• Thursday, May 23, 2024
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Olam shares surge the biggest ever after finding no evidence of FX fraud in Nigeria

Olam shares surge the biggest ever after finding no evidence of FX fraud in Nigeria

Commodity trader Olam Group said that its investigation found no evidence to support allegations of a reported scandal at its Nigerian units, spurring the biggest surge in its Singapore-listed shares in almost 15 years.

The audit and risk committee, assisted by external counsel and independent accountants, had completed the review, without identifying any evidence, the company said in a statement. No charges have been brought against the subsidiaries nor any officers, with businesses operating normally, it said.

Olam — which is about 51% held by Temasek Holdings Pte, Singapore’s state-owned investment fund — has been under scrutiny following news reports in Nigeria that its domestic branches were involved in a multibillion dollar fraud and being probed by local authorities. The company denied the allegations in the articles in September, and ordered a review into the matter.

Olam Group shares hit the lowest close since 2005 in late October following the fraud allegations, which added to setbacks including a profit slump and IPO delay. On Monday, the stock leapt as much as 17% to S$1.03, the biggest intraday gain since May, 2009. It traded at S$1 at 1:36 p.m.

“We appreciate that Olam adheres to high corporate governance standards, and this specific issue has been contained, but investors need to understand there are specific risks linked to such traders,” said Nirgunan Tiruchelvam, an analyst at Aletheia Capital. Commodity traders operate on very thin margins, and they tend to get mired in issues such as this, he said.

The commodity trader is set to announce full-year earnings later this month.

“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,” it said.