Spanish wireless networks provider Gowex is filing for bankruptcy and its CEO resigns after a dramatic end to ongoing investigations into the company's accounting practices. The CEO finally admitted falsifying accounts for four years. Melanie Ralph reports.
Gowex was once a shooting star in Spain's recovery. The wireless networks provider saw its market value soar 22-fold in just 2 years. But it's now filed for bankruptcy after its CEO admitted cooking the books for the past four years, then resigned. Chris Hughes is from Reuters Breakingviews. SOUNDBITE: Chris Hughes, Editor, Reuters Breakingviews, saying (English): "This was held up by many as the poster child for Spanish corporate renewal if you like, so for it to actually have emerged to have false accounts, to say its filing for bankruptcy, you know could have quite serious knock-on effects. The departure of the wi-fi provider's founder and CEO was triggered by a report published by Gotham City Research, alleging Gowex was mispresenting its accounts. That report saw its shares slide 60% in two days before trading was suspended. Jenaro Garcia Martin initially denied the allegations and said they'd take legal action against Gotham City Research. Gowex is one of a crop of Spanish technology firms which raised funds by listing on the country's alternative stock market, the MAB. Some analysts consider MAB to be less transparent than the benchmark Ibex. The bourse watchdog will now investigate potential market abuse. SOUNDBITE: Chris Hughes, Editor, Reuters Breakingviews, saying (English): "The big concern at the moment across the euro zone is whether smaller companies, more risky companies getting access to both bank and equity finance. So even though you have this mad dash for euro zone government debt now, for the more risky parts of the economy to have questions raised about whether you really want to provide them with finance comes at a very bad time." Spain's seen other high-profile bankruptcies in the past few years, including fishing company Pescanova. Gowex's troubles are a stark reminder there could be many more to come on the road to recovery,