Explained: Hindenburg's accusations against African business group Tingo Inc

The US based short seller has accused the African business conglomerate of manipulating its financials and has termed the act as an exceptionally obvious scam.

Hyderabad:US based short seller Hindenburg Research whose report battered stocks of India’s richest person Gautam Adani led group companies has now accused an African business empire of fabricating financials, terming it as an exceptionally obvious scam.

In a research report sent to ETV Bharat, Hindenburg Research accused the New Jersey headquartered Tingo Group of using fake farmers, financials and phones to commit financial fraud, leading to short decline in the share prices of the company.

As a result of the accusations, the share price of Tingo Group Inc, which is listed in NASDAQ stock exchange, declined by more than 16%. According to the report, Tingo Group claims to have several business segments focused on providing mobile phones, food processing and an online food marketplace for farmers primarily located in Nigeria.

Tingo was founded and is spearheaded by Dozy Mmobuosi, CEO of the key holding company entity. Dozy is regularly described by the media as a billionaire and made waves earlier this year when he attempted to acquire the now-Premier League soccer team Sheffield United.

“We’ve identified major red flags with Dozy’s background. For starters, he appears to have fabricated his biographical claim to have developed the first mobile payment app in Nigeria. We contacted the app’s actual creator, who called Dozy’s claims “a pure lie”,” Hindeburg Research said in a statement sent to ETV Bharat.

According to the report, Dozy claimed to have received a PhD in rural advancement from a Malaysian university in 2007. The research report was particularly harsh on the Tingo Group’s CEO Dozy Mmobuosi, accusing him of lying about its university degree.

“We contacted the school to verify the degree. They wrote back saying no one by his name was found in their verification system,” it said. According to the research report, Dozy was arrested in 2017 and faced an 8-count indictment over issuance of bad checks, according to the Nigerian Economic and Financial Crimes Commission. He later settled the case in arbitration.

Fabricated image for airline business

Moreover, the report accused the Tingo Group of photoshopping its logo on aircraft when Tingo Group’s CEO Dozy claimed to have launched Tingo Airlines and later admitting that it actually never owned any aircraft. According to the authors of the research report, Tingo’s Co-Chairman wrote a public letter to Dozy in April this year, filed with the SEC, saying he could not approve the company’s annual report and felt it necessary to recuse himself by resigning due to many critical questions, comments and recommendations that went unanswered and unheeded.

7-month old food division generated $577 million revenue!

According to the report, one of the most obvious financial discrepancy in the company business was about the claim that its just 7 month food division has generated over $577 million revenue in the last quarter alone, which represented 68% of the company’s total reported revenue.

Questioning the financials of the NASDAQ listed Tingo Group, Hindenburg Research said if the claim of the company was true then its claimed 24.8% operating margins would exceed those of every major comparable food company.

Food business without any processing facility of its own!

What is even more surprising is that the company does not have a food processing facility of its own. Rather, it claims its explosive revenue and profitability is derived from acting as a middleman between Nigerian farmers and an unnamed third-party food processor.

The authors of the report said that in February 2023, the company held a groundbreaking ceremony for a planned $1.6 billion Nigerian food processing facility of its own, attended by the country’s agriculture minister and other political luminaries.

“We found that the rendering of the planned facility, featured in Tingo’s investor materials and on a billboard at the ceremony, is actually a rendering of an oil refinery from a stock photo website,” the report added.

Hindenburg’s report on Adani Group

In January this year, Hindenburg Group leveled serious allegations against Gautam Adani led business conglomerate. It accused Adani Group of manipulating stocks, accounting irregularities, cronyism, and tax evasion, among other questionable practices.

It led to loss of over $104 billion in the valuation of Adani Group companies and the Group is yet to fully recover from the adverse impact of the Hindenburg report.