Abu Dhabi, UAEWednesday 22 January 2020

Shares in Nigerian oil company plunge over bogus Qatar loan

Lekoil announces inquiry after falsely believing it had secured $184 million from sovereign wealth fund

Stocks in Lekoil fell on the London Stock Exchange on news of the apparent fraud. Bloomberg
Stocks in Lekoil fell on the London Stock Exchange on news of the apparent fraud. Bloomberg

Shares in Nigerian oil company Lekoil plunged more than 70% before recovering slightly on Tuesday following a suspension of trading after the firm discovered that a $184 million loan it had announced was fraudulent.

Lekoil suspended trading of its shares on the London Stock Exchange on Monday after finding that a $184 million loan it had announced from the Qatar Investment Authority was a "complex facade" by individuals pretending to represent the QIA.

Shares reopened at 2.50 pence on the London bourse on Tuesday - down from a closing price of 9.40 pence on Friday.

The audacious scam casts doubt on Nigeria's hopes that its indigenous oil and gas producers can rise up to fill the gap left by international oil majors such as ExxonMobil and Chevron, which are trying to sell Nigerian assets to focus on projects elsewhere.

The supposed loan, arranged by a company called Seawave Invest Limited, was intended to develop the Ogo field within Oil Prospecting Licence 310.

Lekoil is now scrambling to find nearly $40 million by next month or it could be forced to sell its 17.14% stake in OPL 310.

Lekoil said it had paid Seawave $600,000 for brokering the fraudulent loan.

Seawave, a Bahamas-based independent consultancy firm that focuses solely on Africa, provided Reuters with the email address of a lawyer who could provide comment; the lawyer did not respond to an email.

After the deal was announced on January 2, the company's shares more than doubled to a high above 11 pence per share.

Lekoil said it would contact the relevant authorities "across a number of jurisdictions" immediately to investigate what had happened.

It also said company board members Mark Simmonds - Britain's Africa minister under ex-prime minister David Cameron - and Tony Hawkins would lead its own investigation into the loan, take steps to claw back the money paid to Seawave and look into its "wider corporate governance practices".

Mr Simmonds and Mr Hawkins both joined as independent non-executive directors after the deal was agreed.

Typically, a publicly listed company is obliged to disclose potentially market-moving information in a timely fashion.

Lekoil has said the Qatar Investment Authority got in touch with the firm on January 12. A source familiar with the developments said on Monday the QIA first found out about the loan when Lekoil issued the statement on January 2, and that it contacted Lekoil immediately to tell it that the loan was not legitimate.

Discussions about the loan took place, in part, in Qatar, a source close to the negotiations told Reuters, while Lekoil also has an office in Princeton, New Jersey.

Britain's Financial Conduct Authority declined to comment on the case in any way - and would not say whether it would investigate the circumstances surrounding the loan fraud.

A spokeswoman for the London Stock Exchange said the organisation does not comment on individual companies.

Updated: January 14, 2020 08:06 PM

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