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By Tom Winnifrith, The Sheriff of AIM | Tuesday 4 July 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
When shamed AIM casino posterboy Mercantile Ports & Logistics (MPL) moves from being a member of the minus 98% club in which it currently sits to being a member of the minus 100% club, I want it known that Nomad Cenkos has been fully aware of massive issues all along and has done nothing other than bank obscene fees. As such we have run a series of letters from a big shareholder to Amber Wood, head of Corporate Governance at Lagos Securities, HERE and HERE and HERE. Now for letter four which puts fragrant Amber and Lagos, Nomad to the Quindell (QPP) fraud as well, on notice for when the final wipeout occurs that they will be held accountable.
The shareholder writes:
Good afternoon Ms Wood,
Thank you for the long overdue clarification by way of RNS, of the situation with respect to Mr N Gandhi’s subscription shares. Although, in view of Grant Thornton’s involvement as Mercantile’s auditors, it would have been a little more re-assuring if the RNS had also included confirmation that the funds had actually been received in the Guernsey bank account, as stated in the Jan 2017 RNS.
You may recall Grant Thornton audited AIM fraud Globo's accounts. Shortly after Globo issued a financial statement cheerfully claiming the Company had circa £100m on deposit, it proved to be a total fabrication. In light of this, i recently wrote to Grant Thornton asking what methodology they use, to ensure cash funds claimed by the management of Companies they get paid extremely well to audit, are actually in the bank accounts. I received the following rather unhelpful reply:
Thank you for your email enquiry.
We owe a duty of confidentiality to our client and cannot discuss any details relating to the client about which you are seeking information.
For and on behalf of Grant Thornton (UK) LLP
You will recall i also sent you the following email message on 16 June 2017:
'There is an Risk Factor detailed in the IPO document, concerning a condition of the Karanja Port Operating Dead of Lease, which has been breached by the management when they elected to proceed with the £37m cash raise in October 2016. For which we are yet to find a Company statement confirming this matter has been satisfactorily dealt with, in order to protect shareholders interests.'
'IPO - Risk Factors
Reliance on SKIL as the promoter of the Project:
'It is a condition of the Deed of Lease that SKIL, KIPL and their respective promoters and affiliates retain a minimum 26%, directly or indirectly, in the Project (the ‘‘Minimum Threshold’’). If that interest is not maintained the MMB may seek to terminate the Deed of Lease, which would have a material adverse effect on the Group’s business, financial condition and results of operations, as well as acting as a potential deterrent to potential acquirers of the Company.'
'The Board believes it is unlikely that the Minimum Threshold will be breached in the foreseeable future. In the event that a transaction was proposed in the future that would be likely to cause a breach of the Minimum Threshold, the Board would have to determine whether or not to proceed with such a transaction, taking into account all of the circumstances at that time. The Board believes that it may be possible to reach agreement with the MMB in the future with respect to reducing or eliminating the Minimum Threshold once the Project has been developed and is operational, although there can be no assurance that any such agreement will be reached.'
Incredibly, the breach was news to the your account representative Stephen Keys when i first brought it to his attention many, many months ago. Yet, as detailed in the IPO documentation, despite the breach carrying the risk of loss of the Operating Concession and, the total loss of all shareholder value, it is simply extraordinary that some 8 months later, after completely overlooking its importance and significance in the production of the Shareholders Circular to raise £37m in October 2016, for which Cenkos were extremely well remunerated, shareholders are still yet to see an appropriate response from the Nomad/Company, in line with their duties and responsibilities with respect to the UK Corporate Governance Code and AIM Rules for Nominated Advisors.
I would politely remind Cenkos that during this period, the market capitalisation of Mercantile Ports & Logistics has dropped by some 60% - do you think that shareholders might consider the lack of regulatory oversight from the Nomad in this connection, despite it being repeatedly brought to its attention, may have been a contributing factor in the appalling loss of shareholder value since October 2016 and indeed, at other times since IPO, where a lack of due diligence by the Nomad has resulted in RNS, Financial Statements and Shareholders Circulars being issued by Mercantile, that the late Alan Clarke MP might, with the benefit of hindsight, describe as being extremely ‘economical with the actualite’.
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