The U.S. Securities and Exchange Commission (SEC) has announced the imposition of fraud charges against Brooge Energy Limited, a publicly-traded energy company based in the United Arab Emirates, along with its former CEO, Nicolaas Lammert Paardenkooper, and former Chief Strategy Officer and Interim CEO, Lina Saheb. The charges relate to significant misstatements of revenue and the use of false invoices.
Background of the Charges
According to the SEC’s findings, Brooge Energy, which trades on NASDAQ, misrepresented its revenues by 30% to 80% from 2018 through early 2021 in its SEC filings. These filings were associated with the offer and sale of up to $500 million of securities. The SEC investigation revealed that the company fabricated invoices to overstate revenues from its oil facilities in Fujairah, UAE, by more than $70 million over three years. The order highlights that both Paardenkooper and Saheb were either aware or recklessly ignorant of the fraudulent practices. Additionally, Brooge Energy provided these falsified invoices to its auditors to conceal the revenue inflation.
SEC’s Intervention and Company’s Restatement
The SEC’s proactive approach successfully halted the fraudulent activities before they could cause substantial harm to domestic investors. In response to the SEC’s investigation, Brooge Energy decided not to issue the $500 million in securities and, in April 2023, announced a restatement of its audited financial statements covering the period from 2018 through 2020.
Settlement and Penalties
Brooge Energy agreed to a settlement with the SEC, acknowledging the violation of multiple federal securities laws, including antifraud, proxy statement, reporting, and books and records provisions. As part of the settlement, the company will pay a penalty of $5 million. Paardenkooper and Saheb also agreed to settle the charges, with each paying $100,000 in civil penalties and accepting permanent bars from serving as officers or directors.
