Missing €1.9 billion from accounts may not exist — Wirecard

Wirecard missing accounts
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Payments firm Wirecard has said that the controversial €1.9 billion missing from its accounts may not even exist in the first place.

Scandal-hit Wirecard said the missing amount from its account balances may not exist after the Philippines’ central bank said none of the money appears to have entered the country’s financial system.

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In a statement, the company said: “The Management Board of Wirecard 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 EUR do not exist.”

The missing money comprises around a quarter of the company’s total balance sheet. The German firm said it will withdraw its financial results for 2019 and the first quarter of 2020.

The missing money

Auditors at EY, formerly known as Ernst & Young, said they could not confirm “sufficient audit evidence” of about 1.9 billion euros, or $2 billion, in its cash balances, implying that the money had gone missing.

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According to Wirecard, it had deposited the money at two Asian banks, namely the Philippines’ Bank of the Philippine Islands (BPI) and BDO Unibank Inc., both of which denied having any any business relationship with the payments firm.

BDO said: “Wirecard is not a client of the bank. The document claiming the existence of a Wirecard account with BDO is a falsified document and carries forged signatures of bank officers.”

Meanwhile, BPI also said Wirecard was not its client. The bank said: “Their external auditor presented to us a document that claimed that they are a client. We have determined that the document is spurious. We continue to investigate this matter.”

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CEO’s resignation

On Friday, Wirecard announced that its chief executive officer (CEO) Markus Braun has resigned. The company’s chief compliance officer James Freis will serve as the CEO on an interim basis.

Freis just joined the company on Thursday via an emergency appointment to the board and his appointment was originally scheduled for July 1.

Prior to his resignation, Braun said he did not know why the banks denied having the money and suggested that Wirecard may even be the victim of fraud.

“It cannot be ruled out that Wirecard AG has become the aggrieved party in the case of fraud of considerable proportions,” Braun said.

He added: “Wirecard has excellent employees, a strong business model, outstanding technology and abundant resources to ensure a great future.”

Shares plummeting

When Wirecard joined Germany’s blue-chip Dax 30 share index in September 2018, it was valued at €24 billion. However, the scandal has caused its share price to crash, pushing its value down to just €3.2 billion.

Its share price started falling when it became the subject of an in-depth investigation by the Financial Times in 2019 over its accounting practices, particularly in its Asian operations.

Germany’s financial regulator, BaFin, is conducting three simultaneous investigations into Wirecard, prompting two of Wirecard’s biggest investors, Union Investment and DWS, to threaten legal action against the company.

The company said it continues to discuss a financial lifeline with banks, including a current arrangement due to expire at the end of June, and is considering several ways to save the company, including cutting costs, restructuring its operations, and selling or shutting parts of the business.