Problem
An investment house had been acquiring stock from a lightly regulated sub-market of a major international bourse in a natural resources company. The investment house was concerned that assertions about the value of the company’s prospects in Greece – on which most of the company’s value was based - had not been sufficiently corraborated.

Scope
IRM was instructed to obtain from official and unofficial sources in Greece opinions about the plausibility of the claims about the exploration and extraction prospects the company had been developing in Greece.

Solution
In the course of interviews through our Greek sources, IRM discovered that ministry officials both in Athens and in the local administration where the prospects were located were highly sceptical of the company’s claims. Several informal opinions were obtained to suggest that the company had overstated its recoverable reserves several times over and that one newly acquired prospect would not probaby never become operational because it lay in a strategically sensitive area.

Result
The client was able to minimise its exposure to the stock before the share price collapsed to 10% of its peak price. This happened after it became publicly known that the company’s extraction prospects had been greatly overstated by the company founder, who had surreptiously disposed of company assets before the price collapsed.