Wirecard scandal: Missing billions likely don’t exist
GERMAN PAYMENT service provider Wirecard said on Monday that it has concluded that €1.9 billion (US$2.1 billion) that was supposed to be held in two accounts probably does not exist, deepening troubles that last week prompted the resignation of its chief executive.
Wirecard AG was once regarded as a star of the growing financialtechnology sector, but its shares have fallen sharply after the company became the subject of multiple Financial Times reports about accounting irregularities in its Asian operations. Wirecard disputed the reports, which started in February 2019, and said it was the victim of speculators.
Last week, the company disclosed that auditors couldn’t find accounts containing the €1.9 billion and postponed its annual report. On Friday, CEO Markus Braun resigned and was replaced by James Freis.
Two Philippine banks that were said to hold the money in escrow accounts said that they had no dealings with Wirecard.
The Bank of the Philippine Islands said a document claiming the company was a client was “spurious”. BDO Unibank said that a document claiming the existence of a Wirecard account was falsified and “carries forged signatures of bank officers”. The country’s central bank governor said that none of the missing money entered the Philippines’ financial system.
On Monday, Wirecard said its management board “assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of €1.9 billion do not exist”.
Wirecard said that it is in “constructive discussions” with banks on continuing credit lines and is “assessing options for a sustainable financing strategy for the company”. It said it is examining other possible measures to keep the business going, including restructuring and disposing of business units.
After plummeting last week, Wirecard’s shares took another dive on Monday. They were down 41.3 per cent at €15.15 in afternoon Frankfurt trading.
The president of German financial regulator BaFin, Felix Hufeld, described the situation