MaCeen Capital says dubious financial statements lead to bankruptcy; Mobily’s irregularities ‘disappointing’

Companies that manipulate their financial statements often end up declaring bankruptcy, said Yasser Al-Sharif, chief executive of Riyadh-based MaCeen Capital.

A clear example here lies in the accounting errors found in the financial statements of Etihad Etisalat Co. (Mobily), he said in a press statement obtained by Argaam. 

Al-Sharif stressed that Mobily’s new leadership should urgently adopt a turnaround strategy and restructure all debts to help it escape the crisis unscathed.

“This poses great risks, especially for companies that have acquired loans or bank facilities,” he added. “This was seen in the case of American energy producer Enron, which went bankrupt due to manipulations of its financial statements.”

The infamous Enron Scandal of 2011 eventually led to the bankruptcy of Enron Corporation, based in Houston, Texas. It became known at the time as the biggest audit failure in the United States.  

Saudi Arabia’s second largest telecom operator, Mobily, announced it had suffered a net loss of SAR 913 million ($243 million) for last year's audited results after reporting a net profit of SAR 220 million ($58.7 million) in its preliminary financials. At the time, the operator said it expected to breach long-term loan agreements.

On Wednesday this week, Mobily issued another statement saying it could still meet all its debts. The regulator then agreed to resume trading on the stock today after it had been suspended since Feb. 25.

Investigations into the company’s financial practices are still ongoing, according to Saudi’s market regulator.