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Jumia sued over ‘fraud’ in its IPO

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Jumia appears to be generating more flak than value from its listing on the NYSE through a successful IPO, which earned it the name the “Amazon of Africa” in Western media. Just a month after listing, and days after an investment research firm blew the whistle on ‘fraud’ at the e-commerce company, a class action lawsuit has been filed on behalf of purchasers of the Jumia American Depository Shares (ADSs) who acquired the stock between April 12, 2019 and May 9, 2019.

Through Robbins Geller Rudman & Dowd LLP, the investors on May 14th filed the lawsuit in United States District Court Southern District of New York. The lawsuit is based on the damning Citron Research which alleged that Jumia had failed to state in its Form F-1 filing that 41% of its orders were not honoured – they were returned, not delivered or cancelled.

The lawsuit says that the statements made by the company were ‘materially false and misleading’ when they were made since they ‘failed to disclose the following adverse facts:

  • That Jumia had materially overstated its active customers and active merchants;
  • That Jumia representations about its orders, order cancellations, undelivered orders and returned orders lacked a sufficient factual basis and materially overstated the Company’s sales;
  • That Jumia failed to sufficiently disclose related party transactions; and
  • That Jumia’s financial statements were presented in violation of applicable accounting standards.

“In 18 years of publishing, Citron has never seen such an obvious fraud as Jumia,” Citron analysts said in heir report. “As the media in the US is naively anointing Jumia as the ‘Amazon of Africa’, the media in its home country of Nigeria has plethora of articles discussing the widespread fraud in this Nigerian company. Not even that elusive Nigerian prince can cover this one up.”

[ READ: Mobile loans apps become predators on desperate Kenyans ]

Jumia has stood by its prospectus. Sacha Poignonnec, Jumia CEO, was quoted by The Wall Street Journal saying the company is “transparent” and declined to respond directly to the claims made in the Citron report. “We don’t necessarily want to feed those types of organizations or people,” he said.

According to Jumia’s Registration Statement, the company’s operations are conducted in six regions in Africa, which consist of 14 countries that, together, accounted for 72% of Africa’s 2018 Gross Domestic Product. The Registration Statement states Jumia intends to benefit from the expected growth of e-commerce in Africa through the investments and local expertise the company developed since its founding in 2012.

The company touted strong year-on-year growth in gross merchandise volume (GMV) growth (58%) to €240 million ($270 million). GMV is non-standard accounting metric Jumia uses to show “the total value of orders including shipping fees, value added tax, and before deductions of any discounts or vouchers, irrespective of cancellations or returns.”

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[ SEE ALSO: Huge losses beckon for Kenyans who invested billions in cryptocurrencies ]

It said its active users grew to 4.3 million at the end of the quarter from 3 million a year ago while total revenue grew by 12.3% to €31.8 million ($35.7 million). Gross margins on GMV rose slightly to 6.5% from 5.6% a year earlier.

“The Registration Statement issued in connection with the IPO was materially false and misleading and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading,” the attorneys state in the lawsuit. “These materially false and misleading statements and omissions remained alive and uncorrected during the Class Period.”

The suits argues that the material misstatements and omissions created in the market “an unrealistically positive assessment of Jumia.

Citron Report further notes that just prior to the IPO, Jumia issued a confidential investor presentation in October 2018 during a capital raising effort. According to the Citron Report, “many material discrepancies in reported key financial metrics” exist between the Registration Statement and the confidential investor presentation.

The Class Period begins on April 12, 2019, the first day Jumia shares traded on the NYSE. Before that, on April 10, 2019, Jumia issued the Registration Statement that contained information about the company’s orders, order cancellations, undelivered orders, returned orders, active consumers, active merchants and related party transactions.

Unrealistically positive engine

The The lawsuit says the management materially misled the investing public, thereby inflating the price of Jumia shares, by publicly issuing false and misleading statements and omitting to disclose material facts.

“At all relevant times, the material misrepresentations and omissions particularized in this Complaint directly or proximately caused, or were a substantial contributing cause of, the damages sustained by Plaintiff and other members of the Class,” it says.

The suits argues that the material misstatements and omissions created in the market “an unrealistically positive assessment of Jumia, its business, financial reporting, services, and financial prospects” thus causing the company’s shares to be overvalued and artificially inflated.

[ NEXT: Insider trader who made hundreds of millions fined Ksh208 million ]

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Uhuru Cuts Ruto Down to Size in New Executive Order

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President Uhuru Kenyatta on Wednesday moved to cement his authority as the leader of government by abolishing the Presidency in a new executive order that domiciles Deputy President William Ruto’s office under the Office of the President (OP).

This effectively renders DP Ruto powerless as he will be unable to hire and fire staff as the privilege will now be a preserve of Head of Public Service Joseph Kinyua.

The major political ramifications of the executive order are that the Office of the Deputy President will no longer have an independent budget, or be autonomous and will from now on take orders from (OP)

Executive Order No 1 of 2020 also places Ruto’s Chief of Staff Ken Nyaucho Osinde under the OP which means that he will now be reporting to State House Chief of Staff Nzioka Waita. Nyaucho will now work hand in hand with Waita and Kinyua.

The Executive Order also places the Nairobi Metropolitan Services Authority (NMS) under the OP giving President Uhuru Kenyatta the proximity to oversight the body created to “restore” Nairobi’s glory.

Uhuru’s latest move is eerily similar to one he made last year that gave Interior Cabinet Secretary Fred Matiang’i sweeping powers on the oversight of Government programmes at a time DP Ruto had perfected the art of traverssing the country under the guise that he was supervising government projects at the behest of President Kenyatta.

On Tuesday, President Kenyatta took his crackdown on DP Ruto’s allies to the National Assembly at a Parliamentary Group (PG) meeting held at State House just weeks after kicking out Ruto stalwarts from powerful senate positions.

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In the changes, National Assembly Majority Whip Benjamin Washiali and his Deputy Nominated MP Cecily Mbarire were kicked out in favour of Navakholo MP Emmanuel Wangwe and Igembe North MP Maoka Maore respectively.

During the PG, meeting President Kenyatta once more dressed down Ruto’s allies and faulted them for disrespecting him. The president also intimated that he knew that Ruto’s allies refer to him as “a drunk”.

In the eventful PG meeting, the President fell short of saying that he will not be supporting Ruto as he promised in campaign rallies in the build-up to the 2013 general elections.

I will be happy to know that the person I will be passing the baton to is part of my agenda,” Uhuru told the 212 MPs. 

The President’s remarks came after he enjoyed a night out with Opposition chief Raila Odinga after the Madaraka Day celebrations at State House during the day.

The duo arrived at the Nairobi CBD in the middle of the night and was seen inspecting the re-carpeting of roads by the NMS.

See Also>>> Uhuru Pumps Sh2 Billion to Save Ailing Tourism Sector

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An Executive Order by President Uhuru Kenyatta

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An Executive Order by President Uhuru Kenyatta has abolished the Presidency and instead put the office of the Deputy President under the office of the president.

KBC Radio_KICD Timetable

THE PRESIDENT
EXECUTIVE ORDER NO. 1 OF 2020
THE ORGANIZATION OF GOVERNMENT

IN EXERCISE of the powers conferred by Article 132 (3) (b) of the Constitution, as read with all other enabling Laws, I, UHURU KENYATTA, President and Commander-in-Chief of the Kenya Defence  Forces, order and direct:

(i) THAT the Government shall be organized as set out in this Order;
(ii) THAT this Order contains portfolio responsibilities and changes made in the structure of Government;
(iii) THAT this Order assigns functions and institutions among Ministries and State Departments; and
(iv) THAT this Order supersedes Executive Order No. 1 of 2018 (Revised) issued in July 2018.

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ISSUED under the HAND AND SEAL of the President of the Republic of
Kenya at State House, Nairobi this 11th day of May, 2020.

UHURU KENYATTA,
PRESIDENT.

Click here–> Executive Order No. 1 of 2020 formatted final Updated

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ARTIST SPOTLIGHT: Pinnto, fast-rising Kenyan musician who is destined for greatness

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I love good music and whenever I come across an artist who makes dope jams, I always feel the need to inform other people about them because as they say, sharing is caring.

Also read: Gengetone is still alive, kind of

The talented musician I want to tell you about today is none other than Bernard Oduor Nyariro, popularly known as Pinnto.

His dad was a DJ and coupled with the fact that he knew that he had a special gift, this inspired him to start writing his own songs. As he was growing up, Pinnto looked up to the likes of Jua Cali, E-Sir and Nonini.

Pinnto has been doing music professionally for the last 8 years but it’s only a few years back when people started to notice how talented he is.

Asked why it took him so long to get his name out there, the fast-rising dancehall singer explained that it takes long to penetrate the Kenyan music industry because one must have good quality and show that they are serious.

Pinnto

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He is a very versatile artist which means that today you will find him spitting bars today and doing a dance hall jam the next day and Gengetone the day after that. However, he says if he does a Gengetone jam he will be careful.

Pinnto dreams of working with Khaligraph Jones, Masauti, Sauti Sol, Timmy Tdat so if they are reading this, please reach out to this guy.

He recently released a new song titled Under Curfew and it has been getting a lot of love. Interestingly, he wrote the wrote the some time back and decided to release it now that we are under a nationwide curfew.

Watch his latest jam titled Under Curfew below and tell us what you think.


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