Spanish Firm to Bankruptcy amid Doctored Financials Scandal

Financials, while perhaps the most important tool for a credit manager determining risk of a customer, should never be treated as the ONLY tool on which to make a judgment. This week’s bankruptcy of Spain-based technology firm Gowex SA strongly reiterates this long-held point.

Gowex, which specialized in providing Internet hotspots internationally, filed for bankruptcy in the wake of its chairman’s admission that its financials, which had been impressive, were falsified for roughly four years. The Gowex scandal was unearthed when a rouge group of high-level investors, an anonymous outfit that goes by Gotham City Research LLC, outed the Spanish tech firm, challenging its financials and abilities to generate the profits it claimed. Gotham City, while controversial, was reading between the lines and alleged Gowex was taking some large, not to mention illegal, leaps in its reporting. Turns out where there was smoke, there was fire.

As was noted during several educational sessions at this year’s 118th Credit Congress that strayed into the emerging buzz topic on the importance of financials, there typically is nothing more helpful to a credit manager. But there have been numerous examples of inaccurate financials in various international markets over the years, ones where government watchdogs have either been somewhat asleep at the wheel or somewhat willing to look the other way. US businesses haven’t always been clean either…remember: Enron’s fraudulent accounting-based collapse helped trigger America’s biggest recession since the Great Depression. As such, relaying on a number of tools to improve credit-granting decisions is remains a key, if not basic, principal that should not be forgotten.

- Brian Shappell, CBA, CICP, NACM staff writer
See more in the extended version of this story in this week’s eNews, available late Thursday afternoon via e-mail and the NACM website (

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