Kenyan IT Firm Software Technologies Limited (STL) has been accused of defrauding a South African firm Ksh594 million.
Already, the South African investors through Enko Capital Management, a private equity investor targeting mid-cap growth companies across Africa, have launched a complaint with the Directorate of Criminal Investigations (DCI) seeking to recover Ksh594 million allegedly stolen from them by the Kenyan entity.
According to media reports, Enko Capital wanted to invest in the country and settled on Software Technologies Limited (STL), a company specializing in software solutions founded by Jyoti Mukherjee.
Enko Capital founders Cyrille Nkontchou and Ralph Gilchrist sought the services of Grant Thornton Consulting Ltd on Sept 19, 2017, to help carry out financial due diligence on STL. It also sought the services of Kaplan and Stratton Advocates before getting the green light to invest in the company.
According to Grant Thornton’s 89-page report produced in December 2017, STL’s main shareholders were listed as Jyoti Mukherjee, (19%), Sanjivan Mukherjee, (19%), Chaitanya Mukherjee (16%), TBL Mirror Fund (22%) and Mawa Holdings Ltd (10%).
Satisfied with the report by Grant Thornton, Enko purchased a 20.14% stake in STL for 5 million dollars (Ksh594 million).
Unknown to them, STL duped the investors by cooking the numbers that enticed the investors into buying the stake, according to Tineyi Kuipa, a senior investment officer.
“We saw the numbers and believed them. We thought we were buying an elephant but it turned out to be a mouse,” Mr Kuipa told a local daily.
STL’s audited accounts had shown Ksh887.45 million in revenues and Ksh194.84 million net profit for the financial year that ended June 2018. However, further audits revealed that STL’s revenue in 2018 was Ksh220.77 million and its net profit was Ksh48.82 million.
In their complaint, Enko claims that STL produced forged documentation to support misrepresentation of the number of the company’s customers.
Enko has also complained of irregular withdrawal of funds without the authorization of directors.
STL’s founder Jyoti Mukherjee died in January 2020. The company’s Finance Investment officer Stephen Omwenga was also released from work.
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