Europe’s ‘best Wi-Fi provider’ declares bankruptcy as accounts falsified

||

A company that was named as one of Europe’s ‘Best New Listed Companies’ has filed for bankruptcy and admitted its founder and boss has been falsifying accounts. With the fraudulent activity taking place since at least 2010, it highlights the importance of accurate accounting services.

Wi-Fi provider Let’s Gowex was one of the leading lights of the Madrid stock market scene. It has now been forced to call in administrators after the chief executive of the firm, Jenaro García Martín, admitted to the fraud on Twitter, saying:

“I made a voluntary confession in court. I want to collaborate with justice. I will face the consequences.”

The announcement came following allegations by a U.S.-based short seller, Gotham City Research. In a dossier posted by the firm last week, it accused Gowex of accounting failures.

The episode, which comes on the back of a similar issue at a Spanish frozen fish company, highlights only too well the need to manage accounts accurately. It also underlines the importance of managing compliance obligations.

At Gowex, the firm issued a statement saying that staff were in a complete state of shock, before going on to say that legal action against Mr. Garcia-Martin was being considered. The firm also said that it was hoping “support and prompt action by the authorities”.

The company has already started the process to forensically audit its accounts. That action was taken on Monday, after the note from Gotham was published, likely prompting the firm’s founder to admit his actions.

Gowex’s collapse comes just months after it was awarded its best company status in November. Awarded by Europe’s other stock markets and the European Commission, the failure looks set to surprise and embarrass many.

It has also dealt the Spanish economy another heavy blow, with the nation’s stock market seeing investor confidence fall away.

Madrid’s alternative stock exchange, MAB, which Gowex listed on, saw share prices plummet. Across the market, five company stocks fell by over 10%., wiping 20% off some stocks and, according the the Spanish newspaper El Pais, resulting in four companies wishing to leave MAB.

The main exchange also witnessed a fall as a result of the failure.

Shares in Gowex were suspended from trading after seeing 60% wiped off their value in the two days after the news broke, seeing the company reduced in value by a total of €870m.