Hot stock: Olam surges after investigations show no involvement in US$50 billion Nigerian fraud

SHARES of Olam Group soared on Monday (Feb 19) after the group announced it recently concluded investigations into Olam Nigeria, which turned up no evidence of involvement in a multibillion-dollar fraud.

The stock closed at S$1, up S$0.12 or 13.6 per cent, as more than 10.4 million shares worth about S$10.4 million changed hands over the course of the day.

No married deals took place, ShareInvestor data indicated.

The counter had surged in early trade after the announcement.

At 10.39 am, the food and agri-business giant gained S$0.15 or 17 per cent to trade at S$1.03 amid heavy trading with 7.3 million securities being traded, significantly above the average volume of about one million.

Olam’s investigation findings were contrary to articles published online by Daily Nigerian and PrimeBusiness.Africa in September 2023. Both reports claimed that the country’s Department of State Services was investigating Olam Nigeria, Olam Group and its subsidiaries for alleged fraud involving over US$50 billion.

They also said Olam allegedly funnelled US$34 billion into the Central Bank of Nigeria through its special purpose vehicles as capital importation at official rates, before round-tripping the foreign exchange by selling to other businesses at parallel market rates.

Responding to these allegations in the same month, Olam said references to the sums of US$50 billion and US$34 billion were “manifestly inaccurate and designed to be misleading”. Its board nonetheless directed the audit and risk committee (ARC) to conduct a review of the matter.

Days after the media reports were published, Olam announced that it had posted a bond for Olam Nigeria’s director, Prakash Kanth, to “secure (his) continued cooperation... with any legitimate requests from relevant Nigerian authorities for information or assistance”.

This partially confirmed a separate Daily Nigerian report which claimed the Nigerian unit paid a “humongous” bail bond of one billion nairas (S$1.9 million) for Kanth’s release from remand by the country’s State Security Service.

Though Olam did not mention the amount paid in its own statement, the news sent its share price plunging to a 52-week low.

Prior to the market opening on Monday, Olam said its review was led by an investigation team comprising Olam’s ARC, external counsels and independent external accountants.

Work performed by the team – which was approved by the ARC and Olam’s board during the review – did not identify that Olam Nigeria was involved in any of the specific allegations mentioned in the media reports.

“Olam Nigeria has cooperated fully with the Nigerian authorities and assisted in their enquiry. No charges were brought against Olam Nigeria or any of its officers by the Nigerian authorities,” stated Olam.

The group added that all its businesses in the country “continue to operate normally”.

“Olam regards Nigeria as an important part of its future strategic plan, and it will continue to seek future opportunities to grow its business there. Olam will also continue to further strengthen its governance and compliance in Nigeria.”