank the very kind friends who have stood by him and offered him much needed personal and financial support in these last 17 months.
3. To affirm that his actions and those of his executive board colleagues were motivated by a deep sense of duty and commitment to the long-term safety of a great company whose fundamentals remain sound and which continues to exhibit the benefits of many years of dedicated and visionary management.
4. To initiate proceedings to challenge the decisions taken against him upon legal advice that these are discriminatory, excessive and ultra vires.


Our client is a humble and honorable man who was voted Nigeria’s Most Respected CEO in 2006. He will accept lawful penalty for any fault but he does not consider that his treatment as a “scape goat” and the pursuit of his complete extermination is warranted, just or lawful.

Dated this 14th day of April 2008
C. A. CANDIDE-JOHNSON ESQ., S.A.N.

Counsel to Olubunmi Oni
STRACHAN PARTNERS
5th Floor, Akuro House
24 Campbell Street Lagos
P. O. Box 52177, Ikoyi, Lagos, NIGERIA

Tel: (+234 1) 2634919, 2647698, 2631200 Fax: (+234 1) 2637277 Email:info@strachanpartners.com