Jumia Reveals Internal Staff Fraud, Legal Fights, Mounting Losses
Jumia, which is based in Berlin but describes itself as Africa’s largest online retailer, said it’s tackling internal staff fraud that has caused millions of dollars in lost revenue.
Listed on the New York Stock Exchange in April, Jumia has reported fraud amounting to about 4 percent of first-quarter sales.
The company said it has uncovered improper orders placed and subsequently canceled to inflate sales in Nigeria, one of its largest markets in Africa. Sales agents inflated the sales to earn additional commissions, according to Marketwatch.
The employees involved have since been suspended.
The staff fraud affected sales worth $17.5 million, Jumia said, as it announced that its revenue for the quarter has grown 58 percent to 39.2 million euros ($43.5 million), while its net loss grew to 67.8 million euros from 42.3 million euros in the same period a year earlier.
The company said the fraudulent orders had not affected its financial statement but admitted to having to adjust its reported figures for the second quarter of 2018 to reflect the improper transactions.
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It confirmed that several lawsuits had been filed against the company and its officers in New York over “misstatement and omissions” allegations.
Jumia was the first-ever startup from Africa to be listed on the NYSE. The IPO was greeted with excitement but some people argued that Jumia was not truly African.
After initially jumping to trade at almost $47 a share – three times the listing price of $14.50 — Jumia shares started falling following data-misrepresentation allegations by Citron Research, a known short stock seller.
Claims by two law firms that Jumia was under investigation and planning a class-action lawsuit against the e-commerce startup have also weighed on the stock prices with negative sentiment among investors.