Since the publication of Fraser Perring‘s Viceroy Report, the earth has been shaking under the MDAX-listed German company GRENKE AG. The report accuses the public company and its founder Wolfgang Grenke of running a malicious business model along with balance sheet manipulation and money laundering. The core of the accusations is actually rather identical to the accusations that Perring had also rightfully made against Wirecard. Perring is first and foremost a professional short seller and uses its analyses as a means to an end. And he does not deny that at all. In Vienna, the smoking gun in the GRENKE Case could have been discovered with CTP GmbH.
A good week for shorties
On September 14 or 15, 2020, the Grenke Report was published with the provocative title “Grenke – For Your Fraud Financing Needs“.Within two days the Grenke share price fell from around €54 to €30 on September 17th. That is a loss of more than 40 percent. This was followed by Wolfgang Grenke’s public statement on the evening of September 17, 2020. Another statement regarding the Vienna CTP Handels- und Beteiligungs GmbH (“CTP GmbH” or “CTP“) was released on September 18, 2020.
Since then, the share price has stabilized again and by the close of trading on Friday had risen by around 13% to almost €35. For Shortseller it was probably a fantastic three days. And it was certainly only the beginning.
The Viennese franchise incubator
Fraser Perring follows up with Viceroy and has written an open letter to the German regulator BaFin (“Dear BaFin“). In it, he demanded that the GRENKE supervisory board should “reject their knowledge of Wolfgang’s invested interest in CTP, and remove him from the board or resign.”
It all boils down to the Vienna CTP, it seems. In fact, the Viennese CTP GmbH might turn out to be the smoking gun in the Grenke crime novel. The company was acquired in January 2020 by the Liechtenstein Samoca AG which is owned by Wolfgang Grenke and managed together with his partners Thomas Konprecht and Simona Stingaciu.
In his statement of 17 September 2020, Wolfgang Grenke claims that neither he nor GRENKE AG had control over CTP GmbH before it was acquired by Samoca AG in January 2020. However, according to our research, this is not correct (read this FinTelegram report).
CTP is a key element in the franchise system of the GRENKE AG. It acts as a “private equity investor” when establishing new franchise companies that are regularly founded by Grenke employees. These relationships between franchise companies and GRENKE AG and its founder and Wolfgang Grenke makes them related companies in the legal sense. Typically, the GRENKE AG receives the right to take over the respective franchise company after 4, 5, or 6 years, i.e. CTP GmbH then receives money from GRENKE AG. The 2019 balance sheet of CTP GmbH shows financial assets of €5.1 million and €2.5 million bank balances. The Viceroy Report provided a nice picture on the Grenke scheme around CTP (see below):
A key accusation of the Viceroy Report is that these affiliated and thus related companies are not properly disclosed to shareholders and investors. The takeover of a franchise company founded by CTP and GRENKE employees would be in its very essence business between GRENKE AG on the on hand and Wolfgang Grenke and his group of companies on the other. In this respect, balance sheet manipulations would also be expected, and in no way would this business be in compliance with IFRS rules, so the Viceroy Report.
From the commercial register documents in Vienna, it can be concluded that since its inception CTP GmbH is and was under the control of Wolfgang Grenke and/or companies and persons close to him.
- The former KRENKE AG board member and shareholder Thomas Konprecht was the managing director between February 2013 and December 2019.
- The long-time trusted Joanna Bielicka from Vienna has been working as an authorized signatory since 2008.
- CTP GmbH was established by the Liechtenstein-registered Soft-Line Aktiengesellschaft, another well-known entity in the GRENKE environment and a GRENKE AG shareholder
So, yes, Wolfgang Grenke‘s public answer to the Viceroy Report is false as he indeed had control over CTP GmbH in Vienna.
A flaw as a strengths
Wolfgang Grenke, however, does not see a flaw in the fact that Grenke employees, with the support of CTP GmbH, set up their own franchisee business, but on the contrary one of the great strategic strengths of the Grenke scheme.
The argument of Wolfgang Grenke may be considered correct but it is a fact that a public-listed company has to disclose this transparently. The situation around GRENKE AG, Wolfgang Grenke with his people, and the CTP GmbH constitutes indeed a massive collision of interests and could potentially serve for balance sheet manipulation and shifting of money as the Viceroy Report claims. Whether this is really the case, the Grenke auditor KPMG shall now determine in a special audit. It would perhaps be better if, as in the Wirecard case, this special audit was not carried out by the company’s current auditor, but by someone else. How about EY?