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DE RUEHOS #0010/01 0081527
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R 081527Z JAN 07
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC 8337
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RUEHWR/AMEMBASSY WARSAW 0062
RUEHCD/AMCONSUL CIUDAD JUAREZ 0036
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RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS SECTION 01 OF 02 LAGOS 000010 
 
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SIPDIS 
 
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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) 
 
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Comment 
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¶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