Wirecard scandal: Accounts worth billions likely don’t exist

0

BERLIN (AP) – German payment service provider Wirecard said Monday it has concluded that two accounts that were supposed to contain 1.9 billion euros ($2.1 billion) probably don’t exist, deepening troubles that last week prompted the resignation of its chief executive.

Wirecard AG was once regarded as a star of the growing financial technology sector, but its shares have fallen sharply from their peak after the company became the subject of multiple Financial Times reports about accounting irregularities. 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 euros 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.”

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 euros do not exist.”

Wirecard said 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’s 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 34.6% at 16.89 euros in late-morning Frankfurt trading.

The company was once considered a star of Germany’s tech sector; its market value at one point exceeded that of Deutsche Bank. Wirecard pushed Germany’s No. 2 bank, Commerzbank, out of the country’s DAX 30 index of blue chips.

The company had rapidly expanded outside Germany, building an Asia-Pacific business and entering the North American market by buying Citigroup’s prepaid card services business in 2016.

“You have to pinch yourself and wonder if what is going on at Wirecard is true,” said Robert Halver, an analyst at Baader Bank in Frankfurt.

He noted that Germany is ”not spoilt for high-tech companies” and raised the possibility of the German government considering action to preserve Wirecard’s technology, arguing that “it would be bad if Wirecard became a takeover object for China.”

___

Christoph Noelting in Frankfurt contributed to this report.

FILE – In this Thursday, April 25, 2019 file photo the logo of financial services company wirecard is pictured at the headquarters in Munich, Germany. Shares in German payment service provider Wirecard AG plunged Thursday as the company announced it was postponing its delayed annual report yet again. (AP Photo/Matthias Schrader, file)
Advertisements