Fast’s Stock Market Bluff
”, Dagens Næringsliv, June 28, 2008
Fast’s Stock Market Bluff
Fictions in accounts: 250 million Fictional contracts: 100 million Executives siphoned off: 30 million Chief executive Lervik got rich when he sold Fast before the bluff was revealed.
Fast & Loose
The executives of Fast Search & Transfer manipulated the accounts and fooled the stock market. Someof them enriched themselves with the help of fake invoices. Just before the big scam was revealed,Microsoft acquired the company.
It was the happening of the year. Clients, investors and analysts were assembled in San Diego on February 7,2007 to listen to Fast’s founder and CEO John Markus Lervik’s keynote about the future of search technology.Not only would he talk about technology. He also presented quarterly results for Q4 2006 – and once again aquarter with enormous growth and new records. What nobody explained was that a third of the running incomewas based upon a deal that didn’t exist.
“It is a shame, basically, that people in Boston walk around talking about Fast as the new Enron,” sighsAli Riaz on the phone. The former CFO in the Norwegian search company is tired of Fast. Tired of Norwegian journalists’ calls every time new trash emerges from Fast’s accounts, which were earlier so well funded. Tired of being made the scapegoat for years of bad results, accounting problems and blown-up revenues.“I had nothing to gain from manipulation of the accounts. I had no shares in the company. I wanted shares andquit because I didn’t get any. If you want to find out what’s wrong with the accounts, you need to look at thosewho could gain from it. And it wasn’t me. Talk to Robert Keith, Thomas Fussell or John Markus Lervik,” Riazsays. He has only a final greeting before he hangs up.“I have no wish to talk to you. When I left the company, it had more than 250 million dollars in the bank. Do notcall me again.”
Growth or unbelieving.
It was just before May 17, 2007, only a few months until Fast’s accounts were toemerge as pumped-up with contracts that didn’t exist.Fast Search & Transfer once again reported record turnover in first quarter, with an unbelievable 50% growthfrom the year before. Again.Fast emerged more and more as a fairytale, a wash-proof Norwegian fairytale – based upon research fromNTNU and brought out into the world by the company’s founder and CEO John Markus Lervik.The company had gained new life after it almost hit rock bottom in 2001. That time, Fast was stamped as an airystock bubble. When the bubble broke and the deficit of over two billion NOK was digested by the stock market,Fast’s share price fell 98%. The technology fairytale had been valued to almost as much as Hydro a year before.Now, it was reduced to a gnat.In the turbulence that followed, Lervik, a young technologist from Øksendal in Møre og Romsdal, ascended to of CEO. Together with CFO Ali Riaz, he started the work to rebuild Fast from the ruins of the dotcom crash.Longing to seem successful. Lervik and Riaz in reality ran the company together. They regularly reported hugegrowth and incredible sales figures.