A story of how NOT to do fraud
A Nigerian "Fin-tech" giant exposed
Hi,
I thoroughly enjoy the way Hindenburg Research publishes its reports.
Hindenburg Research is a short seller who in January 2023 brought Adani Group to its knees. The short seller via its forensic financial research believed the Group to be involved in a brazen stock manipulation and accounting fraud scheme over the course of decades.
Hindenburg Research on June 6th, 2023 published another report alleging Tingo Group Inc, a NASDAQ listed company of falsifying its business operations and financials.
What I love about them is that the entire report is devoid of jargon, its written in simple English and it tells an incredible story. A story of how NOT to do fraud.
Before we begin, do consider sharing this with a friend or family member who likes reading interesting stories. It helps the newsletter grow and keeps me motivated.
With that out of the way, let’s dig in.
Tingo is a Nigerian company founded by Dozy Mmobuosi in 2001 as Tingo Mobile. It is currently publicly traded as ‘TIO’ on the Nasdaq.
What business segments does it operate in?
As described on its website it claims to be
Tingo is an Agri-Fintech company offering a comprehensive platform service through use of smartphones (using GSM technology) to empower a marketplace to enable subscribers/farmers within and outside of the agricultural sector to manage their commercial activities of growing and selling their production to market participants both domestically and internationally.
The ecosystem provides a ‘one stop shop’ solution to enable such subscribers to manage everything from airtime top ups, bill pay services for utilities and other service providers, access to insurance services and micro finance to support their value chain from ‘seed to sale’.
Tingo aims to be Africa’s leading Agri-Fintech company that transforms rural farming communities to connect through our proprietary platform to meet their complete needs from inputs, agronomy, off take and marketplace which delivers sustainable income in an impactful way.
As you can see from its own description the Tingo group seems to be doing a lot.
Its SEC Filings reveal that its merger with the Chinese fintech has expanded its business to also included Insurance brokerages in China as well as a securities and investment services firm known as Magpie Securities out of Hong Kong.
For now, let’s just focus on its Africa based businesses.
On paper, Tingo claims that each of these businesses is a behemoth, however on closer inspection their stories collapse.
1. Food processing & Sales
Tingo’s largest division seems to have margins higher than any comparable food company and had ‘$204 Mn’ of inventory vanish in one quarter.
2. An online food marketplace
Tingo’s online food marketplace has been ‘under maintenance’ for months, yet still claims to process 500,000 daily transactions.
3. Mobile Handset Sales and Leasing
Tingo claims to have sold millions of phones to farmers. But everyone from its suppliers to farmers collectives and government bodies say it’s claims are false.
4. Agricultural Exports
Tingo’s claims of extraordinary profitability continue in its Agricultural Exports division. It’s stated 29% margins would make it one of the most profitable agricultural exporters in the world.
So, who is behind the seemingly magical Tingo?
Tingo’s founder is Dozy Mmobuosi who was born in Lagos Nigeria.
Below are the claims he makes which as per Hindenburg's research are false,
Let’s summarize
A founder with a chequered past and claims that seem too good to be true.
Tingo’s story seems to be one of fool’s gold.
None of its claims stand up to scrutiny and it even makes mistakes in its official filings. Truly a story of how NOT to do fraud.
The fact that companies like this can trade publicly and put the everyday investors’ hard-earned money at risk is something that should make us wary. It should serve as a warning for us to look at the companies that list closely and not just believe that because they are listed they are upstanding corporate citizens and should be invested in.
P.S. I found this hilarious→ Tingo used stock photos of farmers using “their” mobile phone devices on their website. The company photoshopped its logo on pictures of airlines encouraging customers to “Fly With Tingo Airlines Today”.
Read the entire Hindenburg Research article here.
I hope you enjoyed this edition of Filtered Kapi. I’ve tried a fresh style to continue experimenting with how I share stories with you all.
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Filtered Kapi #45 - Someone sent you this?
Laughed so hard. This was so good. And scary.