Revolut CFO quits after auditor BDO warning

[krona]

The Revolut UK banking chief executive also just quit 'for unrelated reasons' after texting a death threat to a customer: https://www.telegraph.co.uk/business/2023/05/13/revolut-exec...

[silisili]

This is so hilariously bizarre. Why does a customer have a bank executive's personal number? Why was the account frozen? Who did the exec think he was texting? And who was he going to be waiting for armed?

I feel invested at this point, like I've watched a movie that just cut off in the middle...

[Mistletoe]

> He has taken up a new executive role at telecoms business Lycamobile.

Unbelievable. It’s impossible for people in this caste to fail.

[rahimnathwani]

The article says:

  “There is not any doubt over the completeness of the balance sheet, which, in turn, logically means that total revenue is also correct,” he[0] said.

By my reading, this directly contradicts the statement of the auditors, published on Revolut's web site[1]:

  As described in the basis for qualified opinion section of our report, we were unable to satisfy ourselves concerning the completeness and occurrence of certain revenues for the year ended 31 December 2021. We have concluded that where the other information refers to revenue or related balances these may be materially misstated for the same reason.

By my reading, this says that it's not just revenue that may be materially misstated, but revenue or related balances. So the statement by the CFO directly contradicts what the auditors say about both the Income Statement and the Balance Sheet.

[0] Salovaara, the CFO.

[1] https://assets.revolut.com/pdf/Revolut_Ltd_YE_2021_Annual%20... which is linked on https://www.revolut.com/financial-statements/

[balderdash]

And the the thing that links those two financial statements is the statement of cash flows, which tells the real story…funny that wasn’t mentioned…

[jsmith99]

When auditors talk about the Other Information they mean the front half of the annual report and accounts i.e. the annual report rather the actual financial statements.

[sschueller]

From what I have read in the last years of how the CEO and the company in general operate I would not be surprised if there will be a criminal investigation. This isn't the first time Revolut has had issues.

[1] https://en.wikipedia.org/wiki/Revolut#Controversies

[SilverBirch]

This is really quite very very bad. I remember someone on twitter a while ago pointing out they keep missing the deadline for publishing their accounts. Like one of the things I would be quite keen to do if I were applying for a banking license would be to make sure I'm getting the paperwork right. Given that Revolut have raiesd enormous amounts of cash, I'd imagine they're pretty keen to IPO, and to do that they need a UK banking license - and there's just no way that's happening any time soon given what's going on. This could really cause them trouble and in the mean time the equity of any of the employees has probably already gone to zero because of the massive valuations they've raised at.

[toyg]

They counted on their chumminess with the Prime Minister, Rishi Sunak, who's been an outspoken supporter of Revolut. Iirc a report from Private Eye, there is a hint of an ongoing cold war between the PM's henchmen telling bank regulators to let them get the license, and regulators resisting - likely because nobody wants to be responsible for authorizing a business that clearly doesn't meet the necessary requirements in very obvious ways.

[ztrww]

> and to do that they need a UK banking license

Why does it specifically have to be an UK banking license?

[pavlov]

So did “fintech” just mean “shitty bank” all along, same way that crypto was just shitty penny stocks.

[riffraff]

Revolut has had a fee questionable moments already, this does not seem to have been the case for other European fintech operations (wise, klarna, n26 etc).

So yeah, I think a lot of fintech is not particularly good, but I don't think we can generalize to the level of the crypto boom.

[Moldoteck]

Before revolut our bank apps were pure garbage, so they improved them for compensation and I give revolut credit for this

[lnxg33k1]

Well, yeah, they should really aim to clone the stability and efficiency of traditional banks, like the target of any bank should really be to mimic the operational beauty of Deutsche Bank, Santander, Monte Paschi, ABN Amro, and so on.. they're the pillars on which our society is built upon

[rchaud]

Fintech just means your valuation is based on how long you can expect to get away with ignoring checks and balances. You're no longer pre-revenue, just pre-regulation.

[joering2]

Punchline: “IT systems weren’t designed in such a way that would allow for IT or business process controls to be effectively tested throughout the year.”

[rchaud]

Pssh, these are precisely the kind of burdensome regulations that are leading fast moving, thing-breaking companies like Revolut to leapfrog traditional finance /s

[computing]

I would not be surprised if this is another Wirecard/FTX brewing, and I will also not be surprised if it's all 100% legit.

[rchaud]

CFO's comments to The Guardian in December 2022 (the article also mentions the auditor's concerns)[0]:

> Mikko Salovaara, its chief financial officer, told the Guardian in an interview that the company was on the brink of getting a banking licence from City regulators: “I think we’re at the very last stages. Really at the finish line.” Salovaara said the UK licence was a step towards achieving Revolut’s aim of becoming a “truly global bank”. It would allow the company to offer “an increasing set of services to our customers, particularly credit.”

Sounds like another Wirecard. There's even the cliched startup quote "we want to be the Amazon of banking". WC wanted to be the Paypal of Europe. Amazing how far you can get before you've earned a single cent of profit!

[0] https://www.theguardian.com/business/2023/mar/01/uk-fintech-...

[exizt88]

There’s a huge leap between fucking up your accounting systems and doing outright fraud. This isn’t even close to what WC was doing, at least from the available information.

[teddyh]

https://archive.is/QI8b0

[wslh]

That is pretty bad, it sounds like a criminal investigation should start immediately.

[exizt88]

There’s nothing in the article that indicates that regulators are considering a criminal investigation.

[petesergeant]

For what crime?

[zx8080]

Probably not a crimimal one.

But imagine if a person cannot explain to tax agency some large sums of money flows.

[sampa]

rate hike will wipe out many companies

it will blow up like this in very different places, wiping those who lived by the grace of free money

[cm2187]

For all its sins, I don't think that's the case of Revolut.

[kman82]

Oh boy