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Lekoil’s shares plunge 66.49% amid Qatar loan fraud

Lekoil shares have returned to trading barely 24 hours after suspension but its shares have taken some hits. Shares plunged 66.49 percent early on Tuesday in London.

The Aim-listed energy company, which Mark Simmonds, the United Kingdom’s Africa minister under David Cameron, joined as non-executive director last week, said it would be “contacting the relevant authorities” to investigate what seems to be “an attempt to defraud Lekoil”.

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According to people familiar with the matter, Lekoil’s advisers were approached on Sunday by representatives of the Qatari Investment Authority (QIA) questioning the validity of a $184 million loan agreement announced on 2 January.

After investigating, the company confirmed on Tuesday that the early January loan had been entered into “by a company with individuals who have constructed a complex facade in order to masquerade as representatives of the QIA”.

The company confirmed that its financial exposure is limited to approximately $600,000 being the amounts paid in good faith as initial arrangement fees, some of which it will try to recover.

Lekoil was notified by QIA on 12 January that a different party falsely presented their credentials as QIA representatives to secure funds for the appraisal drilling and initial development programme activities on Lekoil’s Ogo field off Nigeria.

The company said it will seek alternative funding for the future development of OPL 310 as a priority, as the drilling of an appraisal well, is still expected to occur before August 2022.

Lekoil originally acquired a 17.14 percent equity stake in OPL 310 in 2013, and two years later bought a further 22.86 percent after former partner Afren went into administration.

Subject to Nigerian ministerial consent, Lekoil’s interest in the development will increase to 40 percent, with local partner Optimum on 60 percent.

Lekoil appointed independent non-executive directors Mark Simmonds and Tony Hawkins to investigate the origination and execution of the facility agreement. Simmonds is an ex-UK Foreign Office minister, according to a report by Upstreamonline.

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