Vestas Wind System A/S VWDRY (OTN) needs to come clean in almost all area’s. Recently they terminated the severance agreement with former CFO Henrik Nørremark. Apparently following an audit they found two deals in India that will create losses. The deals were supposedly hidden from CEO Ditlev Engel as well as the board of directors.
You can only speculate over the sheer stupidity of it all. But the CFO wanted to trick the CEO and board. Sounds like he committed corporate suicide and has some explaining to do. Lawsuits will most likely abound. Somewhere there will be interesting documentation which will shed light.
Usually it’s the marketing guys who become desperate and reach too far. They work on incentives and need to make deals. So you have to wonder why the CFO took it upon himself to sign ultra-vires deals which are screwing his employer err former employer.
The question has been begged.
Take a look at the accounting. Customers are being given extended payment options. Clients now owe some 18% of revenue. Up from 12%. The CEO and sales team have been closing deals quickly in the US to take advantage of expiring tax credits. So how do you drive sales in the future. How do you collect what is owed on tax influenced and therefore distorted deals.
The two issues of CFO deals in India and climbing receivables in the US need to be explained. Most investors will conclude a huge head on collision is about to occur if it has not already happened.
George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti