WiGroup hit by crisis over ‘financial mismanagement’

Just six months after announcing an investment by Richard Branson’s Virgin Group and retail solutions provider Smollan, Cape Town-based mobile loyalty software company wiGroup has been hit by what it’s terming “financial mismanagement”, which has led to forensic auditors being brought in.

The company’s chief marketing officer, Nic Bednall, confirmed on Tuesday that the company has been forced to restructure its operations and reduce its staff complement as a result. He declined to say how many employees have been affected.

WiGroup has appointed PwC to conduct the forensic audit. It is expected to complete its report soon, after which it has said it will be able to share more details about what happened.

WiGroup’s key clients include retailers, banks, quick-service chains, insurance and telecommunications companies.

An anonymous source on Tuesday tipped TechCentral off about the developments.

The news comes at a bad time for the company, which is gearing up to expand into new markets around the world on the back of the Virgin and Smollan investments. The two companies announced they would invest in wiGroup earlier this year, joining Investec Asset Management and Crossfin Technology Holdings as co-shareholders.

WiGroup founder and CEO Bevan Ducasse said in a statement at the time that the company would use the investments to expand more quickly in Europe, Australasia and emerging markets. It had already recently established a presence in Amsterdam, London and Paris, and was looking to the Middle East and Australia as key growth markets over the short to medium term. (Listen to a TechCentral podcast interview with Ducasse on the Virgin and Smollan investments.)

Internal finance department

Bednall said on Tuesday in written response to questions from TechCentral that until PwC has completed the forensic audit, it is “difficult to share facts on what happened”.

“While the news about mismanagement and the restructure is not good, it is important to note the impact is not operational (and does not affect) the financial sustainability of the business — the intrinsic business remains healthy and with good growth rates,” he said. “Bevan is in the driving seat and we have quantified demand for our software across three continents.”

Bednall said wiGroup discovered “some internal financial mismanagement, by the internal finance department”.

“This has no effect on the daily operations or the deployments of technology on behalf of clients. As a result of the internal financial mismanagement, a restructure process was implemented. Roles and positions which are critical operationally and from a technology point of view have been prioritised. Other roles within the business may be changed or collapsed and there have been some job losses.”

He added that the shareholders, board of directors and senior executives of wiGroup are “committed to a thorough and full investigation as well as the corrective action which is deemed necessary for the ongoing, professional management of the company”.

WiGroup was founded in 2007. It expanded from its South African base to markets including Namibia, Nigeria, Mauritius and Ghana. It has 75 000 integrated till points accepting mobile payments, loyalty and rewards transactions.  — © 2018 NewsCentral Media