Fraud Allegations: Malicious, Misleading, Baseless – Tingo Group Tackles Hindenburg Research Report

Fintech firm, the Tingo Group has refuted the shocking fraudulent allegations levelled against it in a report by Hindenburg Research.

Tingo Group

Hindenburg Research in an explosive report published on Tuesday, alleged that Tingo Group, founded by a Nigerian entrepreneur, “Dozy” Mmobuosi was involved in misrepresentation, tax delinquency, and accounting fraud.

It also accused Tingo of being an “exceptionally obvious scam”.

The report sent the fintech firm’s share price crashing.

In a statement published on its website, titled “Tingo Group Refutes Malicious and Misleading Allegations in Hindenburg Research Report”, the group described the allegations as “baseless”.

“The report, which contains numerous errors of fact, together with misleading and libellous content, appears to be a deliberate attempt to undermine the positive work that Tingo Group is undertaking across various worldwide markets,” the firm explained.

To authenticate itself, the firm also shared pieces of evidence and added that it has business licences from the necessary authorities.

“Tingo Group confirms that it remains in compliance with the laws of the territories in which it operates and maintains the highest standards of corporate governance. The company also confirms that its accounting records are accurate and correct and that its financial results are accurately reported within its financial statements and its SEC filings,” it added.

Tingo condemned the research and said, “As disclosed by Hindenburg Research, the report represents their own opinion and is designed to benefit a short position taken by them and their associates from which they stand to realise sizable gains.

“The company can confirm that no attempt was made by Hindenberg Research to verify the allegations or otherwise make genuine inquiries concerning the information provided in the report prior to its release.”

It also explained that it collaborates with farmers against the claim contained in the research, noting that it was difficult to release some information to avoid legal pitfalls and data breaches.

While referring to its developmental partnership with the All Farmers Association of Nigeria, Tingo restated its plan to provide farmers with access to services including, among others, the Nwassa ‘seed-to-sale’ marketplace platform, insurance, micro-finance, and mobile phone and data top-up.

“The investor community has demonstrated its faith in Tingo Group on the basis of detailed analyses and reports prepared by leading professional advisors, financial experts, and credit rating agencies.

“Tingo Group will respond in detail to the allegations made by Hindenburg Research in due course, but for the avoidance of doubt, the company believes the report published today is a deliberate attempt to damage its reputation maliciously and unlawfully through the issuance of false, misinformed and distorted information for Hindenburg Research’s own financial gain and at the expense of the company’s shareholders,” said the statement.

Full Highlights Of Hindenburg Research on Tingo Group.

Hindenburg Research on Tingo Group titled – Fake Farmers, Phones, and Financials—The Nigerian Empire That Isn’t

We are short Tingo Group Inc (NASDAQ:TIO) because we believe the company is an exceptionally obvious scam with completely fabricated financials.

Tingo, headquartered in New Jersey, 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”.

Dozy claimed to have received a Ph.D. in rural advancement from a Malaysian university in 2007. We contacted the school to verify the degree. They wrote back saying no one by his name was found in their verification system.
In 2017, Dozy was arrested and faced an 8-count indictment over the issuance of bad checks, according to the Nigerian Economic and Financial Crimes Commission. He later settled the case in arbitration.

In 2019, Dozy claimed to have launched “Tingo Airlines” and posted social media messages encouraging customers to “fly with Tingo Airlines today”. Media outlets later uncovered that Tingo had photoshopped its logo onto pictures of airplanes. Dozy later admitted to never owning any actual aircraft.

In April 2023, Tingo’s Co-Chairman wrote a public letter to Dozy, filed with the SEC, saying he could not approve the company’s annual report and felt it “necessary to recuse myself by resigning” due to “many critical questions, comments and recommendations” that went “unanswered and unheeded”.

Tingo’s food division is 7 months old, yet claimed to generate $577.2 million in revenue last quarter alone, representing 68% of total reported revenue. If accurate, its claimed 24.8% operating margins would exceed those of every major comparable food company.

Yet, Tingo has no food processing facility of its own. Rather, it claims its explosive revenue and profitability are derived from acting as a middleman between Nigerian farmers and an unnamed third-party food processor.

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.

Following its groundbreaking, Tingo reported in a May 2023 SEC filing that it made “significant progress” on the facility, including laying “the foundations of its numerous buildings”.

We visited the site a week later and found zero signs of progress; it was empty except for the plaque and billboard commemorating the groundbreaking ceremony, surrounded by weeds.

Subsequent to the “groundbreaking”, Tingo announced a $150 million agreement with a UK entity called Evtec Energy to build solar panels for its non-existent food processing facility. Funding for the deal is slated to be provided through Evtec, but UK filings show that Evtec was “Dormant” as of its most recent annual report and held zero cash in the bank.

Tingo Group bought Tingo Foods from Dozy in February 2023 for $204 million, a price “approximately equal to the cost value of the inventory held by Tingo Foods”.

The inventory, which was reported in year-end financials, completely vanished from Tingo’s Q1 2023 accounts without explanation. In our experience, $204 million in inventory doesn’t just disappear at companies with internal controls and genuine financial reporting.

Tingo claimed in its reverse merger press release that members of 2 unnamed farming cooperatives supply the majority of its then-9.3 million userbases, consisting of local Nigerian farmers. These farmers supposedly form the core of the company’s phone customers and provide the agricultural products used in Tingo’s food processing and trading businesses.

A local media outlet identified and contacted the cooperatives. Both said they had never heard of Tingo and had fewer than 100 farmers in each cooperative.

We were able to make contact with one of the cooperatives. Its owner reiterated having no relationship with Tingo and flat-out told us “they are scammers”.

Tingo claimed its mobile handset leasing, call, and data segments generated $128 million in revenue last quarter (~15% of total), claiming these services are provided through an agreement with Airtel in Nigeria. The type of license they claim did not exist until June 2023.

Our checks with the Nigerian Communications Commission showed it has no record of Tingo being a mobile licensee at all, despite company claims of having 12 million mobile customers.

Despite claiming to have millions of farmers using its phones, Tingo Mobile’s corporate presentation and webpage uses stock photos of farmers using phones.

We visited Tingo Mobile’s office in Nigeria and found only a handful of employees and a sign posted on its door by federal tax authorities stating that the company is delinquent on its tax obligations.

Tingo Mobile claimed a Ghana expansion effort would enroll 2-4 million members by February 2023.

This would represent ~9%-18% market share in the country within months of launch. We found zero records pertaining to Tingo Mobile through Ghana’s communication regulator.

We tried to contact Tingo’s Ghana support in late May to buy a phone. The email bounced back and no one picked up the phone despite numerous attempts.

We visited Tingo’s Ghana office location in late May 2023. We saw 2 cars in the parking lot and no customers. When we tried to enroll in a plan and buy a phone we were told the location wasn’t operational yet.

TingoPay (part of Tingo Mobile) claimed in 2021 to have launched a partnership with a major local bank.

Two days after Tingo’s blockbuster announcement, the bank put out a statement calling Tingo’s claim false and that it had “NOT concluded any agreement with Tingo International in respect of any payment system whatsoever”.

Tingo now claims its payment group has a point of sale (PoS) system and other merchant products. We found that pictures of Tingo’s claimed PoS system were taken from a different PoS operator’s website, with a Tingo logo photoshopped over them.

Tingo claims its “seed to sale” online marketplace called NWASSA generated $125.3 million in revenue last quarter or ~15% of its total revenue, yet the website has been “under maintenance” and inoperable for months.

Tingo claims it has launched its NWASSA platform in Ghana. The Ghana website also doesn’t work and just says “Updating…” without ever going anywhere.

In a May 2023 press release, Tingo claimed its brand-new agricultural export business, Tingo DMCC, was on track to deliver over U.S. $1.34 billion in exports by Q3.

Tingo’s sales projections for that business are higher than the entire nation of Nigeria’s annual 2022 agricultural exports, which totaled about U.S. $1.15 billion, per government data.

Despite Tingo’s bold claims, we found no import/export records from Tingo at all through searches of Nigerian customs and trading databases.

Tingo DMCC’s website has numerous non-functioning links and includes a fake testimonial that appears leftover from the website template.

Tingo’s financial statements are riddled with errors and typos, including a note to itself that it apparently forgot to delete, saying “please update for the tingle (sic) transaction including the tingle (sic) foods transaction”.

Its financials include other basic errors like incorrect math and leaving zeroes off key metrics.

More troublingly, Tingo’s cash flow and balance sheet statements do not reconcile and show major errors indicating a complete lack of financial controls. Its cash flow statements regularly subtract items from cash that should be added and vice versa.

The errors also seem to apply to Tingo’s audited annual financial statements, which were recently given an unqualified audit opinion by Deloitte Israel (a strange choice given the company lacks substantive operations in Israel).

We strongly suspect Tingo’s cash balance, which it conveniently claims is held in Nigeria, is fake. The company collected only ~12% of the interest income one would expect from its claimed cash balances.

Overall, we think Tingo is a worthless and brazen fraud that should serve as a humiliating embarrassment for all involved. We do not expect the company will be long for this world.

In other news, Kanyi Daily reported that a 23-year-old man, Isyaku Lawal has been arrested by operatives of the Nigeria Security and Civil Defence Corps (NSCDC) for allegedly sodomising a nine-year-old boy in Jigawa State.

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