Israeli fintech company Vesttoo, which has been in the center of a fraud scandal amounting to billions of dollars, is laying off most of its staff. 150 out of 200 employees are being cut, representing 75% of the company's work force. Last month, it was revealed that Vesttoo was being investigated on suspicion of fraud as part of forged collateral documents presented to insurance company on its platform.
Media reports suggest the size of the alleged fraud could be as high as $4 billion.
In a letter to employees, Vesttoo CEO Yaniv Bertele said that he had reached, the inevitable conclusion that the only way of giving the company a chance to survive and opportunity to get back on track of sustainable growth was to keep a small core of people to fulfill the central operational needs." He added, "These changes are designed to maintain and focus the company's core services, in our data-based solutions and market share, and providing solutions to our customers who have been harmed by the situation."
Bertele continues, "Regarding the ongoing investigation, the company is doing everything in its power to locate the source of the fraud and how and where it happened." Beretele wrote that the company, "is committed to understand the full picture around the events that took place. For this reason we have hired an investigative team and an external legal team, in order to receive from them counsel and support during this process."
According to the letter, all those being laid off will leave the company no later than August 31. Bertele also addressed the "core team" who will not be leaving with words of thanks and appreciation for their readiness to try and rebuild the company.
"Working around the clock on all fronts to stabilize the company"
Vesttoo has developed a virtual "marketplace" that mediates between insurance companies that want liquidity and financial entities including banks, pension funds and investment houses, which are looking for avenues of investment in the insurance world. Insurance companies must cope with strict regulation, and therefore are required to present collateral in amounts similar to the premiums they sell.
Vesttoo offers to help institutional investors locate insurance companies and reinsurers through their platform, to provide them with collateral. At the same time, Vesttoo provides the pricing for these securities. The collateral documents of Chinese bank CCB are suspected forgeries. The suspicions arose when these documents were not honored.
Vesttoo said, "We are managing the event responsibly. We are currently working around the clock and on all fronts to stabilize the company, out of great responsibility and commitment to our employees and customers. Unfortunately at this time, we are forced to make organizational changes that are required by the reality, and terminate the employment of excellent employees. We would like to stress that we are maintaining the core of the company that will allow us, at the end of the current period, to return to fulfill our vision and build the leading company in the industry."
Published by Globes, Israel business news - en.globes.co.il - on August 2, 2023.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.