Gizmondo Executives Resign Following Financial Controversy

Author: by Simon Carless, Nich Maragos

Tiger Telematics, the parent company of handheld firm Gizmondo Europe has announced that its Managing Director Carl Freer has resigned from the company, apparently to "pursue other entrepreneurial ventures", following significant recent controversy over Gizmondo's financial performance and significant financial perks to company directors. In addition, fellow senior Gizmondo Europe executive Stefan Eriksson has resigned from the company, also to pursue "new entrepreneurial pursuits", following an expose by Swedish newspaper Aftonbladet, which alleged Eriksson's involvement in the 'Uppsala Mafia', a criminal enterprise which led to his convictions in his native Sweden from charges including counterfeiting in the early 1990s. Fellow Gizmondo employees Peter Uf and Johan Enander have also apparently left the company, and Enander is currently wanted by the Swedish police, according to Aftonbladet. Gizmondo's latest financial results also reveal that, following an investigative report by Gamasutra on September 27 reporting that "...in 2004 and the first quarter of 2005, Gizmondo Europe paid Anneli Freer, the spouse of Mr. Carl Freer, $116,000 and $57,831, respectively, for consultancy services provided to Gizmondo Europe", a pre-resignation Carl Freer "...reimbursed the Company for these entire amounts on September 28, 2005." Freer also reimbursed the company on the same date for $163,855 in legal fees incurred by the company on his behalf, after stories regarding the company's financials surfaced. The company's results also comment on a series of complex financial transactions involving, among others, Asiatic Bank and Finance and Northern Lights Software Company, the latter of which was owned by Freer and Eriksson in addition to their directorship of Gizmondo, and was paid a total of $3,513,000 for the games Chicane and Colors, although Carl Freer subsequently paid $906,000 of this money back to an escrow account on September 29, 2005, "pending the determination of a special committee of independent directors of the fairness of the transaction to the Company, relying upon independent counsel and a fairness opinion of independent financial experts." Tiger's comments regarding the above deals explain that: "Several of the transactions described above were consummated without prior approval by the Company's Board of Directors", and it seems likely that these unauthorized transactions in part led to the departure of Freer and Eriksson, despite claims in the press from a Gizmondo spokesperson that the financial revelations were par for the course for a growing company. Following the resignations, Michael Carrender, the Company's CEO, will assume the additional post of Chairman, and Steve Carroll, a Director of the Company, is assuming the role of Managing Director of Gizmondo, as it tries to build on the recent limited launch of its handheld in the U.S., despite reports of massive development and consultancy-related financial expenditure.