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Did Deloitte Miss a Nigerian Company's Massive Fraud?

Did Deloitte Miss a Nigerian Company's Massive Fraud?

by Starling Insights

Starling Insights Editorial Board

Jan 15, 2024

Observations

As reported by Forbes, the US Securities and Exchange Commission (SEC) has uncovered a startling case of financial misrepresentation involving a Nigerian company, the Tingo Group. Despite Tingo receiving a clean audit from Deloitte that "verified" a cash balance of $462 million, the SEC found only $50 (no, not $50 million) in the company's accounts.

Earlier this month, the SEC indicted Tingo CEO Dozy Mmobuosi for securities fraud, making false filings, and conspiracy charges. "Dozy Mmobuosi allegedly orchestrated a massive scheme to inflate Tingo Group's financial statements and make it appear as though the cellular and agriculture companies he founded were profitable and cash rich companies when, in fact, they were not," said US Attorney Damian Williams. "With this Indictment, Mmobuosi's alleged deceitful scheme comes to an end."

Short-seller Hindenburg Research had previously raised concerns about Tingo, questioning its legitimacy and Deloitte's due diligence. "The issues in Tingo's financials are glaring enough that we'd expect they could have been spotted by any semi-conscious finance undergrad with severe vision loss," Hindenburg wrote in its June 2023 report. "These issues were apparently not glaring enough for the company's auditor, however."

If recent history tells us anything, Deloitte is likely to face substantial consequences if it is found to have contributed to such a fraud — even if it did so passively, by failing to uncover it. One need only look to the $1.5 billion lawsuit filed against EY late last month for its work auditing collapsed payments processor Wirecard for an example.

Last year, Starling Insights published "Renal Failure: A Crisis in Audit Culture?," a Deeper Dive discussing the recent rash of scandals in the audit profession and how it impacts society at large.

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