Spanish WiFi provider Gowex to file for bankruptcy

Spanish wireless networks provider Gowex will file for bankruptcy and said its chief executive officer resigned after admitting he presented fictitious accounts for at least the past four years.

The board accepted CEO and founder Jenaro Garcia’s resignation after he took full responsibility for fake accounts, Madrid-based Gowex said yesterday.

The shares have dropped 60 per cent since July 1, when short-seller Gotham City Research said the start-up was worthless because it inflated revenue.

Gowex’s fast growth, with a market value that more than doubled between going public in 2010 and the release of Gotham’s report, happened in a country that has failed to foster successful technology startups with global reach.

The company was one of the best performers in Madrid’s MAB stock exchange, an alternative funding source for small companies promoted by the Spanish government.

“I made a voluntary confession in court,” according to a posting on 46-year-old Garcia’s Twitter page yesterday.

“I want to collaborate with justice. I will face the consequences.”

The message followed an earlier note conveying an apology “to everybody. I am truly sorry.”

Citing a former company director it didn’t identify, El Confidencial newspaper reported today Gowex has falsified accounts for at least eight years.

Garcia founded Gowex in 1999, at a time when investors were turning to Spanish real estate as the dot-coms were going bust.

A former futures trader trainee and asset manager, Garcia persuaded his wife to sell their home and use the €150,000 from the sale to fund the Internet startup.

Gowex, which also provides support services for mobile- phone carriers, said July 1 that Gotham’s report was “false.”

On July 4 it said it would hire PricewaterhouseCoopers to review its accounts.

The stock, which has been halted from trading since July 3, will remain suspended today. It has a market value of €573 million.

A press officer at the national police said they had no knowledge of any action against Gowex.

Bloomberg