Have you ever had to repay a debt that you didn’t owe? Well, Sim Shagaya, the founder and former Chief Executive Officer (CEO) of e-commerce company, Konga, had to do so – and in the process, faked a heart attack – when a Nigerian bank thought his company was owned by a landlord who had defaulted on the loan he collected from the bank.
The debt issue occurred in 2014 after a misunderstanding involving a Nigerian bank, which he called ‘Starling’ (not real name). The bank had sent the police to shut down one of Konga’s distribution centres, thinking the landlord owned the online marketplace. According to Shagaya, Konga had some small short-term trading liabilities to suppliers but certainly didn’t owe any bank.
The landlord owned the property where the distribution centre was situated but not the online retail business. However, the bank was not convinced that Konga wasn’t the landlord’s. The bank moved to take over the property, causing over 100 warehouse workers to wander around the facility, clueless about what was going on, with Police officers stationed around the property.
[READ MORE: Konga opens new stores in Lagos, Abuja, Uyo, Rivers, Warri, others]
Efforts to prove real owner of Konga
With the uncertainty surrounding the identity of the individual that owned Konga preventing business flow, the burden of proof was on Shagaya to prove ‘Starling’ or recovery officer wrong.
As orders kept pouring in but demands were not met due to the shutdown of the distribution centre, Shogaya, his lawyer and then COO of Konga, Shola Adekoya, had to present incorporation documents to prove Konga had no corporate affiliation with the landlord.
However, despite the submission of incorporation documents, the recovery firm said it still didn’t believe the landlord wasn’t the owner of Konga. Shagaya stated in his tweet that, “The firm informed us – Babajimi, Shola and I – that there was still belief that we did not own the business.” After this, Shagaya had to inform his board about the situation after initially resisting the thought to do so.
Landlord from hell?
While the issue lasted for four days, the landlord was nowhere to be found. He had reportedly switched off his phone, so he couldn’t be reached, and he never reached out during the period either.
“Our landlord switched off his phones and took no calls,” Shagaya disclosed.
How it was resolved
As the issue continued to drag and Shagaya began to consider shutting the Konga website down in order to stop the overwhelming orders they couldn’t fulfil. He called an emergency meeting with his board, and the resolution was to take down the Konga website if the debt issue wasn’t resolved in 48 hours.
He also began to make calls to persons that could be of help as regards the bank and the recovery firm. According to Shagaya, the then Minister for ICT, Omobola Johnson, as well as leaders of the banking community and senior lawyers were among those contacted to help resolve the issue and get the attention of ‘Starling’ Bank’s CEO, who told Shagaya he had never received “so many calls around any one issue” and promised that he would “look into it”.
Despite this, the issue still lingered, and in order not to disappoint customers any longer, the company began to meet demands from the headquarters rather than waiting for the distribution centre which was still under lock.
Finally, a deal was sealed
After another round of calls, an agreement was finally reached with the bank and the recovery firm. Shagaya had to write a cheque for two years of additional rent in favour of the bank. The payment was over N60 million. However, after handing over the bank draft for payment to the recovery firm, Shagaya and Shola were informed that only the bank could order the police to vacate and open its distribution centre.
Shagaya and his team had to head to the bank to meet with the CEO. After waiting for 4 hours without seeing the CEO and having only 1 hour left to shut down the Konga website, Shagaya told his lawyer the only solution left was to fake a heart attack, and the lawyer was to support his ‘Oscar-rated performance’. Immediately Shagaya faked the heart attack, the bank management decided to meet with him.
[READ ALSO: Konga now offering merchants loan at 2.08% interest rates]
What this means
You need to know people. Your contact as a businessperson determines your chances of overcoming certain issues. But apart from your contact list, a business person must be willing to drop his pride and become a drama king or queen to hasten certain processes.
The misunderstanding occurred because the bank had not conducted a proper know your customer before ordering the closure of the property in order to take over it. But because the bank held the key, ‘Starling’ threw caution to the wind.
In 2014, we were going gangbusters. We were growing 20+% month on month. Lots of operational challenges but this one would be special. Then at 630am one day, I got a call from our head of fulfillment. The Nigeria Police has shut down the distribution centre. Details were murky.
— sim shagaya (@SimShagaya) October 27, 2019