Fri., July 11, 2014
Spanish wireless networks provider Gowex, at the heart of an accounting scandal that has hit Spain's reputation among investors, started insolvency proceedings on Thursday, giving it four months to reach a deal with creditors or face bankruptcy. Spain's High Court also said it had charged the company's founder and former chief executive Jenaro Garcia Martin with three financial crimes: false accounting, distortion of economic and financial information, and insider trading. He was called to testify next Monday, when he is also due to hand over his computer and his phone. Gowex stunned investors and its workers on Sunday when it said Garcia Martin had misrepresented the firm's accounts for at least the last four years. Until recently, the company had been hailed as an example of Spain's ability to rebound from the worst economic crisis in decades. Its stock value surged 22-fold in two years as it expanded its wi-fi services globally. Garcia Martin said on Sunday on his twitter account he had made a confession to a court and was ready to collaborate with the justice authorities. Reuters journalists saw him outside his home in Madrid on Thursday. He declined to comment on the case. In a document registered with the judge to initiate the insolvency proceedings, Francisco Martinex Marugan, a Gowex board member, and the company's lawyer Ricardo Urbina, said the situation at the firm was one of "misgovernment, disarray and absolute anarchy." A first round of talks with creditors and workers had started, they said in the document obtained by Reuters. Under Spanish law, a company filing for such proceedings has a maximum of four months to reach a deal with creditors or enter into administration - a formal bankruptcy process in which a judge takes over the company and appoints who should run it, often leading to it being wound up or radically restructured.