The allegations by a British prosecutor of James Ibori’s links to Oando has caused the company’s shares to fall by almost the 10 percent limit allowed on the Nigeria stock exchange.
Oando shares were down 9.37 percent at 9.14 naira, after falling 9.95 percent.
One trader said people were dumping Oando’s stock as a result of panic because of the negative news, but that the company’s fundamentals were still strong.
“The price earnings ratio is one of the best in the sector,” he said.
Sasha Wass, the British prosecutor who make the allegations, told a London court on Tuesday that Ibori had revealed to a Swiss private bank in 2004 that he owned 30 percent of Oando, which paid $1.2 million into his account that year.
Oando has admitted paying more than twice that sum into Ibori-owned companies, but denied it knew they were his. The compay also denied that Ibori had a significant shareholding in Oando.
This negative share price reaction could prove a headache not just for Oando but for U.S. oil giant ConocoPhillips, which is selling its Nigerian assets to Oando’s Toronto-listed subsidiary Oando Energy Resources Inc for $1.79 billion.
Ever since that deal was disclosed in December last year, industry experts have doubted whether Oando would be able to raise enough cash to complete the sale, despite numerous bank loans and rights issues.