Namali’s financial information indicated that they were perhaps not complying with all laws. It seems taxes were not being fully paid. As I wrote in the previous article, I explained to Nurgazy why we could not invest in such businesses. He understood and we found a simple one.

If we were to invest, Namali’s operations will be transferred to a newly registered company. Namali would cease to exist. The new company would operate in compliance with all laws. Nurgazy and Mr. A said it is what they wanted to do. At least that is what they indicated.

With that issue sorted, I started the due diligence process. I spent about a week in their office, going through documents and making copies. They kept good records. I made copies of various documents including loan agreements, loan repayments receipts, sales receipts, purchase of equipment and payment to employees and agents. I still have those documents, lying next to me as I write this.

While Namali maintained good records, they did not prepare the ‘financial statements’, balance sheet, profit and loss statement and cashflow statement. I guess they did not need it, but we needed it. So I asked an accountant to use Namali’s numbers to prepare financial statements. Here’s a summary:

The due diligence process was fine. After a lot of discussions and negotiations, we made an offer to buy 33% of the new business. Since this was our first investment in Kyrgyzstan, we wanted to make a relatively small investment, as a test. It would give us an opportunity to learn more how local entrepreneurs do business. And there certainly was a lot to be learnt.

The offer was accepted. We selected Trilight as the name selected for the new company. “Tri” stood for the three shareholders. We started the registration process, celebrated and looked forward to a bright future. Then suddenly an unexpected issue came up.

Note: A criminal case is currently open. These are two most recent letters I received from the prosecutor.

уведомление

Opening of Criminal Case March 2018

Next article: The “Break-Up”

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