April 11, 2008 / 3:22 PM / in 11 years

Nigeria fines Cadbury unit for false accounting

LAGOS, April 11 (Reuters) - Nigeria’s Securities and Exchange Commission (SEC) has imposed a fine of 21.2 million naira ($180,783) on Cadbury Schweppes’s CBRY.L local Nigerian unit for falsifying its accounts between 2002 and 2005.

The fine, which followed an investigation into the finances of Cadbury Nigeria CADB.LG, is the latest move by the regulator to police the Nigerian stock market which has seen a dramatic boom in the last few years.

Cadbury is a leading maker of confectionery in Africa’s most populous country. Its products include Bournvita drinks, Bubba bubble gum, Trebor mints, and Tom Tom and Eclairs sweets. It also has a wholly-owned cocoa processing subsidiary, Stanmark.

The official enquiry following an internal review by the Cadbury parent group showed that the Nigerian company, 50.02 percent owned by the British confectioner and soft drinks giant, had overstated its accounts by 13.25 billion naira.

The investigation showed “that Bunmi Oni, the company’s former managing director, in concert with the company’s board since year 2002 used stock buy back, 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,” SEC said in a statement obtained on Friday.

Oni, who was fired shortly after the fraud was discovered, doctored the account books with the connivance of external auditors and the company registrars, the SEC added.

The regulator banned Oni and suspended several ex-directors and senior employees from dealings with the Nigerian stock market. It ordered the external auditors to pay a fine of 20 million naira and the registrars 8.3 million naira within 21 days or forfeit their registration with SEC.

Cadbury launched an investigation into the overstatement of its financial position after the regulator raised concerns about the company’s 2005 annual report.

The British parent company raised its stake in the Nigerian business to 50.02 percent from 46.4 percent at a cost of 19.7 million pounds ($34.3 million) in February 2006.

It said at the time the move was aimed at giving Cadbury Nigeria better access to group technology and expertise, making it a key production hub in West Africa.

The Nigerian company’s share price, which plummeted to 34 naira after the fraud from 57 naira before, regained some lost ground to close at 44.65 naira on Friday.

In 2005 Cadbury Nigeria was reported as an associate in Cadbury Schweppes' accounts and contributed a net profit of 6 million pounds ($11 million). The value of Cadbury Nigeria on Cadbury's balance sheet as at June 30, 2006 was 70 million pounds. (For full Reuters Africa coverage and to have your say on the top issues, visit: africa.reuters.com/ ) (Reporting by Tume Ahemba and Oludare Mayowa; Editing by Pascal Fletcher)

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