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Nomad Cenkos put "on record" re the Mercantile Ports fraud - letter 6, about Mr Gandhi the chairman

By Tom Winnifrith, The Sheriff of AIM | Friday 14 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 disgraced 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 and HERE and HERE.  Now for letter six 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. This letter has also been cc'd to AIM Regulation - I know they are useless but surely even they must realise that Lagos Securities has "form."

Dear Ms Wood,

Subject: Nikhil Gandhi - Executive Chairman Mercantile Ports and Logistics

Further to my previous correspondence on the importance of an AIM Nomad carrying out effective due diligence on a client both pre and post appointment. Were Cenkos aware of the following and, if not, why not, since the information was freely available prior to the Mercantile IPO, for those carrying out the most basic research?
Veranda Verma - a prescient Indian business journalist working for the 'Business Today’ journal, wrote in a July 2008 feature on Nikhil Gandhi:

'There are plenty of question marks around Nikhil Gandhi.

Why are investors willing to back him when he’s got precious little to show in terms of revenues or assets on the ground?

Why has he taken over three fledgling companies that have little by way of operations, but whose stock prices have soared in a bear market?

How can these companies with no fundamentals worth writing about shoot through the roof in a bearish market?'

Despite no revenue, Horizon Infrastructure's share-price soared nearly 30 fold in a matter of months, from Rs 68 to Rs 1,951 between January 25, 2008 and May 5, 2008. The National Stock Exchange clearly did't like what it had seen, and following a short investigation, suspended trading in the company for almost 8 years.

Shortly afterwards Sebi, the Market regulator, charged officials of a second of these companies KLG Capital Services, with insider trading following a 8 fold rise in the share-price in a few months and, barred it from the stock market. The share-price of the third company JL Capital, went up by a highly suspicious 11 fold in a similar timeframe.

Gandhi’s Skil Group - the company these three companies were merged into, briefly saw its share-price rocket from Rs 75 to Rs 2000 in a matter of months in 2008 during a global market crash, but like Mercantile, has since seen its share-price completely collapse by some 98%.

In 2008, Nikhil Gandhi according to the business journalist, planned to use his takeover of these three stock market tiddlers KLG Capital, Horizon Infrastructure and JPT Securities as a vehicle to enter private equity and financial services.

“They will see some dynamic action over the next 12 months,” Gandhi hinted(nod, nod, wink, wink,) to the business reporter at the time - Nikhil was clearly good to his word because they certainly did see some ‘dynamic' action over the next year! - as we saw from above, Sebi barred KLG from the stock market altogether after they found its executives had committed serious insider trading offences, and suspended trading in Horizon Infrastructure for 8 years!

Shortly after SKIL Group's spectacular share-price rise in 2008, Gandhi signed a 50:50 joint venture with Iceland-based Askar Capital for a private equity foray. Mercantile shareholders know courtesy of the current Mercantile website, this is the Company Mercantile CEO Pavan Bakshi apparently left as MD to join Skil/Mercantile - yet the latest Asker Capital(Mumbai) company records tell a completely different story - Pavan never left Asker Capital at all and is still one of its three founder executives, some seven years after 'leaving'!

Indeed, one business journalist said at the time "Askar Capital, a Nordic investment bank, is another believer in the SKIL group. Pavan Bakshi, Managing Director, Askar Capital, is convinced about the group’s expertise in infrastructure, and the potential for king-size returns in this sector."

Oh dear, Pavan's judgement on Gandhi's infrastructure 'expertise' is clearly about as sound as the UK II's decision to put £73m of British retirement funds to 'work' in Mercantile under Pavan's and Gandhi's 'stewardship' at IPO, and incredibly another £37m some 6 years later by way of a Placing and Open Offer. Despite extremely strong evidence suggesting the Placing Circular was highly misleading and in direct contravention of the Terminal Operating Concession and, the shocking realisation that as much as circa £44m of shareholders funds may have already disappeared like morning mist into the Indian ether BEFORE, the aggregate trucks had even got access to the ‘terminal' site to commence land reclamation!

Clearly not deterred by the Indian regulators decision to quickly close down his Stock Market insider trading scam to facilitate an entry into private equity and capital services, by barring and suspending KLG Capital and Horizon Infrastructure respectively, Gandhi and his sidekick Bakshi, immediately turned their sights to new and clearly less demanding sources of funding - the huge AIM Casino on the London Capital Markets.

Sadly, for British Pension Fund Investors and many PI's they found the City and its II community far more welcoming and less judgemental than those pesky Mumbai market regulators, who had the temerity to charge Gandhi for insider trader offences after carrying out multiple raids on his company offices and private residences and, barred or banned his 'investment' vehicles from the Indian Stock Market.

How, shortly after these revelations, Cenkos Securities, the subsequent Mercantile Nomad considered Nikhil Gandhi, as someone of suitable character to work with to raise IPO funds from UK II's beggars belief - likewise, where was the due diligence from the II's as to Nikhil's clearly white collar criminal and red flag filled background?
You will recall, highly respected Sunny Varkey, the billionaire education entrepreneur and philanthropist, and Unesco Goodwill Ambassador, in 2015 served writs on former Everonn Education directors Nikhil Gandhi and P Kishore(MD) in connection with allegedly carrying out fraudulent transactions and siphoning off huge sums of funds from Everonn, of as much as £12mk into companies run by Gandhi’s close family.

And that the matter is now the subject of an investigation by the Serious Crime Branch of India's Special Fraud Office, following a formal complaint from a livid Sunny, who reports suggest is still incandescent with rage at the subsequent collapse of Everonn, after his accountants found the company's books to be a work of fiction and the accounts manipulated following on takeover.

In light of our extreme concern as to what has been going on at MPL, i thought Sunny and his forensic accountants might be interested in what Gandhi, the former teenage Mumbai street spiv and now Mercantile’s white collar criminal Executive Chairman, has been up to at Mercantile - so we emailed Sunny and his team a copy of our 120 page Mercantile file for their perusal, in the hope it may contain something of value to their case.
[email protected]

I seem to remember, it came to light the CEO of recent huge AIM fraud Globo was a largely uneducated, former wind surfer and beach bum, before he re-invented himself as a con artist masquerading as a AIM listed tech sector company CEO!

Which brings us to the question as to how could the Market Regulator best protect AIM investors hard earned investment and retirement funds?

As Harry Markopolis said, when it comes to incentives, the problem is most 'responsible' parties are handsomely paid by a company: the Nomad, the Auditor, the Broker, the Comms Agency and the Directors.

"The fact that the Madoff feeder funds were getting clean audit opinions from the Big Four accountants for decades, when Bernie was stealing every dime from day one, shows how easy it was for Madoff to fool the accountants", Markopolos said, adding that "in the long history of accounting it’s impossible to name even one multibillion dollar fraud that the Big Four uncovered.” “Now, if I asked you, to name all the big, multibillion-dollar accounting frauds that the Big Four aided and abetted, we could be here all afternoon,” he said.

Given the huge importance of raising capital to the Aim broker model, perhaps that is where shareholder protection should start: with Nomads surrendering 100 per cent of the fees, plus harsh financial penalties, for flotations and capital raisings when a prospectus is later shown to have been false.

What do you think?


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