Following the loss of millions of Dollars as annual revenue by multinational logistics service provider, Panalpina due to its pulling out of Nigeria’s freight forwarding operations, the firm has been dragged to a court in the United States by one of the company’s share holders, Deccan Value Advisors seeking for compensation.
Deccan Value Advisors which owns a 5 per cent stake in Panalpina, is alleged to be claiming that Panalpina’s share price as artificially inflated by the company’s ongoing involvement in the Nigerian market at the time Deccan bought its shareholding in 2006.
Although the company is alleged to be downplaying the claim for compensation by Deccan Value Advisors, the Swiss forwarder confirmed it had received a complaint via a court in Laredo. Texas.
Panalpina said it disputed all of the compensation demands listed in the filing, in which Deccan claimed to have suffered stock market losses linked to the Nigerian withdrawal.
Panalpina said it ‘as unable to give full details of the complaint, legal sources close to Panalpina believe the claim has no validity.
A source at Panalpina said the group had always made it clear to investors that forwarding activities in the oil and gas industry could be subject to disruption or withdrawal in the event of local political events or changes in energy prices.
He said Panalpina had informed investors and analysts as Soon as it became aware in 2007 that its activities in Nigeria were being investigated by the US Department of Justice – and at each stage afterwards.
Panalpina eventually concluded last May that it was impossible for an international freight forwarding company to perform customs clearances in Nigeria with sufficient Speed to meet its customers’ needs without breaching the US Foreign corrupt Practices Act, and pulled out of domestic operations last October.
One source said there did not appear to have been any significant share price change correlated with the Nigeria withdrawal.
Panalpina estimated that the overall effect of the Nigeria situation on the company‘s 2008 balance sheet was about US$92m, including costs associated with changes to its global network, the effect on customer relations and costs associated with ongoing investigations.