Sun. Nov 28th, 2021

The Financial Conduct Authority has filed a lawsuit in the Supreme Court against two former top executives at Globo, the UK mobile technology company that collapsed in administration in 2015 following allegations of accounting fraud.

The British market watchdog filed a lawsuit last week against Costis Papadimitrakopoulos, Globo’s founder and CEO, and Dimitris Gryparis, who was chief financial officer. The case comes six years after the FCA began investigating the company.

Globo is listed on London’s Aim, the UK’s light regulated market for smaller public companies. It raised more than £ 100 million in shares and debt sales, and at their peak the group’s shares were valued at more than £ 300 million.

The company was founded in 1997 and claims to sell software used by more than 300,000 companies to manage employees’ cell phones, but collapsed when questions were raised about its revenue and profits.

Papadimitrakopoulos resigned with Gryparis in October 2015 after notifying the board of directors of “certain matters concerning the falsification of data and the misrepresentation of the company’s financial situation”, Globo told the market that month.

The company also announced at the time that it had made reports to law enforcement authorities in the UK, Greece and Cyprus, and that the FCA had launched an investigation.

The FCA declined to comment.

Globo collapsed after the publication of a report by the New York hedge fund Quintessential Capital Management, which claimed that the company greatly overestimated its revenue and profits by generating fictitious sales invoices from shell companies. [posing as] legal customers ”.

The Financial Times too found that companies that claimed Globo as significant customers on its website included a laptop repair shop in Mumbai that had never heard of it.

When Papadimitrakopoulos was approached for comment for the first time at the time, he denied any breach or problems with the accounts. The next day he sold more than half of his 19 percent stake in Globo.

Papadimitrakopoulos and Gryparis could not be reached for comment.

Gabriel Grego, founder of QCM, applauded the FCA action. “Once again, short activism, coupled with good investigative journalism, has proven a force for good in the markets,” he said.

Globo was audited by Grant Thornton at the time of its collapse and claimed £ 104 million in cash reserves in several foreign subsidiaries. According to the insolvency administrator’s report, the British holding company failed with £ 180,000 in cash in its bank accounts. A year later, only £ 33,000 was recovered, mainly from a VAT refund.

In 2018, the Financial Reporting Board, which regulates auditors, closed its investigation into Grant Thornton over its Globo audits without taking any action.

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