Monrovia - A BBC investigation tagged, the ‘file on four’ has released a damaging investigative report on how investment firms listed on the London based Alternative Investment Market (AIM) duped investors through bogus deals.
In Liberia, one of AIM listed companies, Sable Mining, succeeded in wooing some top government officials into what could later become- the largest conspiracy to dupe the country of its natural resources
Registered in 1995, AIM which is also referred to as the London Junior stock market is one of the most successful growth markets in the world.
AIM is also a less-regulated alternative to its big brother, the main London Stock Exchange.
Since its launch in 1995, it has raised towards a hundred billion pounds for thousands of firms.
Due to lighter regulations, to date, AIM is pulling some major high street names; Dominant Peters, an online fashion store, but its reach goes way beyond this. It has seen a series of high profile of Foreign Companies failing in suspicious circumstances.
An investigative report filed by BBC Simon Cox on ‘File on 4,’ shows how some of these companies listed on the AIM’s site, dwindled under questionable conditions.
“At the moment in one particular company, I have lost all my money. Having said that, part of the problem is once it is delisted or revises in both ways, no one and certainly no small shareholders like myself have any clue, what is left within the company.
There is no one actually investigating or tracing to see what remains.” One investor hinted.
In Liberia, one of AIM’ s listed companies, Sable Mining, succeeded in wooing some top government officials into what could later become- the largest conspiracy to dupe the country of its natural resources.
Andrew Grooves and Phil Edmond listed Sable Mining among their nine investments on the AIM site where they attracted some investors.
One of the investors who begged for anonymity during the BBC’ interview, disclosed how he was encouraged by his son to invest into the business which could later become a scam costing him thousands of pounds in loses.
“My son give me a call and tells me dad ‘I have got this wonderful investment and its gonna go up next week, you must invest, everybody is talking about it.’
He gives me the information and I said to him, let’s make some inquiries, he says ‘no dad there is no time.’ Its gonna go up if you start making investigation.
So dad invests five thousand pounds into it,” anonymous Investor said. According to the report, when Sable arrived in Liberia, their target was to grab the Wologizi Mountain.
“There was one mining particular that Sable wanted- Wologizi Mountain. It was hugely valuable and it was up for grabs. Global Witness alleged that Sable mining was told, in order to get the site; they needed to change a law.
This will stop the mine from going to public tender and making it instead, the decision of one Minister.” The report stated.
Following revelations from the Global Witness, an international corruption Watch Dog, the Liberian government set up a Special Presidential Task Force to investigate the matter.
“That’s clearly a big claim. We have obtained a copy of a spread sheet which contains a list of some of the most powerful people in Liberia.
And it also has a corresponding detail of money received by each of these officials. The total amount of the entire deal is almost a million dollar.”
“The spread sheet is at the crux of this investigation. It’s probably the most important piece of the evidence. It tells us where the money trail leads, so it is very important.
It very important to this case,” said Cllr. Fonati Koffa, Head of the Special Presidential Task Force set up by the Liberian government to investigate these allegations.
To Minister Koffa, the documentary evidence is key; “rarely have we seen in a bribery scandal that is highly secretive, the mountain of email trail and documentary evidence that we have in this case.
Well the actual allegation is economic sabotage, what we have alleged is that, officials from sable mining and certain government officials from Liberia, conspired to award Wologizi mountain range which is the last virgin mineral mountain range in Liberia to sable mining for undervalued market prices.
“That’s the allegation and for that, money was paid to some members of the executive and the legislature in order to get that accomplished.
This is an extremely big deal. The conspiracy is so widely spread.
Those who are involved or implicated are so powerful and we have a saying in Liberia where we say; ‘corruption is fighting back.’
There is a lot of lobbying done behind the scene, there are lot of attempts done to delay the investigations but we are not deterred.
We are going to proceed as quickly and as deliberately. This case, will come faster, probably than any case we have had in Liberia,” Minister Koffa said.
When these allegations were put forth to Mr. Grooves and his partner, they denied the allegations.
They went on to say that they have been used as puns in the Liberian politics but their company can no longer be traded on the market.
Phil Edmonds, an ex-English top spin bowler inked up with Andrew Grooves, a Zimbabwe business man following Edmond’ sporting career in England and together, they entered the African mining sector.
In total, they launched nine companies on AIM.
Dr. Vivet Salanki was their Physician and they made him tempting offer to go into business with him setting up private hospitals across Africa.
So the three men formed a company called ‘Africa Medical Investment’ (AMI) which they listed on AIM.
Phil Edmond used his cricket record as a platform to market their business interest to the African communities.
The AMI medical group set up by the trio, set up private hospitals and established boutiques and medical clinics in De Es Salam, Mobotu and Harare.
They planned to roll out a series of clinics with expensive Planes to fly patients across Africa with less expensive adverts to promote them.
But they need a hospital to fly to. The three directors went on to buy a property in Mobotu, Moazabique for just over two million dollars but through a separate offshore investment rather than the AMI.
The deal caught the attention of Anti-Corruption Groups. The investigators could later unveil that these properties were resold to the real company or the AMI for over five million dollars.
This business deal was not disclosed to the other shareholders as the proceeds from the deal went to trust funds and family members.
With these newer companies, what protection is there for the investors and their funds? The way the AIM is regulated is different from to the main stock market.
Simon Teddy Young, a former Nomad who is now a full time Investor explains how the NOMAD system works at the site.
“A Nominated adviser or Nomad is a gatekeeper to the company’s reputation.
Nomad must ensure that the company is suitable for him, guide it through the flotation and its involve in the due diligence on the company, preparing the listing documents, checking to direct the appropriate suitable for being a company.
The Nomad is effectively the delegated regulator for the London stock exchange. It’s up to them to make sure that client companies follow the rules and remain suitable for listing.
Well the delegation and regulation to the NOMAD, means the NOMAD is the police man and adviser and the London Stock Exchange has to rely on the Nomad to do what they say they are going to do and keep all their companies on track.’’
This reliance is even greater when the company is base overseas.
“There has been a pattern of Chinese companies apparently with the normal turnover making a whole lot of profits and cash balances. Well, a couple of years, the cash have been removed from the company by one reason of the other,” Young said.
NIBOU, one of the Chinese companies involved in this, has an interesting story for investors.
With no debt and forty million pounds in the Bank, it even attracted investors running newer companies.
Richard Edward, an English Investor, invested tens of thousands of his saving in NIBOU.
Initially, things were moving well until two major Chinese Investors sold their shares on the site. The suspicion was, they knew something that the British Shareholders didn’t know. The British shareholders too began to have doubts.
This was a company once valued on AIM at almost seventy million pounds. But by this point, the share price has dropped at almost ninety percent in just three years.
The UK based executive and Directors were immediately forced to admit that they have lost contact with their Chinese Co-Founder and senior executives.
So what happened to NIBOU?
The truth is no one really knows. Brian Kerry, a former Engineer turned Investor flew to China to found out his investments. He wasn’t convinced always as it should be.
When NIBOU floated, the company claimed it was debt free and has cash in the bank. Some armature sneaking from Brian found out otherwise.
“I did some research on documents published on the Chinese web. Well I am not a Chinese Speaker but I Goggled translators and those translations helped me a lot. I also got some Chinese firms to help me with some translations,” Brian said.
His creative approach to due diligence, paid off. He came across some information on the company that hadn’t been disclosed when it floated on AIM.
“I found a list of loans from banks which listed a very large loans to NIBOU which has been undisclosed.
I also found on the judicial website of China, some court cases in which the Chief Executive Officer of NIBOU has been involved,” Brian said.
The Chinese Founder, Mr. Lee has vanished, so is the other Chinese investor and the tens of thousands of millions pounds invested in the company.
The reason most of these Chinese based listed companies on AIM have crashed and burn often in questionable circumstances have become known in investment circles as the ‘filthy-faulty.’
Simon Teddy Young was unlucky enough to have invested in some of them.
Losing money is part of the game which investors like Simon expect. But with the Chinese, it wasn’t a fair play.
David Stradoff from the Shareholders Society: “Do you know how much in those companies come up from China but delisted now? It could be billions.
Because, all these companies have had access to the Cities and the Cities are where managers put lots of money in these investments.
So you could be talking three or four billions. It’s a lot of money and I am only thinking about one area which is China.
There are probably Ninety five percent of people who have lost money on Chinese investments.”
AIM however denied claims that they are unable to regulate the market and protect investors and their funds.
Micheal Stater, AIM’ Market Boss says that in every market there are ‘failures’ nothing that these are some of the effects of investing risk capitals.