Oceana Governance Developments

Oceana Governance developments

Oceana has recovered after a year of governance breakdowns when a whistle-blowing report led the Board emanating ENS Forensics to conduct a forensic investigation which highlighted misconduct from certain individuals related to poor decision making, bullying and fraud. None of the matters or allegations raised has a material impact on past, current, and future financial performance of the company, yet the share price declined by as much as 30% during this time.

We have summarized the corporate governance failures at Oceana into the following broad categories:

Delay in the publication of the financial results due to a whistle blower query

Suspension and termination of the CFO’s employment

Resignation of the CEO

Forensic investigation

Appointment of new auditors

Delay in the publication of the financial results:

On the 29th of October 2021, Oceana announced a delay in the publication of the 2021 financial year results. Stating that it is due to the company being made aware (whistle-blowing) of queries relating to mainly the accounting treatment of the United States subsidiary “Westbank Fishing” and other related matters. The first indicator of weak internal reporting process, Oceana were made aware of these natters after the whistleblower went directly to the auditors instead of reporting it internally. The details were vague at this point and the share price declined by 5-10% during the first 3 months of the announcement.

It subsequently transpired that the accounting issues which related to Westbank Fishing were:

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The appropriateness of recognition in Daybrook’s books of the proceeds of an insurance payment received under a self-insurance arrangement in which Oceana participates this was found to be appropriately accounted for.

The conclusion of the forensic report …………….

No material announcement regarding the matter were made at the 2021-year end other than cautioning for further delays in the publication of the 2021 financial results. Oceana ended the year 2021 flat from a share price performance despite its cautionary. In January 2022, Oceana communicated it will publish its financial results by the 31st of January 2022 and withdrew its cautionary.

Eventually, on the 9th of March, Oceana released its October 2020 to September 2021, financial year results. Overall results were weak because of external factors relating to global supply chain issues, unfavorable weather conditions, civil unrest in KZN and covid-19 related interruptions were not a surprise to the market as they were flagged earlier on. Oceana’s share price was around 12% lower since the initial whistle-blowing event and 5% lower during the 3 months leading up to financial results release.

Suspension and termination of the CFO’s employment:

At the end of January 2022, another cautionary was issued stating further issues were identified and matters raised as part of the f