16 Sep 2020
The short-seller that warned about the Wirecard scandal has targeted a second German listed business, this time claiming more than 1,400 British small business owners have fallen prey to an alleged leasing scam.
Viceroy Research has published a report that claims Grenke, a finance group that lends to small and medium-sized businesses, is involved in “swindling” companies, “laundering money for criminals” and accounting fraud.
Last night Grenke was preparing a statement in response to the report. It told German media that it rejected the allegations, adding that the group had “not violated any accounting regulations”. Its share price fell by as much as 29 per cent yesterday.
BaFin, Germany’s financial watchdog, said that it was looking into possible market manipulation by Grenke or third parties, including short-sellers. Possible insider trading before the report’s publication was also under review, it said.
Established in 1978, Grenke provides leasing, banking and invoice finance services to small and medium-sized companies, often via intermediaries. It says it is active in 32 countries, including Britain, and employs 1,700 people.
Viceroy claimed that Grenke had expanded through the “purchase of dozens of undisclosed related-party franchises” in a scheme designed to “either hide fake cash or siphon off millions of euros to undisclosed related parties, or both”.
It said that Grenke’s banking division was a conduit for “the proceeds of crime and money laundering” and that its leasing model “facilitates the defrauding” of small businesses and charities.
Small companies in Britain claim to have been mis-sold leasing contracts by Grenke’s resellers.
Viceroy claimed that Grenke had “knowingly” allowed resellers to facilitate an alleged scam that involves small businesses being leased equipment such as printers and televisions.
For example, Viewble Media UK, a now-bust reseller, is accused of leasing screens to companies for £299 a month for three years, with a total sum payable of almost £11,000. Businesses say they were told that as well as benefiting from advertising, the deal was cost-neutral as a second associated company, Shoppers Network UK, would rent the screen for advertising purposes and would pay the shop owner £299 a month. Business owners say the payments stopped soon after the screen was installed, leaving them liable for the full cost of the contract, which ultimately was owned by Grenke.
By James Hurley, The Times, 16 September 2020
Read more at The Times
RiskScreen: Eliminating Financial Crime with Smart Technology
Count this content towards your CPD minutes, by signing up to our CPD WalletFREE CPD Wallet