SCAM ARTISTS Nigeria: How Fake Representatives Of A Qatari Sovereign Wealth Fund Fooled Oil Explorer Lekoil

Afraudulent loan and a bogus consultancy firm have put a damper on Nigerian oil producer Lekoil which, since it discovered and announced the fraudulent nature of an $184m loan arrangement with the Qatar Investment Authority, has suffered heavy losses on the London Stock Exchange, where its market cap fell £35m ($45.6m) in less than a week.

Lekoil Limited shares plummeted more than 70% on 14 January on London’s Alternative Investment Market (AIM), with shares closing at £2.46 (€2.88) the day after the independent Nigerian oil producer announced it was the victim of an attempted fraud and its decision to suspend its shares for a day.

The suspension comes on the back of an $184m loan agreement finalised a few days earlier with individuals who posed as representatives from the Qatar Investment Authority (QIA), the Qatari sovereign wealth fund chaired by Ahmed al-Sayed, by “construct[ing] a complex façade”. The loan was intended to fund drilling carried out by Lekoil at the Ogo oilfield under exploration licence OPL 310.

In a financial press release dated 13 January, Lekoil wrote that “based on all information currently available to Lekoil, the loan agreement [that we] announced on 2 January 2020, purportedly with the Qatar Investment Authority […] seems to have been entered into by the [c]ompany with individuals who have constructed a complex facade in order to masquerade as representatives of the QIA.”

After an internal enquiry, the Nigerian oil explorer was able to establish that the individuals who posed as QIA representatives had no legal authority to enter into such an agreement on behalf of the sovereign wealth fund. Lekoil has pointed the blame directly at its partner, Seawave Invest Limited, the intermediary which introduced it to the fake QIA representatives. The Nigerian company specified “that its financial exposure associated with the [f]acility [a]greement is limited to approximately $600,000 [€537,000],” corresponding to the initial arrangement fees it paid to Seawave, and “that there have been no monies paid by Lekoil to the [fake QIA representatives].”

Incorporated in Nassau, Bahamas, Seawave Invest Limited presents itself as “an independent consultancy firm speciali[s]ing in cross-border transactions” and “targets opportunities primarily in sub-Saharan Africa and the MENA region,” according to its website. When contacted by Jeune Afrique, Holowesko Pyfrom Fletcher (HPF), the Bahamian law firm which incorporated Seawave Invest Limited on 28 October 2016, indicated that the company was “inactive”.

“The company is, and has always been, inactive and was struck off by the Registrar of Companies for default on 1 January 2020,” said Christopher Larson, an attorney at the Bahamian law firm, adding that he is “not Seawave’s legal representative at this time”. According to an official statement from HPF, “HPF is instructed by the company’s directors to state that whatever acts may have been done by persons purporting to represent the company, neither the company nor any of its officers and directors have any knowledge or involvement in such acts. Neither Seawave nor its directors or officers have come into the possession of any proceeds in connection with the matter.”

The firm’s statement suggests that the representatives who claimed to be acting on behalf of their firm were just as fake as those posing as representatives from the QIA.

Until the situation is further clarified, Lekoil has appointed two independent non-executive directors to “investigate the origination and execution of the [fa]cility [a]greement” and establish “what steps can be taken to retrieve any monies already paid in association with the [t]ransaction.” After being suspended for a day, the company’s share price dropped from £9.50 at the close of trading on 10 January to £2.96 on 16 January.

In the matter of a single day – 14 January – Lekoil’s share price plummeted 70%, bringing its market value sharply down from £51m to £15.48m, i.e., a £35m ($45.6m) loss in the span of a week.

According to a second Lekoil financial press release dated 13 January, the company “continues to generate positive cash flow” and “will seek alternative funding for the future development of OPL 310,” and added that “the drilling of an appraisal well within OPL 310 is still expected to occur within the tenure of the license which expires on the 2 August 2022

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