Vesttoo names Ami Barlev as interim CEO as it continues to grapple with fraud scandal
Vesttoo names Ami Barlev as interim CEO as it continues to grapple with fraud scandal
"We are working around the clock in order to provide solutions for our customers and partners around the world, and we will work intensively to restore the company's activities," Barlev said
Israeli fintech company Vesttoo said on Wednesday it named Ami Barlev as interim chief executive officer, replacing Yaniv Bertele, who was in charge during a fake collateral scandal.
Vesttoo said in a statement that Barlev has extensive experience in senior positions in a number of private and publicly-traded Israeli and Nasdaq-listed companies, as well as startups, in the fields of technology, AI, communications, aviation and real estate. Barlev serves as the Executive Chairman of Gilat Telecom, as well as Axilion Smart Mobility. He is also the former CEO of B Communications.
The firm noted Barlev specializes in the areas of corporate governance, business development, crisis management, and managing companies in complex situations.
Vesttoo - partly backed by Banco Santander's fintech venture capital arm Mouro Capital - said last week it was laying off about 75% of its staff and considering removing Bertele, following internal and external investigations into the events leading to the first report of a fraudulent letter of credit used in many transactions.
On Monday, it said it was in "active discussions" with potential investors to find alternative collateral for clients after discovering fake letters of credit had been used on its platform.
Vesttoo, which uses artificial intelligence technology to connect the insurance industry and capital markets, is also in contact with regulatory bodies worldwide.
"We are working around the clock in order to provide solutions for our customers and partners around the world, and we will work intensively to restore the company's activities," Barlev said.
"We believe in the value that Vesttoo can still provide. I am confident that by completing the ongoing audit thoroughly and comprehensively we can overcome this significant challenge and get back to work."
Vesttoo provides insurers with access to so-called insurance-linked securities - an alternative form of reinsurance. These securities may be backed by collateral in the form of letters of credit.
If the securities turn out not to be valid, insurers will need to find replacement cover, or pay any insurance claims in full, industry sources say.
A company spokesperson said earlier this week that “standard KYC (“Know Your Customer”) was conducted on all parties internally as well as by external organizations.”
“Vesttoo is committed to working with alternative investors and brokers to ascertain alternative collateral for our clients. We are in active discussions with potential investors for this purpose.”
Vesttoo said a core team of more than 50 people was working to seek alternative collateral, and the company would meet all its commitments to suppliers and consultants.
Calcalist uncovered last month that the allegedly fake letters of credit (LOCs) provided by investors to insurers for reinsurance transactions on the Vesttoo platform are believed to total a sum of around $4 billion. The fraud came to light when one of the LOCs was found to be fake, leading to a comprehensive review of all letters of credit issued by the company.
The Israeli startup previously released a statement admitting that “at a minimum, it appears that Vesttoo’s procedures were circumvented.”
The company is also apparently under an investigation by the FBI Financial Crimes team, which is looking into the alleged fraud, according to a statement from reinsurance firm Corinthian.
