Case Overview
A private debt fund and institutional commercial lender was finalizing terms for a ₦2.5B secured credit facility to finance an infrastructure contractor's expansion.
As security, the borrowing consortium pledged a diversified collateral portfolio comprising commercial real estate in high-density corridors, heavy industrial plant machinery, and corporate guarantees. Professional valuation reports commissioned by the borrower indicated a collateral coverage ratio exceeding 180%.
Prior to loan drawdown, the lender's risk committee engaged JOCRA to perform an independent, specialized collateral verification investigation to confirm asset existence, verify unencumbered title, validate physical possession, and test the legal authority of signatories to pledge the assets.
"The purpose of investigative due diligence is not simply to verify whether a business or asset exists. It is to help clients understand what may sit behind representations, records, and commercial promises."
Client Concerns & Threat Exposure
The client required independent factual clarity on critical operational and commercial vulnerabilities before committing capital or undertaking legal action:
- Whether pledged properties were free from prior registered mortgages, debentures, or statutory liens.
- Whether the borrowing company held valid, perfected legal title or mere equitable interests.
- Whether pledged industrial equipment physically existed, was operational, and matched submitted serial numbers.
- Whether corporate signatories possessed valid board and shareholder authority to pledge corporate assets.
- Whether valuation reports reflected reality or grossly inflated asset worth to secure excess leverage.
Investigative Objectives
Physical Asset Identification & Inspection
Locate and physically inspect every pledged commercial property and heavy machinery asset.
Title & Ownership Verification
Conduct thorough searches at relevant land registries to establish true registered ownership and historical root of title.
Encumbrance & Lien Search
Examine registry charge sheets, court dockets, and bank collateral registries for prior undisclosed security interests.
Valuation Representation Review
Evaluate valuation assumptions against local market comparables and independent engineering assessments.
Corporate Authority & Resolution Audit
Verify corporate articles, board resolutions, and shareholder consent documents authorizing the security pledge.
JOCRA's Methodological Approach
The investigation was organized around five specialized workstreams: Physical Asset Existence Verification, Title & Ownership Research, Encumbrance & Prior Charge Searches, Valuation Representation Audit, and Corporate Pledging Authority Verification.
This multi-layered approach distinguished between asset existence, registered legal ownership, unreleased prior mortgages, and true recoverable market value.
Key Investigative Findings
Undisclosed Prior Bank Mortgages
Land registry searches revealed that two prime commercial properties were already subject to registered, unreleased first legal mortgages to commercial banks.
Third-Party Asset Pledging
One of the key properties presented was registered to an unrelated third party who had issued no valid power of attorney or corporate consent to pledge the land.
Simulated Machinery Inventory
Physical inspection of industrial equipment revealed duplicated serial number plates attached to obsolete, non-functioning machinery.
300% Valuation Inflation
Independent market analysis demonstrated that submitted valuation reports had applied unrealistic commercial yields, overstating collateral worth by over 300%.
Evidence & Verification Register
Every finding in JOCRA dossiers is cross-referenced against authentic source documentation and categorized according to strict evidentiary standards:
| Ref Code | Material Examined | Investigative Purpose | Status |
|---|---|---|---|
| TERM-01 | Borrower's collateral schedule, facility term sheet, and valuation reports | Document initial representations and pledged asset specifications | Verified |
| TITLE-02 | Certified true copies of land registry searches and deeds of mortgage | Prove existence of prior unreleased first legal charges | Verified |
| CAC-03 | Corporate charge registers and board authorization filings | Expose defect in corporate legal authority to create encumbrance | Verified |
| INSP-04 | Physical inspection photographic registers and equipment serial audits | Document non-existence, obsolescence, and tampered serial tags | Verified |
| MKT-05 | Independent local real estate transaction comparables and land cadastre data | Demonstrate gross asset valuation inflation in submitted reports | Corroborated |
Outcome & Strategic Recommendations
The factual discoveries delivered actionable intelligence enabling the client to mitigate material risk, avoid catastrophic capital allocation, and pursue appropriate legal remedies.
Discontinue Facility Disbursement
Immediately halt the proposed ₦2.5B credit facility disbursement pending complete resolution of collateral defects.
Demand Replacement of Compromised Assets
If loan structuring proceeds, require substitute collateral consisting of verified, unencumbered liquid securities or first-tier bank guarantees.
Direct Title Search Mandate
Mandate that future loan facilities require independent, lender-commissioned registry searches rather than borrower-provided copies.
Valuer Review & Blacklisting
Report the grossly inflated valuation report to professional valuation oversight bodies and remove the firm from the approved panel.