From our offices in the Detroit area, Akeel & Valentine, PLC serves clients nationwide.

From our offices in the Detroit area, Akeel & Valentine, PLC serves clients nationwide.

A whistleblower complaint filed against Canadian oil company

On Behalf of | Jan 24, 2022 | Whistleblower

Whistleblower complaints often expose inappropriate activities by companies in many different industries. Natural resource extraction involves large sums of money and high stakes that sometimes lead to deceptive practices.

An evolving case involving the Canadian company ReconAfrica centers on misrepresentations that potentially misled investors.

Oil exploration in the African wilderness

National Geographic provided details on a whistleblower complaint recently filed with the U.S. Securities and Exchange Commission. The filing alleged that ReconAfrica engaged in fraudulent activities with its investors to drive up its stock price. The whistleblower filed the complaint anonymously to protect against retaliation and harassment.

The complaint relied on public records that show a pattern of the company failing to disclose pertinent information to investors. Possible violations of securities laws involved information on looking for oil and gas deposits in a sensitive wildlife area that included the Okavango Delta in Namibia and Botswana.

Since possibly deceptive promotional materials put investor money at risk the case falls under the purview of the SEC. Based only on minor exploration data, the oil and gas company potentially made exaggerated claims about the likelihood of valuable oil and gas reserves.

A tripling of stock prices in a short time

Due primarily to the company’s questionable actions, as alleged by the complaint, its stock prices improved in value by a substantial sum. Some observers suggested that the company’s prospects amounted to a house of cards that could injure investors.

The company also claimed that fracking could lead to better extraction outcomes, even though the company did not have permits or permission to use this method. This comes at a time when the company reassured government officials that it did not intend to use fracking measures.