Friday , 18 January 2019
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Gowex goes bankrupt after CEO admits falsifying accounts

Spanish wireless internet services provider Gowex is to file for bankruptcy after its CEO and founder Jenaro Garcia admitted that he had falsified the company’s accounts for at least the past four years. “I made a voluntary confession in court. I want to collaborate with justice. I will face the consequences,” said Garcia on Twitter, having earlier posted “I ask everyone for forgiveness. I am deeply sorry.” In a statement to Spain’s stock market regulator CNMV, the board of Gowex said it had accepted Garcia’s resignation and that in anticipation it would be unlikely to be able to meet debt repayments the board had agreed to file for bankruptcy and was looking at additional measures to protect the company’s interests. On 04 July Gowex said it had hired PricewaterhouseCoopers to prepare a “full disclosure forensic report” in response to the critical research note from US firm Gotham City Research that triggered the company’s collapse. The note posted on Gotham’s website accused Gowex of overstating its sales and operations, saying that its real value was “zero” and that “Gowex’s actual wireless revenues are at most 10 percent of what it reports in its financial statements.” It also said that Gowex appeared to be operating far fewer Wi-Fi hotspots than it claimed.

Although Gowex had initially responded strongly to the Gotham report, saying it was “categorically false”, trading in Gowex shares was suspended on 03 July after they fell by over 60 percent in two days, wiping around EUR 870 million off the company’s value. However, on 03 July the company continued to claim that in 2013 it achieved revenues of EUR 182.6 million, equity of EUR 94.4 million, net cash position of EUR 54.8 million and had accrued EUR 10.5 million in income tax. It also stressed that it currently offers its services in 91 cities, generating 172 direct and 1,200 indirect jobs and had plans to invest EUR 260 million by the end of 2018.

Gowex, frequently hailed as a Spanish high-tech success story, is one of a number of Spanish techn companies that have raised funds by listing on Madrid’s MAB alternative stock exchange. In November last year it was named one of Europe’s ‘Best New Listed Companies’ by the Federation of European Stock Exchanges and the European Commission. At the end of June the company announced an agreement to become a global strategic partner for Cisco Systems Inc. and said it planned to bring a free Wi-Fi connection to 600 cities by 2018.

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