Home news Telit boss quits amid fraud allegations

Telit boss quits amid fraud allegations


Since it was founded in 1995, the Alternative Investment Market (AIM) has been a home for some of Britain’s fastest-growing and most exciting companies, such as the online fashion retailer Asos.

Because it is more lightly-regulated than the Main Market, though, AIM has also had its fair share of corporate mishaps.
One of the latter, which has kept market-watchers richly entertained during the last week, is Telit Communications.
Floated on AIM in 2005, Telit is a tech company that describes itself as “global enabler of the Internet of Things”, the concept of connecting devices, appliances and buildings over the internet and allowing them to talk to each other.
Amid excitement at its prospects – Telit’s customers include Honda, snowmobile maker Polaris and the Kennedy Space Center at Cape Canaveral – the company’s stock market valuation reached just shy of £500m as recently as May this year.
Since then, the shares have more than halved following an extraordinary series of claims concerning Oozi Cats, its chief executive.
These came to a head today when Mr Cats, a Rome-based Israeli citizen who led Telit’s flotation and who remains the company’s third-largest shareholder with a 12.9% stake, resigned.
The saga began when, on Monday last week, the shares halved after Telit reported it had gone into the red during the first six months of the year – just a few weeks after Mr Cats offloaded a third of his shareholding, raising £24m, in what the company’s own broker described as a “badly explained” sale.
As the market digested Telit’s results, Tom Winnifrith, a financial journalist who styles himself “the sheriff of AIM”, went public with a story that had been swirling around London’s hedge fund community for a while.

He published details of one Uzi Katz, who with his wife, Ruth, was indicted of wire fraud by a court in Boston, Massachusetts, in 1992. He pointed out that the pair were still wanted by US police and added that Mr Cats has a wife called Ruth who was born on the same day as the Ruth Katz named in the court documents.
For good measure, he noted that Mrs Cats was also employed as a curator for the company’s art collection, an activity not normally associated with tech companies.
Telit immediately announced that Mr Cats had gone on leave of absence while it called in Cameron McKenna, the law firm, to carry out an independent investigation into whether Mr Cats and the Mr Katz wanted in America were one and the same.
Today, the company said the evidence showed there was an indictment issued against Mr Cats in the US and that “this fact was knowingly withheld from advisers”.
It added: “It is a source of considerable anger to the board that the historical indictment against Oozi Cats was never disclosed to them or previous members of the board and that they have only been made aware of its existence through third parties.”
They are not the only ones. Shareholders – the hedge funds who had bet against the company aside – are doubtless in a state of “considerable anger” too.
The departure of Mr Cats, which has sparked a modest rebound in the shares, is unlikely to be the end of the matter.
There are now likely to be calls for an investigation into the work done by the advisers who brought Telit to market and the extent to which they and the board scrutinised the credentials of Mr Cats. Legal claims look set to follow.

Source: Sky News