There has been more fallout from the Guinness Nigeria saga with the National Agency for Food and Drug Administration and Control (NAFDAC).
Earlier in the week, we reported that NAFDAC had ordered Guinness Nigeria to pay N1bn as administrative charges for various clandestine violations of NAFDAC rules, regulations and enactments over a long period of time.
Guinness was also accused of re-validating expired products without authorization and supervision by NAFDAC, among others.
It appears some shareholders of the company are not happy with the way the regulatory agency has handled the matter. They are fumed by the One billion naira fine levied against Guinness.
Expressing their frustrations, they spoke to the News Agency of Nigeria (NAN) on Friday in Lagos, where they said that the huge fine could send wrong signals to investing public and erode shareholder returns.
Alhaji Gbadebo Olatokumbo, a founding member, Nigerian Shareholders Solidarity Association, advised the regulatory agencies to be mindful of how they sanction companies so as not to send wrong signals to both local and foreign investors.
Olatokumbo said that although sanctions or fines were good for correction, cost implications could cause unintended effects.
He added that the huge fine could lead to closure of the company, which might negate the real intention of NAFDAC to promote industrial growth.
Olatokumbo advised government regulators to also warn erring companies or grant them hearing before sanctioning them.
He said that shareholders were not against sanctions per se, but it must be done in moderation.
“Where you must apply the stick, do so for correction sake and with lesser fines.
“Don’t kill our companies with huge sanctions because we the shareholders at the receiving end will be responsible for the loss,” he said.
He urged the management of quoted companies to be diligent in their duties as “it’s no longer business as usual.”
Mr. Boniface Okezie, the President, Progressive Shareholders Association of Nigeria (PSAN), lent his support and said that care must be taken by regulatory agencies in imposing fines to avoid doing more harm than good.
He said “Let it not be that many agencies which are broke are looking for money by all means.”
Okezie added that such heavy fines, could in the long run, discourage companies from operating in Nigeria.
However, he said that companies must strive to do the right things to avoid sanctions to the detriment of shareholders.
He said that operators must also be guided by good corporate governance ethics to avoid unnecessary sanctions.