In May this year, the head offices of the Tingo Group in Lagos, Nigeria, showed no signs of being a multimillion-dollar global technology company. The office occupied two floors of a high-rise building in the city's old commercial district and was filled with broken furniture, the Financial Times reported. It was unthinkable that the operations of millions of customers were being managed in the office.
After months of investigations, the US Securities and Exchange Commission (SEC) described the firm's operation as a "massive fraud". According to the SEC report, "billions of dollars of fictitious transactions" were conducted under the direction of a single individual: Dozy Mmobousi.
The 45-year-old London-based Nigerian entrepreneur had applied to buy English Premier League team Sheffield United this year. But Mmobousi inflated the profits of his three companies by forging documents to defraud investors, according to the SEC report.
In November, the SEC halted trading in Tingo Group and Agri-Fintech securities listed on the Nasdaq Composite Index due to discrepancies found in company reports. The regulator's move followed US-based short-selling firm Hindenburg Research's June report on Tingo, which called it a "blatant fraud." Tingo shares went into free fall after the Hindenburg report.
Big blow to super apps
In a 72-page report published by the SEC last week, "Tingo Mobile is a work of fiction. Its alleged assets, revenues, expenses, customers and suppliers are almost entirely fabricated." It also stated that the scale of the fraud was "staggering".
The charges against Tingo are a new blow to the reputation of "super apps" in the fintech space. These super apps, which have emerged over the last decade, aim to revolutionize the banking system by offering payments, instant messaging and commerce services simultaneously. Investors were looking at Nigeria as one of the most promising of these initiatives. Nigeria is seen as an emerging market, but it is also in dire need of a growing banking system.
Mmobousi will defend himself
"This is the most blatant fraud we have ever seen and people refused to see it for what it is," said Tunde Leye, a partner at Lagos-based risk intelligence firm SBM. Leye also said SBM analysts had visited Tingo's purported phone factory and food processing plant and found it completely empty.
Mmobousi resigned as CEO and board member of Tingo on Wednesday. The SEC is seeking to completely ban the entrepreneur from serving as an officer or director of a public company.
In a statement published in the Nigerian press on Friday, Mmobuosi called the SEC's allegations "baseless" and said he would "contest them with unwavering determination." In the statement, the Nigerian businessman said he was "committed to cooperating with the legal process to ensure a thorough and fair examination of the facts that he believes will ultimately lead to his exoneration."
Tingo said in a statement that it "plans to vigorously defend itself against the SEC charge."
Behind the scenes of the fictitious company
According to SEC charges, the origins of the alleged fraud date back to 2019, when Mmobousi used false documents to portray Tingo Mobile as a healthy business. The Nigeria-based company's assets consisted of macro loans to farmers, weather forecasts and an online marketplace. However, according to the SEC, the company had only $15 in its account that year.
According to the report, Mmobousi used Tingo Mobile's valuations, which were "grossly inflated" by these forged documents, to sell the company to two public companies.
In 2021, Tingo Mobile was sold through a stock combination to OTC-listed Agri-Fintech. This company was sold to Nasdaq-listed Tingo Group a year later. The transactions valued Tingo at more than $1 billion and gave the company access to US capital markets. The company's advisors included global law firm Dentons. The law firm did not comment on the matter.
Mmobousi even said that reports purporting to be financial audits of Tingo Mobile were forwarded to the group's chairman. However, the SEC states that the application has not been subject to any financial audit. The company reported a cash and cash equivalent balance of $461.7 million for fiscal year 2022.
