A short-selling firm that has published damaging reports on multiple ASX-listed companies and was an early critic of collapsed German fintech Wirecard claims Australian small businesses may be victims of fraud by its latest target.
In a 64-page report sent to The Sydney Morning Herald and The Age, Viceroy Research claims the €2.56 billion ($4.17 billion) valued, Frankfurt-listed Grenke is « uninvestable » and has engaged in « blatant accounting fraud ».
Grenke is a German-based asset leasing company with operating divisions and subsidiaries across the globe. Its main activity is offering finance leases to businesses but it also operates a banking subsidiary.
Viceroy has previously exposed ASX-listed sandalwood grower Quintis and graphite miner Syrah, as well as South African conglomerate Steinhoff and German fintech Wirecard. But the firm has also been criticised, including by South Africa’s treasury, for ambushing companies.
« Viceroy believes Grenke’s stock is uninvestable due to blatant accounting fraud, including dozens of undisclosed related party transactions, and the complete lack of internal controls right down to individual due diligence on customers, » the report states.
Grenke was a financier for (Australian) television advertising company Viewble Media which trapped thousands of small businesses around the country in an alleged scam.
Viewble’s customers paid $430 a month to a finance company under three-year contracts with a total cost of up to $15,500 for a television with the potential to earn money from display advertising from neighbouring businesses. However, the advertising never eventuated leaving the businesses paying a high price for basic equipment. Viceroy alleges Grenke uses the same model for financing printers and photocopiers and that Viewble was one of several ponzi schemes enabled by its lease financing.
« Advertising revenues inevitably never came through and customers were left holding the bag, » the report states. « Grenke’s actions suggest it was party to a larger conspiracy to defraud, as it knocked back complaints, denied knowledge of the existence of the scheme (despite it being written into its contracts), and continued to allow these scammers to write new contracts to the tune of hundreds of millions of dollars. »
Viewble collapsed into liquidation last year leaving more than 1100 Australian small businesses out of pocket.
Grenke’s Australian division recorded revenue of €1.4 million and €17.9 million in 2018, according to its annual report
Viceroy alleges Grenke has financed dozens of fraudulent schemes across the globe since its inception. Analyst Gabriel Bernarde said the firm had spent many months speaking with victims of frauds and class action groups which have been set up in their wake.
« Given the vast number and enormous size of these reseller frauds, and Grenke’s association with every one globally, it was hard to come to the conclusion that they were somehow innocent, » he said.
Mr Bernarde said in Australia regulators have been focused on the booming buy now, pay later sector, but there were « massive deficits » in oversights of the leasing sector.
The Australian Financial Complaints Authority (AFCA) launched an investigation into complaints about Viewble and Grenke. However, the authority’s powers are limited as Grenke is not an AFCA member and it has not provided any further update on its investigation since May 2019.
AFCA declined to comment. Grenke was contacted for comment. Viceroy said on Twitter this week it had given regulators advance warning of its next target « weeks before » it established a short position in the stock.
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Cara is the small business editor for The Age and The Sydney Morning Herald based in Melbourne
Grenkeleasing, GRENKE AG, Finance
Actu monde – GB – Claims Australian firms impacted by ‘rampant fraud’ at German leasing giant Grenke