Auckland Council cancelled Beam’s operating licence on August 27 and ordered its 1400 e-scooters deactivated by midnight, following an investigation that found it had “consistently exceeded its device allowance by almost 40%” in the CBD and surrounding suburbs.
Three days later, Wellington City Council suspended Beam’s licence over similar accusations.
A whistleblower earlier forwarded documents, including conversations from one of Beam’s Slack channels, to local authorities in Auckland, Brisbane, Canberra, Townsville and Wellington, alleging the scooter share firm had exceeded its cap by hundreds in each city.
While saying he was open to making a “commercial settlement”, Beam founder Alan Jiang also denied wrongdoing in a statement to the Herald, saying the extra scooters were put on streets to make up for those that were inoperable or missing.
The whistleblower claimed Beam had deliberately concealed its extra numbers of scooters – dubbed “phantoms” – from the Ride Report monitoring software used by all of the councils to keep real-time tabs on rides. It was also claimed Beam had defrauded councils out of “millions” because revenue from the phantom scooters was not shared with councils (contracts differed but some involved a 1 to 3% share of revenue; Wellington took a flat 11 cents per ride).
The council is currently weighing tenders for the next two-year e-scooter licensing period, which begins on November 4.
Lime (whose major investor is Uber), local contender Flamingo, Alibaba-backed Chinese giant HelloRide, Singapore-owed Neon and Singapore-owned Ario are all in the running.
The Herald understands HelloRide – which is partnering with Queenstown developer and tourism operator Min Yang on its Auckland bid – is flying in one of its global big guns next week for councils talks.
Beam would not comment on whether its tender was still active. But the fact the council has referred its contact to police indicates contained odds of success if it has maintained its bid.
What is Beam?
Beam was founded in Singapore in 2018 by Alan Jiang and Deb Gangopadhyay – both since named to the consumer technology section of the Forbes 30 Under 30 Asia list.
Today it operates e-scooters and e-bikes in 60 locations around the Asia-Pacific region, including 36 towns and cities across Australia and NZ (before the five cancellations and suspensions covered above).
In a statement released on April 30 this year, the privately held firm said, “Beam saw a 36% increase in gross revenue from 2022, to a record US$53 million in 2023.”
In the second half of 2023, “Beam achieved a significant milestone by reaching adjusted Ebitda profitability; signifying the company’s ability to translate its impressive growth into a sustainable business model.”
Before the fraud allegations emerged, the the firm said it was “on track for full-year double-digit profitability in 2024″.
Chris Keall is an Auckland-based member of the Herald’s business team. He joined the Herald in 2018 and is the technology editor and a senior business writer.
