Atlas Mara, an investment company focusing on investing in African financial institutions that was formed by the former Barclays executive Bob Diamond and Ashish Thakka, a young Dubai-based entrepreneur, has run into headwinds just one year after it made its first investment on the continent.
According to the Wall Street Journal, the ex-Barclays chief company is facing allegations of overpaying some of its managers and failing to disclosed information about Diamonds personal investment in one of the banks the listed investment firm has bought a stake in.
Some investors and corporate governance experts are questioning why Diamond withheld crucial information regarding his personal shareholding in one of Atlas Mara’s acquisition targets until months after Atlas Mara offered to buy it.
“From a governance standpoint, having the investor on both sides of the transaction is problematic and obviously raises some questions about the transaction,” Charles Elson, chairman of corporate governance at the University of Delaware, told Wall Street Journal.
Atlas Mara’s Chief Executive John Vitalo, however, refuted any claim of poor corporate governance at the firm, adding that its objectives were “100 percent intact”.
Diamond’s first investment in BancABC worth $210 million early last year also seems to have been a bad pick according to analysts.
The bank, which has huge bad loans exposures in Zimbabwe — a country whose economy is quickly deteriorating due to poor politics, fell below the minimum capital requirement in Tanzania.
Its top management team left in a huff in December last year claiming they were unhappy with what they saw as bureaucratic processes imposed by Atlas Mara.
Atlas Mara, which was incorporated in the British Virgin Islands where financial regulation rules are lax, controls assets worth about $2.6 billion in banks operating in Nigeria, Botswana, Zimbabwe, Tanzania, Zambia, Mozambique and Rwanda.
The investment firm’s share price have tumbled 28 percent from its $10 listing price in December 2013 as high costs and poor economic conditions in some of the African countries it has invest in pushed it to a $63 million net loss in 2014.