Gizmondo executives quit under cloud
Swedish criminal convictions revealed
A number of senior executives at Gizmondo Europe quit the company last week ahead of the US launch of the firm's handheld games console and amid allegations in the Swedish press that some had criminal pasts.
Carl Freer and Stefan Eriksson tendered their resignations on 20 October, a document filed with the US Securities and Exchange Commission (SEC) revealed this week. Freer co-founded Gizmondo Europe and was the company's Managing Director. He was also chairman of parent company Tiger Telematics.
Eriksson, and another just departed employee, Peter Uf, joined the firm when Gizmondo Europe acquired their Swedish games development company, Indie Studios, in August 2004.
Following the resignations, Gizmondo Europe CTO Steve Carroll has been promoted to MD, and Tiger CEO Michael Carrender has taken over the chairmanship.
The resignations came a month after Tiger posted its long-awaited FY2004 full-year financial performance report. The document, filed with the SEC as Tiger announced a plan to trade its stock on Nasdaq, revealed not only a massive, $99.2m loss - unsurprising, perhaps, given the cost of developing the Gizmondo handheld - but also some very generous executive compensation packages - provided in the form of cash, loans, automobile allowances and stock.
To make matters worse, this week Swedish-language newspaper Aftonbladet reported that Eriksson are Uf both received criminal convictions in the mid-1990s.
A Gizmondo Europe spokesman confirmed to The Register today that Eriksson and Uf had quit the company when their past - which they had not previously disclosed to the company, he claimed - came to light as a result of Aftonbladet's probe.
No suggestion of criminality has been directed toward Freer. However, he resigned "upon learning of the impending Swedish article that would implicate him as an associate of Eriksson and Uf, and could negatively impact the company", the spokesman said. He went "of his own volition".
On 28 September, Freer reimbursed Tiger a significant sum covering various expenses paid to himself and his wife, plus monies paid to other companies in which he has an interest or a business connection.
However, the following day, Tiger appointed three independent directors and asked them to form a committe to "investigate, review and determine the fairness" of "transactions... in which Mr. Carl Freer, Mrs. Carl Freer and/or Mr. Stefan Eriksson had an interest". If necessary, the three independent directors, are authorised to "initiate remedial actions", the SEC filing states.
The filing also reveals Tiger lost $163.8m (381 cents a share) during the three months to 31 March 2005, the quarter in which it launched Gizmondo in the UK, although not until the middle of March. $151.1m of that loss arose from general and administrative operating expenses. By contrast, the company spent just $455,092 on goods sold.
Alongside the controversy, Tiger launched the Gizmondo console in the US this weekend "at selected retail locations" across the country, backed by a $30m advertising and marketing campaign. ®