• Spain's news in English

Broke Wi-Fi provider admits to cooking books

AFP · 7 Jul 2014, 09:45

Published: 07 Jul 2014 09:45 GMT+02:00

Facebook Twitter Google+ reddit

Gowex, which offers wifi services in world capitals including Paris and New York, made the devastating admission after days of protesting that a damaging US report on its operations was incorrect and defamatory.

Gowex president Jenaro Garcia Martin informed his board the previous day that, in fact, he had faked the company's results, the firm said in a statement released by Madrid's Alternative Equity Market.

"Garcia Martin, chief executive and president, said before several board members that the company accounts for at least the last four years do not reflect the true picture, attributing this falsehood to himself," Gowex said.

Board members revoked the chief executive's powers and accepted his resignation, it said.

"The board, confronted by the expectation that the company would not be able to cope with its maturing current debt payments, agreed to file a voluntary request for bankruptcy."

Gowex is expected to give a detailed response on Monday to allegations about its operations, which had sent its shares plunging 60.2 percent to €7.92 in two days before they were suspended from trade by Madrid's junior stock market, the Alternative Equity Market.

US firm Gotham City Research sparked the freefall Tuesday by publishing a highly critical report, which had previously been described by Gowex as "unfounded and defamatory".

Gotham City Research called Gowex a "charade" and said its revenues were far lower than the company had reported.

Gotham City said its target price for Gowex shares was zero.

In its 93-page report, Gotham City said Gowex's actual revenues were "at most" 10 percent of those reported.

About 90 percent of Gowex's telecommunications revenues came from undisclosed related parties, Gotham City said.

Gowex's audit fee was only €40,000, far less than would be expected for a company generating revenues of more than 180 million euros, the firm said.

"We have evidence Gowex's largest customer was really itself," the report said.

After Gowex issued the statement saying that Garcia Martin had faked the firm's results, he announced on Twitter that he had made a "voluntary confession in court".

"I am willing to face the consequences and cooperate with justice," the former wealth management manager added.

The posting followed an earlier Twitter message in which he said he was "wholeheartedly sorry" and apologised to "everyone".

The European professional investors association ASINVER filed a suit Friday against Gowex with the Spanish public prosecutor alleging false accounting.

Story continues below…

"Given the lack of response by the company for requests for more information, we had no choice but to ask the public prosecutor to look into the issue because it is very likely that a crime took place," Javier Flores of the Spanish branch of ASINVER told public television.

Spanish stock market regulators are also likely to face scrutiny over their supervision of the firm's activities.

On Wednesday, the Spanish market regulator, the CNMV, said it had asked the US Securities and Exchange Commission and Britain's Financial Conduct Authority "for information about Gotham City Research LLC and its administrators".

The CNMV said it did so "in order to analyse whether the document published by that entity on Let's Gowex could constitute a possible abuse of the market".

On the same day, Gowex had issued a statement confirming its 2013 revenues of €182.6 million ($249 million) and stressing that the figures had been audited.

"We are a high growth company that is financially stable and very solid and we are being attacked," Garcia Martin said that day in an interview with Spanish public television.

For more news from Spain, join us on Facebook and Twitter.

Facebook Twitter Google+ reddit

Your comments about this article

Today's headlines
Southern Spain will become a desert with global warming
Photo: Steven Stralton / Flickr

Southern Spain will become a desert if global warning continues, scientists have warned.

Eight Spanish films to truely terrify you this Halloween
Photo: Corie Howell / Flickr Creative Commons.

Looking for something to give you goosebumps this Halloween? The Local looks at eight Spanish films that are sure to have you cowering beneath the covers.

Spain's Socialists refuse to go easy on Rajoy once in power
Photo: AFP

Spain's Socialists may have reluctantly decided to let Mariano Rajoy govern again but they will not go easy on the acting conservative premier once he re-takes power, they warned on Thursday.

Spain's Podemos sees golden opportunity in Socialist woes
Pablo Iglesias is ready to step up in opposition. Photo: AFP

As Spain's conservatives prepare to re-take power after 10 months of political limbo, anti-austerity party Podemos has set its sights on replacing the divided Socialists as the main opposition force.

Wildlife ranger accused over decapitated bison in Valencia
The headless corpse of Sauro was found last month. Photo: Carlos Alamo / Reserva de Valdeserrillas

The case of the beheaded bison at a wildlife reserve in Valencia just got a whole lot weirder.

Spain jobless drops below 20% for first time in six years
The unemployed queuing up outside a Madrid job centre. Photo: AFP

Spain's unemployment fell below 20 percent for the first time in six years, official figures showed on Thursday.

'Saints not ghouls' insists Spanish church for Halloween
Suggested outfits from the Bishopric of Cadiz and Ceuta. Photo: Shower of Roses

Spanish bishops are urging good Christian children to forgo zombie, ghost and devil outfits and instead dress up as "saints, virgins and apostles".

Tough road ahead, Spain PM warns before return to power
Rajoy will try and form a government this week. Photo: AFP

Spain's acting Prime Minister Mariano Rajoy warned on Wednesday of a tough road ahead as he prepares to take power again at the head of a minority government with little support.

Russia withdraws request to refuel warships in Ceuta
The aircraft carrier Admiral Kuznetsov was due to dock in Ceuta

Russia has withdrawn a request for its aircraft carrier group to be refuelled at the Spanish port of Ceuta, authorities confirmed.

Bulls replace guard dogs at scrap yard in Valencia
Two bulls will be patrolling the scrap yard in eastern Spain. Archive photo: AFP

Guard dogs were not proving enough of a deterrent to thieves at a car breakers yard in eastern Spain so the owner has brought in a pair of fighting bulls.

Analysis & Opinion
Out of the dark: Five years on from Eta ceasefire
Sponsored Article
Last chance to vote absentee in the US elections
Spanish 'La Mafia' restaurants banned after Italian complaint
Spain's top court overturns bullfighting ban in Catalonia
Hunt launched for ten most wanted Brit fugitives hiding out in Spain
Napflix: Spaniards launch very boring TV channel for siestas
Madrid parish church faces fine over 'too noisy' bells
Celebrate expat life at Madrid’s THRIVE convention
Fury after kids told to bring their own loo roll to school
Disney announces plans for Don Quixote action movie
Activist tells 8-yr-old matador wannabe with cancer 'just die'
King to make last minute push to avoid third vote in Spain
Amazing photos of Catalonia's 'human tower' contest
What's on in Spain: October 2016
'No way, Jose! You'll never get your hands on our Rock'
Recipe: How to make a classic Spanish tortilla de patatas
Chorizo in paella? Go back to cooking school Jamie Oliver
Spain in eye of a perfect storm after 10 months without govt
Thousands share clips of life for 'Spain in a Day' film
Ten incredible Spain locations for Game of Thrones season 7
Analysis & Opinion
Why moving to Spain could be the best decision of your life
Seven reasons why autumn is the very best season in Spain
Spanish study finds four types of personality. Which are you?
New search underway for civil war grave of poet Lorca
jobs available