Lekoil reviews corporate governance following release of fraud investigation report

Embattled oil and gas exploration and production firm, Lekoil Limited, says it plans to review its internal corporate governance framework in the aftermath of the investigation into the origination and execution of the loan agreement announced by the company, on 2^nd January 2020, purportedly with the Qatar Investment Authority (QIA).

In the wake of the discovery that the $184 million credit arrangement and agreement had not been entered into with the QIA but rather with persons masquerading as QIA officials, the Lekoil board set up a committee to investigate the origination and execution of the facility agreement and measures that could be adopted towards recovering the fund lost in the transaction.

London-based security and investigation company, Kroll Associates UK Limited, was the third-party forensic investigators of the committee during the enquiry.

International law firm, Herbert Smith Freehills LLP, was engaged to provide legal advice in the course of the investigation on discreet issues emerging from Kroll’s work.

Read also: GTB grows profit to N196.9bn, proposes N2.50 final dividend

The committee came up with the following findings in the course of the investigation:

• The Facility Agreement was a part of a fraud perpetrated against the Company. The Facility Agreement, and the sums to be received by LEKOIL pursuant to it, are not legally binding.
• There is no evidence of any complicity of any Lekoil Director or employee in the fraud.
• The Chief Executive Officer (“CEO”) led the interaction and negotiations with the individuals falsely purporting to represent the QIA, on behalf of the Company, prior to ultimate approval being given by the Board to enter into the Facility Agreement.
• The Company has a legal claim to recover the US$450,000 paid to Seawave Invest Ltd (“Seawave”) and its principals, in its capacity as introducer of those falsely purporting to represent the QIA.
• The Board only approved the execution of the Facility Agreement after a third-party global risk consultant engaged to undertake the due diligence investigation on Seawave, provided a report, based on public record search, that did not identify any “red flags” on Seawave or its principals.
• The fraud, whilst relatively elaborate and sophisticated, should have been capable of being detected by parties engaged to advise on the Facility Agreement, internally or externally, prior to its execution.
• The due diligence undertaken by the Company, including the above mentioned third-party due diligence report, prior to the signature of the Facility Agreement proved to be inadequate.

The Chairman of Lekoil Limited, Samuel Adegboyega, responding to the committee’s discoveries, said “first of all, I would like to thank the Committee for leading the review and the provision of the detailed findings to the Board.

“The Board will seek, as a priority, to improve its standards of corporate governance and we welcome the recommendations received from the Committee, which are in the process of being implemented.”

In its reaction to the recommendations of the committee, the board has announced it has taken the following decisions:

• Commenced steps to recover the US$450,000 paid to Seawave, including the issuance of pre-action letter of demand against Seawave and its principals, Mr. Bismarck Abrafi and Mr. Said Memene; and Mr. Rilk Dacleu Idrac, the purported representative of the QIA.
• Commenced a review of the Company’s corporate governance practices and procedures for the review and approval of major transactions, with the intent of implementing suggested changes as soon as practicable.

“Whilst the Company has a legal claim to recover the US$450,000 paid to Seawave, and the Company intends to exercise the rights and remedies available to it under law, there is no guarantee that the losses suffered by the Company as a result of the fraud perpetrated against it will be recovered in full.

“The Company will provide further updates on the outcome of the above actions, and any material updates on the matter generally as and when appropriate,” a statement from the company reads.

 

Join the conversation

Opinions

Support Ripples Nigeria, hold up solutions journalism

Balanced, fearless journalism driven by data comes at huge financial costs.

As a media platform, we hold leadership accountable and will not trade the right to press freedom and free speech for a piece of cake.

If you like what we do, and are ready to uphold solutions journalism, kindly donate to the Ripples Nigeria cause.

Your support would help to ensure that citizens and institutions continue to have free access to credible and reliable information for societal development.

Donate Now