Wi-Fi Firm Gowex Admits Accounts Are False, Files For Bankruptcy
Spanish Wi-Fi firm Gowex says it made up its accounts for at least four years, meaning public network in Newcastle could be at risk
Spanish Wi-Fi firm Gowex has filed for bankruptcy after its CEO and president admitted its accounts were falsified and that it is unlikely to be able to pay its debts.
According to Gowex, CEO Jenaro García Martin has taken full responsibility for the deceit and only informed the board on Saturday. He has resigned and a replacement will not be appointed.
“The financial accounts of the Company for the last four years, at least, do not show a full and fair view of the Company’s situation,” said the company in a statement.
The news effectively halts the developement of the free Wi-Fi network in Newcastle and Gateshead, for which Gowex (UK) Ltd was contracted to build infrastructure later this year.
Gowex fraud
“The Board, anticipating that the Company might not be in a position to face its ongoing debts when they become due, has agreed to file for a declaration of voluntary insolvency, without prejudice of other measure that it may adopt for the best protection of the Company’s interests, regarding which it will immediately inform the market as soon as it might adopt them.”
Gowex, which provides Wi-Fi networks in 91 cities, including New York, Bordeaux, Madrid, Santiago de Chile, and Dublin, said only last week it achieved revenues of €182.6 million and planned to invest €260 million into the network over the next four years.
However a report from Gotham City Research last week claimed the company was an elobarate charade and that 90 percent of its revenues didn’t exist. The report listed a host of irregularities, including the fact that Gowex doesn’t report usage figures, and alleged that its biggest customer was itself.
It is also claimed that the company’s head of investor relations was Garcia’s wife, who signed off IR reports, and that Garcia himself was a director of Advanced Refractive Technologies, a penny stock fraud whose shares were revoked by the US Securities and Exchange Commission.
Newcastle implications?
The development affects the planned free Wi-Fi network in Newcastle, announced as part of the Go Digital Newcastle scheme. Gowex was named as supplier by Newcastle City Council and Gateshead Council following a “rigorous” selection procedure in May to complement the Broadband Delivery UK (BDUK)-funded rollout of fibre in the city.
“We are naturally concerned and very disappointed at the news that Lets Gowex SA, the associated company of Gowex (UK) Ltd who were procured – in common with many other major cities around the world – to provide public wi fi, is in financial difficulties,” said Newcastle and Gateshead councils in a joint statement.
“The contract Newcastle and Gateshead have with Gowex (UK) Ltd did not rely on any financial investment from either council so there will be no financial loss to the council tax payer. Delivery under the contract with Gowex (UK) Ltd has not started.
“We are waiting for confirmation from Gowex (UK) Ltd before any further decisions are taken to progress this work.
“The contract with Gowex (UK) Ltd is just one part of our ambitious programme of delivering superfast broadband and wi fi in the city. We remain committed to this important programme.”
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