In a dramatic twist for Olam Group Ltd., shares plummeted to a near 15-year nadir following contentious fraud accusations in Nigeria. This further compounds an already challenging year for the Singapore-based agricultural giant, replete with a stark dip in profits and an unforeseen deferment of its IPO.
Olam Group’s shares have seen a precipitous drop of around 15% this week, marking the steepest weekly decline since the summer of 2012, according to financial data powerhouse Bloomberg. By Thursday, the company’s stock teetered perilously close to the S$1 threshold, stirring palpable anxiety amongst stakeholders.
Swiftly responding to the allegations that have shaken investor confidence, Olam Group vehemently refuted the claims of financial misconduct in Nigerian media. The board, committed to ensuring corporate transparency, has green-lighted an immediate review of the allegations.
“We have always maintained our commitment to transparent and ethical business practices. The allegations are deeply concerning, and we are dedicated to a thorough review to assuage any concerns,” remarked a senior company spokesperson.
With operations spanning the gamut from animal protein production to rice cultivation, Olam’s venture in Nigeria injects over $3 billion into its yearly revenue, underlining the gravity of these allegations.Â
Unexpected challenges have marred Olam’s journey this year. Earlier, a worrying 90% nosedive in first-half profits was attributed to subpar almond crop yields. A keenly expected initial public offering of Olam Agri in Saudi Arabia, originally slated for the first half of this year, has now been pushed to 2024.
Drawing parallels, just six months ago, another agribusiness firm faced scrutiny in Kenya over alleged financial discrepancies, echoing the concerns that global investors have regarding transparency in large-scale agricultural ventures.
Delving into Olam’s past, about a decade ago, the company’s business model came under the microscope when short-seller Muddy Waters LLC expressed doubts. This. eventually paved the way for a strategic takeover by the esteemed Singaporean state-owned investment fund, Temasek Holdings Pte. Today, Temasek remains a major shareholder, boasting a hefty 51% stake in Olam.
By mid-week, to collaborate with Nigerian authorities, Olam revealed that its African subsidiary had furnished a bond for director Prakash Kanth. This is expected to ensure Mr. Kanth’s unwavering cooperation with any forthcoming legitimate information requests from pertinent Nigerian agencies.
As the corporate world keenly watches the unfolding of this saga, the ultimate outcome could shape investor perceptions and trust in international agribusinesses for years to come.
Source: Business Day
