Codere reviews ‘corporate structure’ following damaging LatAm investigation

Bolsa Madrid gambling group Codere SA has sanctioned a review of its ‘operating structure, following an independent investigation of auditing discrepancies found within its LatAm subsidiaries.

This October, an embattled Codere governance was forced to declare to Spain’s CNMV markets authority that year-to-date accounts had ‘overstated earnings’ by €13-20 million attached to the firm’s LatAm business unit.

Facing investor backlash, Codere governance would appoint Mexican law firm Kroy Abogados and South American management consultancy Alvarez-&-Marsal to lead its investigation of LatAm discrepancies.

A re-audit of LatAm accounts would see Codere reduce its YTD EBITDA by €16.5 million, with the investigation revealing that €14 million of ‘inconsistent earnings’ related to Codere’s Mexican business, with the remaining sum split between the firm’s Colombia and Panama units.

In their joint report, Kroy and Alvarez-&-Marsal have revealed that the ‘inconsistencies were intentional, coordinated by a small number of people in Mexico’.

The independent advisors detail that they can point to “accurate data on modified figures” related to income and costs, and the abuse of operating and accounting systems, “without the knowledge” of Codere’s Madrid HQ.

Codere said it has taken immediate disciplinary action against ‘those responsible for such actions’ as the company undertakes a wholesale review of its internal reporting structures, executive leadership, systems and internal controls.

Concluding the report, Kroy and Alvarez & Marsal underlined that they had ‘not detected signs of inappropriate uses or outflows of the funds’.

Last week, Codere published its Q3 2019 trading statement. It recorded revenue declines across all core territories, as the Bolsa Madrid group booked-in period operating losses of €30 million.

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