Lekoil (LEK), the London AIM listed oil producer caught up in a fiasco which sank more than half its market cap over the last months is still yet to be done with its turmoil as regards to the alleged fraud it reported to be victim of.
Following announcement to great fanfare early January of a giant loan obtained from The Qatar Investment Authority, it took the company two weeks to revise itself and disclose that they might have been victim of what they called then a “fraudulent transaction” forcing halt of its shares trading over suspicion of a bogus loan.
Investors and analysts have wondered how could a listed company – hence abiding by compliance guidelines – fall for what it described to be “an enterprise made by people who built a complex facade to deal as QIA”, raising once again the compliance issues with AIM listed companies.
“Lekoil scam” became one of these trailers worthy of an Hollywood polar with daily revelations and ramifications all over the world. The company quickly pointed the blame in direction of its advisor, Bahamas based consulting firm Seawave Invest.
Datas on Seawave Invest report the company to be “a major player in projects financing and debt structuring” but a cursory search shows the said entity was struck out of registry by the regulator in Bahamas for failing to abide by its standards and a Financial Times investigation reported Seawave to be operating from an address in Accra, Ghana.
Contacted back then for clarifications, M. Bismarck Abrafi, a man listed as Managing Partner of Seawave told the Financial Times to have nothing to worry about and stated: “when light will come on this deal you will see we have done nothing wrong and it is a complete misunderstanding”. Lekoil later reported to have an exposure of $600,000 (£483,599) over the bogus loan transaction mainly with fees paid to Seawave and legal expertise to oversee the transaction.
This could have been all the finance world ever knew and never could have seen the bottom of it shall further developments to the already very complex transaction happened.
In a report closing its investigation, Lekoil stated to have engaged legal proceedings to retrieve the sum paid to Seawave and for the first time of the entire story named the person it linked to the QIA. Rilk Dacleu-Idrac an investment banker and executive, as per Lekoil, “purported representative” of the Qataris during the transaction is a figure well known from his previous participations in several awkward stories connected to Qatar. Open sources researches show Dacleu-Idrac active hands in 2017 in a Senegal political enterprise where he got charged and brought to trial for an alleged money laundering on about $500 millions before being cleared by Senegalese justice just a little after an official visit of the Emir of Qatar in Dakar. In 2016, panama papers revealed Dacleu-Idrac involvement with several shell companies tied to investments of the QIA along with funding made by Sheikh Hamad bin Jassim Al Thani, former prime minister of Qatar and previous chairman of the sovereign wealth fund. Leaks from Mossack Fonseca disclosed a complex structure to his own personal holdings and tied him with possible tax evasion schemes; still Lekoil seemed to be happy to do business with such individual.
QIA contacted for a reaction following the latest reports went out of its usual silence saying to be “totally unaware of the reporting made on this story and have nothing to say regarding Lekoil”. Questioned on the recent developments exposing Dacleu-Idrac and the disavowal reported over his character, QIA spokeswoman said to find “those allegations grotesques and no such comments have ever been made or reported by The Qatar Investment Authority or any of its affiliates” further pressed for a reaction on QIA eventual connection to any loan with Lekoil she declined to make any comments. The redaction later received a statement from The QIA arguing: “A report about the alleged loan transaction related Lekoil management to be reckless and
investigations in Qatar found M. Dacleu-Idrac had no association whatsoever with the company, but admitted having briefly crossed its chief executive while on the way to his plane once.”
In an internal memo we could obtained, it is said QIA “raised concerns about Lekoil dealings and allegations”, the fund wondering how Lekoil’s legal advisors was completely unable to inform them of any eventual wrongdoings or the unusual behavior of the management. The memo states that the fund is engaged in “no dealings with Seawave” but awkwardly does mention of Bismarck Abrafi as “M. Abrafi and M. Memene serves as advisors to the Republic of Madagascar that operations (Department) has been in contact with for various cooperation projects in the country”
Contacted via Twitter for a comment, Dacleu-Idrac directed us to his personal assistant who declined to make any comments. M. Khalid Al Kuwairi, a lawyer representing him addressed the redaction with a correspondence stating “His excellency (Dacleu-Idrac) has had no part in any dealing with Lekoil and strongly rebuts the allegations made against his person. To his understanding, Lekoil made terrible decisions in this matter including attempting bribing Qataris officials to secure their funding.” rejecting any implication of Dacleu- Idrac in the Lekoil matter; the note later continues: “The company (Lekoil) engaged in reckless maneuvers and facing their consequences tried to spin it out in a way satisfactory to the eyes of its regulators […] He (Dacleu- Idrac) never received any payment or compensation of any kind from Lekoil; has been totally exonerated of any wrongdoings by reviews and investigations on this matter conducted in Qatar. We have taken legal actions against these allegations.”
Seawave on its side has been much more diplomatic with the oil producer, first summoning the company to elaborate its allegations and produce evidences of its declarations, “for legal review” they added. On a legal memo sent to its counterpart, Seawave discharged itself from any blame or wrongdoing having deliver to its engagements with Lekoil not only by ensuring that the Nigerian government extends its concession agreement with the oil producer but by securing as well a loan which until January 12th and Lekoil’s claims was “valid and approved” as per Seawave statement.
Whereas Lekoil in its final report stated “to have find no evidences of internal complicity on the matter” and “vowed to improve its corporate guidelines”, people familiar with such transactions doubt the official line and assert to be very unlikely that all what has happened between the parties involved are out yet. Questions can also be asked about whether Lekoil has been telling it all or not with its final report on its investigation.
It is obvious the truth will remain hidden in this matter as long as what transpired will not be entirely said but one can really wonder how could a scam went undetected within the company? And why did it takes two weeks after announcement for anything to be exposed to public knowledge?