Nigerian oil company caught in Qatari loan scam

Lekoil finds itself victim of alleged fraud after entering $184m loan agreement with people ‘purporting’ to be Qatari Investment Authority.

LONDON - Nigerian oil company Lekoil Ltd. suspended trading Monday after falling victim to a bogus loan agreement from the Qatari Investment Authority.

Lekoil is said to have paid $600,000 to Bahamas-based consultant Seawave Invest Ltd. for arranging a loan facility for the development of the offshore Ogo field near Lagos with people ‘purporting to be the QIA’.

Seawave Invest’s website shows no information on executives or employees, including a list of partners with no knowledge of the company’s existence.

Eyebrows were raised after the QIA, one of the world’s largest sovereign wealth funds, questioned ‘the validity' of the $184m loan, but not before Lekoil had announced the deal to its investors earlier this month.

“The loan agreement announced on 2 January 2020 by the company, purportedly with the Qatar Investment Authority seems to have been entered into by the company with individuals who have constructed a complex facade in order to masquerade as representatives of the QIA,” Lekoil said in a statement on Monday evening.

The London Stock Exchange suspended trading in Lekoil shares, which tumbled by as much as 70%, from it’s junior Aim market on Monday, but the company insists that normality will resume on Tuesday.

“The company will be contacting the relevant authorities across a number of jurisdictions without delay, with regard to what appears to be an attempt to defraud Lekoil,” the statement said.

Lekoil had previously said that payments could total up to $10m in commission to Seawave and an upfront fee to the QIA, leaving just over $173m within the loan facility to fund it’s plans for oil exploration.

The 3.72% interest they agreed to pay is is far below the 5% interest that Seplat Petroleum, another London-listed Nigerian company, is paying in an ongoing loan agreement.

Lekoil now has until February to raise sufficient funds to cover it's share of drilling costs in Nigeria or else face losing the asset completely.

This is not the first instance of fraudulent behaviour the LSE has experienced with Nigerian oil and gas producers.

In 2018, executives at Afren, Lekoil’s partner at the Ogo field, were found guilty of fraud and money-laundering.