CEO Pushed Out as German Fintech Admits: €1.9 Billion is Missing from Our Balance Sheet

guest · Jun 21, 2020

CEO Pushed Out as German Fintech Admits: €1.9 Billion is Missing from Our Balance Sheet
June 19, 2020
https://www.cbronline.com/news/wirecard-missing-money

“Spurious balance confirmations had been provided”
The CEO of German payments and IT services specialist Wirecard has resigned with immediate effect — a day after the firm admitted that EY auditors couldn’t find €1.9 billion euros (£1.7 billion) of cash on its balance sheet.
Markus Braun will be replaced by James Freis as interim CEO.

“There are indications that spurious balance confirmations had been provided from the side of the trustee respectively of the trustee’s account holding banks to the auditor in order to deceive the auditor and create a wrong perception of the existence of such cash balances,” Wirecard told investors.
Wirecard employs 5,800+ persons in 26 countries.
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Wirecard, once on of Germany’s corporate darlings, is no stranger to auditing issues: in 2018 internal whistleblowers triggered an investigation by the company’s own compliance team into suspicious transactions in Asia.
Among a series of allegations at the time [...]

As the FT reports — the paper has broken a number of investigative stories on the firm’s finances — its accounting practices have been controversial since 2008.
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Reuters: Wirecard's missing money didn't enter Philippine financial system, central bank says

None of the $2.1 billion missing from scandal-hit German payments firm Wirecard AG appears to have entered the Philippine financial system, the central bank said on Sunday.

The chief executive of Wirecard, Markus Braun, who built the company into one of the hottest financial technology investments in Europe and a rare tech champion for Germany, quit on Friday as the company faces a cash crunch after saying it may have been the victim of fraud.
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Rasheed187 · Jun 21, 2020

Yes, read about it, there is something seriously wrong with this company and this may be good news for its Dutch competitor named Adyen. The stockprice of Adyen is way too high though, it's clearly overvalued.

https://www.adyen.com

guest · Jun 21, 2020

About Wirecard:

About us
Wirecard operates one of the world’s fastest-growing digital platforms in the realm of financial commerce. We offer both business clients and consumers a full range of innovative added-value services for digital payments: online, mobile, and at the point of sale.
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two more articles:

Schirp calls for Wirecard audit on behalf of shareholders (January 13, 2020)

Schirp & Partner has called for a "special" audit into the inner workings of Wirecard on the basis of recent allegations concerning misleading accounting and fraud.
The law firm is making the case on behalf of a small group of shareholders, as reported by Reuters.

Allegations of fraud and suspicious accountancy practices have haunted Wirecard since a report was published by the Financial Times based on documents, claimed to be internal, that appeared to indicate "a concerted effort to fraudulently inflate sales and profits at Wirecard businesses in Dubai and Ireland, as well as to potentially mislead EY, Wirecard's tier-one auditor," according to the news outlet.
Wirecard has "questionable accounting practices," the report alleges. EY has previously passed Wirecard's business and accountancy practices as legitimate.
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Investor TCI files criminal complaint against Wirecard managers (May 19, 2020)

The investor TCI Fund Management said on Tuesday that it has filed a criminal complaint against Wirecard managers with public prosecutors in Munich.
A recent independent audit by KPMG, along with reporting by the Financial Times and WirtschaftsWoche, “reveal anomalies that may have criminal relevance”, it said.
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guest · Jun 22, 2020

'Total disaster': Phantom billions plunge Wirecard into chaos
June 22, 2020
https://www.reuters.com/article/us-...xisted-rips-up-earlier-accounts-idUSKBN23T06V

Wirecard said on Monday that 1.9 billion euros ($2.1 billion) it had booked in its accounts likely never existed, a black hole that threatens to engulf the payments company and tarnish the reputation of Germany’s financial watchdog.

The one-time investor darling is holding emergency talks with its banks, which are owed roughly 1.75 billion euros, to avert a looming cash crunch triggered by the missing money.
The episode marks a dramatic turn in the fortunes of a homegrown tech firm that attracted some of the world’s biggest investors before a whistleblower alleged that it owed its success in part to a web of sham transactions.

The furore has also damaged Germany’s image.
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Wirecard says missing $2 billion never existed. Its stock is down 85% in 3 days

Shares in Wirecard (WCAGY) plunged in early trading on Monday. The stock has lost more than 85% over three trading sessions — wiping out $12.5 billion in market value — since EY, its auditor refused to sign off the company's accounts.
Wirecard is now scrambling to find the money to keep creditors at bay. Wirecard said late Friday that it had hired investment bank Houlihan Lokey to come up with a new financing strategy.
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stapp · Jun 24, 2020

Wirecard: Former boss arrested over €1.9bn scandal

The ex-boss of scandal-hit payments firm Wirecard has been arrested in Germany.

Markus Braun resigned last Friday after auditor EY refused to sign off the firm's 2019 accounts over a missing €1.9bn (£1.7bn).
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https://www.bbc.co.uk/news/business-53149907

guest · Jun 24, 2020

Former Wirecard CEO Released From Jail
June 24, 2020
https://www.silicon.co.uk/e-enterprise/financial-market/former-wirecard-ceo-release-jail-345966

Markus Braun the former CEO of Munich fintech start-up Wirecard, has been released from custody, his lawyer confirmed to Reuters on Wednesday.
Braun had been arrested on suspicion of falsifying the German payments firm’s accounts.
Fintech scandal
German financial regulators this week called the situation at Wirecard a “scandal” and a “disaster”.

It is understood that the company is currently in emergency talks with its lenders, whom it owes about 1.75bn euros, over its immediate options.
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Sources told Reuters that German prosecutors were also considering whether to issue an international warrant for former chief operating officer Jan Marsalek, who was fired on Monday and, according to the Sueddeutsche newspaper, is currently the Philippines.
The Philippines do not have an extradition treaty with Germany, Reuters reported.
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guest · Jun 25, 2020

'The money's gone': Wirecard collapses owing $4 billion
June 25, 2020
https://www.reuters.com/article/us-...ecard-collapses-owing-4-billion-idUSKBN23W176

Wirecard collapsed on Thursday owing creditors almost $4 billion after disclosing a gaping hole in its books in Germany’s worst accounting scandal.

The implosion of the payments company came a week after auditor EY refused to sign off its 2019 accounts, forcing out Chief Executive Markus Braun and leading Wirecard to admit that $2.1 billion of its cash probably didn’t exist.
Its demise leaves creditors with scant hope of getting back the 3.5 billion euros ($3.9 billion) they are owed, a source close to to the matter said. Of that amount, Wirecard has borrowed 1.75 billion from 15 banks and 500 million from bond investors.

“The money’s gone,” said one banker. “We may recoup a few euros in a couple of years but will write off the loan now.”
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A third source said the banks were completely shocked that Wirecard had sought insolvency - beating creditors who were thinking of calling in their loans to the punch.

“We thought that Wirecard was a trustworthy company run by people who knew what they are doing,” the person said, comparing the saga to the collapse of U.S. energy trader Enron.
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guest · Jun 26, 2020

UK fintech firms forced to suspend services after Wirecard collapse
June 26, 2020
https://www.reuters.com/article/us-...ervices-after-wirecard-collapse-idUSKBN23X2CM

Customers of several British digital finance companies were unable to make payments or access their money on Friday after the collapse of German payments firm Wirecard caused disruption across borders.

“Is my money safe? When can I get it back? Won’t let me withdraw or pay a supplier. What the hell is going on???” tweeted a customer of business account provider ANNA.
ANNA said in a statement that it had had to temporarily suspend customer cards and accounts and was working to restore services as soon as possible.

Card provider Curve said it had seen a temporary disruption to services and advised customers to use alternative payment methods, while account provider Pockit told its customers accounts would be inaccessible for a short period and it was working with the FCA to find a solution.
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Sarah Kocianski, head of research at fintech consultancy 11:FS, said the knock-on effects of Wirecard’s collapse posed a big test for digital firms that often rely on backend services provided by bigger players.
“This could rebound not only on the companies in question, but also on the wider fintech industry as consumers question the newer providers they have recently adopted in large numbers.”
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guest · Jun 27, 2020

EU investigating German watchdog over Wirecard collapse
June 26, 2020
https://www.reuters.com/article/us-...watchdog-over-wirecard-collapse-idUSKBN23X184

The European Union is investigating Germany’s financial regulator over the collapse of payments company Wirecard in a rare move that heaps embarrassment on Berlin days before it is due to take over the EU’s rotating presidency.

Wirecard’s implosion on Thursday, owing creditors almost $4 billion, is shaping up to be one of Germany’s biggest corporate scandals, and regulator BaFin has come under fire at home and abroad for not spotting problems sooner.
The European Commission has asked the EU’s markets watchdog to assess if BaFin’s responses to allegations of improprieties at Wirecard, which stretch back years, were adequate to protect investor confidence in EU markets, according to a letter from the Commission to the EU watchdog.
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guest · Jun 29, 2020

Wirecard digital currency services halted in UK
June 29, 2020
https://coingeek.com/wirecard-digital-currency-services-halted-in-uk/

Wirecard’s digital currency debit cards no longer work in the United Kingdom. This means that Crypto.com, TenX, and CryptoPay users with digital currency debit cards living in the country can no longer top up—or make transactions with—their Wirecard debit cards.

This is a result of the Financial Conduct Authority (FCA) ordering Wirecard to cease all of its regulated activities in the U.K.

“We have been working closely with Wirecard UK and other authorities over the past few days to take action that protects consumers,” according to the FCA’s official statement.
“We are continuing to do this and on 26 June, we took additional measures to require the firm to cease all regulated activities in order to further protect customer money. This now means customers money cannot be accessed.”
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Wirecard’s digital currency Clients
Although Crypto.com, a client of Wirecard Card Solutions (WCS), originally said that they were unaffected by Wirecard’s accounting scandal, the move by the FCA has made Crypto.com’s, TenX’s, and CryptoPay’s digital currency debit cards unusable not just in the U.K., but also in the European Union.
[...]
Crypto.com also says they will be shopping for a new digital currency debit card service provider.
What’s next for Wirecard?
No other government body has imposed on Wirecard’s subsidiaries operations yet, but it would not be surprising if other governments in which Wirecard runs a subsidiary follow in the steps of the U.K. as legal action against Wirecard and its former CEO continues to unfold.
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FCA: Requirements have been imposed on Wirecard’s authorisation

Update 29 June
Following last week’s news of €1.9 billion missing from the accounts of the German company, Wirecard, we placed requirements on the firm’s UK business so that it should stop carrying out regulated activities and not pay out or reduce any money it holds. Our primary objective all along has been to protect the interests and money of consumers who use Wirecard.
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guest · Jul 4, 2020

German accountancy watchdog washes hands of Wirecard debacle
The accounts examiner has denied any accountability for the scandal
July 3, 2020
https://www.zdnet.com/article/german-finance-accountancy-watchdog-washes-hands-of-wirecard-debacle/

The German accountancy watchdog has denied any responsibility for the scandal surrounding Wirecard that led to the company filing for insolvency.

The privately-owned Financial Reporting Enforcement Panel (FREP) was asked last year to examine Wirecard's accounts, but the report was not provided ahead of the digital payments provider's collapse.
FREP said that the investigation into Wirecard was conducted as quickly as possible and BaFin was updated on a regular basis -- however, its powers are limited.

"Tracking down accounting fraud and investigations are not part of our tasks," FREP said in a statement on Wednesday, as reported by Reuters.
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guest · Jul 16, 2020

Jailed executive in Wirecard scandal offers confession, lawyer says
July 16, 2020
https://www.reuters.com/article/us-...l-offers-confession-lawyer-says-idUSKCN24H35T

The former head of a key subsidiary of Wirecard, who was arrested earlier this month, has admitted wrongdoing to prosecutors for his role in a multi-billion-euros fraud, his lawyer said on Thursday.

It is the first known confession of wrongdoing in the collapse of one of Germany’s biggest companies.

“My client has voluntarily given himself up for the proceedings and - in contrast to others - takes individual responsibility,” his defence lawyer Nicolas Fruehsorger said.
The Munich prosecutors declined to comment. They have not identified the individual by name to avoid prejudicing legal proceedings.
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The executive had travelled from Dubai and turned himself in last week.
The arrest was made on suspicion of conspiracy to commit fraud, attempted fraud and aiding and abetting other crimes, prosecutors said.
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guest · Jul 17, 2020

Stripe wins business following Wirecard's collapse
July 17, 2020
https://www.reuters.com/article/us-...ss-following-wirecards-collapse-idUSKCN24I1CM

The U.S. payments company Stripe is picking up some former Wirecard (WDIG.DE) customers, an executive told Reuters.

“It is difficult to count the impact of Wirecard, but we know that some former Wirecard customers switched to Stripe,” said Matt Henderson, who oversees Europe, the Middle East and Africa.
Stripe is unlisted but is valued at $36 billion.
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Rasheed187 · Jul 18, 2020

mood said: ↑

Stripe wins business following Wirecard's collapse
July 17, 2020
https://www.reuters.com/article/us-...ss-following-wirecards-collapse-idUSKCN24I1CM
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No surprise here, I figured that companies like Stripe and Adyen would most likely profit from it.

guest · Jul 21, 2020

Wirecard Hires Alix Partners for Forensic Investigation: Sources
July 21, 2020
https://www.nytimes.com/reuters/2020/07/21/business/21reuters-wirecard-accounts.html

German payments firm Wirecard has hired Alix Partners for a forensic investigation of the accounting scandal which led to its collapse, people close to the matter said.

The blue-chip company filed for insolvency last month, owing creditors almost $4 billion after disclosing a 1.9 billion euro ($2.17 billion) hole in its accounts that auditor EY said was the result of a sophisticated global fraud.
Alix Partners has been tasked with finding out which Wirecard employees, including executive and supervisory board members, knew what about potentially criminal incidents, the people said.
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Findings are expected to be valuable in any litigation against Wirecard managers and claims to their directors and officers liability (D&O) insurers.
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guest · Jul 22, 2020

'World's Most Wanted Man' Involved in Bizarre Attempt to Buy Hacking Tools
July 21, 2020
https://www.vice.com/en_us/article/...d-bizarre-attempt-to-buy-hacking-team-spyware

The fugitive executive of the embattled payment startup Wirecard was mentioned in a brazen and bizarre attempt to purchase hacking tools and surveillance technology from an Italian company in 2013, an investigation by Motherboard and the German weekly Der Spiegel found.

Jan Marsalek, a 40-year-old Austrian who until recently was the chief operating officer of the rising fintech company Wirecard, seems to have taken a meeting with the infamous Italian surveillance technology provider Hacking Team in 2013.
In recent days, Marsalek has been described as the 'world's most wanted man.'
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Wirecard provided digital payment services and was considered one of the most important companies in the financial tech industry.
The company suddenly collapsed in June [...] Marsalek is now a fugitive and a key suspect in the German investigation. He reportedly fled to Belarus, and is now hiding in Russia under the protection of the FSB, according to German news reports.
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guest · Jul 22, 2020

Prosecutors arrest three in Wirecard criminal enterprise
July 22, 2020
https://www.msn.com/en-gb/money/oth...e-in-wirecard-criminal-enterprise/ar-BB173tPw

German prosecutors arrested three former top executives at Wirecard on Wednesday, saying they now suspected them of an organised criminal enterprise to bilk creditors of billions of euros based on faked accounts.

Former Chief Executive Markus Braun, who is already a suspect, was re-arrested along with Wirecard's former chief financial officer and chief accounting officer on testimony from a cooperating witness, the prosecutor's office said.
The three ex-executives are suspected of having conspired with others to inflate revenues by faking business with third-party acquiring partners, Anne Leiding, spokeswoman for the Munich State Prosecutor's Office, said.

"In reality it was clear, at the latest by the end of 2015, that Wirecard's real business was losing money," Leiding told reporters in Munich.
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Once worth $28 billion, the company now has a stock market value of 220 million euros. The billions borrowed are now "in all probability lost" due to Wirecard's insolvency, Leiding said.
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guest · Aug 3, 2020

German regulator examines auditor EY over Wirecard accounts
August 3, 2020
https://www.reuters.com/article/us-...ditor-ey-over-wirecard-accounts-idUSKBN24Z1QL

The German body in charge of regulating auditors is examining the work of EY, the auditor that approved the books of collapsed payment services firm Wirecard, the German Economy Ministry said on Monday.

Handelsblatt newspaper, which first reported that the inquiry was underway, said the regulator was examining all audits that EY had conducted of Wirecard’s accounts since 2015. The regulator has the power to check earlier submitted accounts and audits.

“A preliminary inquiry was launched in October 2019,” the ministry said in a statement. “In May 2020, after KPMG’s report came out, that was turned into a full regulatory inquiry, which is still underway.”
“We too are interested in this matter being cleared up comprehensively, completely and quickly,” EY said in a statement.
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guest · Aug 25, 2020

Bankrupt Wirecard to lay off half of its German staff
August 25, 2020
https://www.thelocal.de/20200825/bankrupt-wirecard-to-lay-off-half-of-its-german-staff

Wirecard's workforce will be cut by 730 from around 1,300 staff currently, with 570 kept on at the firm's base near Munich.

"The economic situation of Wirecard was and is extremely difficult in light of the lack of liquidity and the well-known scandalous circumstances," the company's insolvency administrator Michael Jaffe said in a statement.
"The number of employees and all other cost positions at all insolvent companies have to be adjusted to the corporate reality."

Administrators said they are in negotiations with "well-known interested parties" regarding an acquisition of the core business, including the group's still-solvent Wirecard Bank division.
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Digital payments provider Wirecard, once a rising star in the booming fintech sector, collapsed spectacularly in June after the company was forced to admit a €1.9 billion hole in its balance sheet.
The company's former CEO and several other top executives have since been
arrested on fraud charges.
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guest · Oct 1, 2020

Wirecard ordered to stop payment services in S'pore
MAS also tells insolvent German firm to return all customers' funds by Oct 14
October 1, 2020
https://www.straitstimes.com/busine...ard-ordered-to-stop-payment-services-in-spore

The Monetary Authority of Singapore (MAS) has ordered Wirecard to stop its payment services in Singapore, in a move that will force businesses that still use the German firm's systems for credit card and other digital payments to shift to other options.

Some users of Wirecard SG's pre-paid cards will be affected as well, said the regulator yesterday.
Wirecard also has to return all customers' funds by Oct 14. The Straits Times understands that this refers to funds held by Wirecard as part of processing payments for merchants, as well as corporate customers which issue pre-paid cards.
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MAS said it has been monitoring the impact of parent company Wirecard AG's insolvency on the ability of its Singapore entities to continue providing payment services here.
However, Wirecard SG has told the authority that it is unable to continue providing payment processing services to a "significant number of merchants", it said.

As such, MAS assessed that it is in the interest of the public for Wirecard SG to cease its payment services and promptly return all customers' funds, it said.

"This provides the greatest certainty to customers on their appropriate course of action, including seeking alternative service providers."
Some merchants that have used Wirecard are now offering consumers other payment options while others are adjusting.
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guest · Nov 19, 2020

German lawmakers to quiz ex-Wirecard boss on Berlin's role
November 19, 2020
https://www.nasdaq.com/articles/german-lawmakers-to-quiz-ex-wirecard-boss-on-berlins-role-2020-11-19

German lawmakers will question the former boss of collapsed payments firm Wirecard about its contacts with government on Thursday, as they investigate Berlin's role in the biggest corporate fraud in post-war Germany.

Their inquiry into the implosion of a German tech star once worth $28 billion [...] Wirecard's demise has embarrassed the German government, which prides itself on a reputation for rectitude and reliability, amid criticism that authorities ignored red flags.
State prosecutors in Munich have charged Wirecard's former chief executive Markus Braun with fraud and embezzlement, alleging that he covered up the true state of its finances to hoodwink investors.
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Scholz, who heads Germany's finance ministry and is responsible for regulator BaFin, has also been criticised for the authorities' failure to take Wirecard to task, spending years probing the company's critics instead.
Scholz has since pledged to tighten financial controls to prevent a repeat fraud.
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guest · Dec 12, 2020

Germany promises to probe audit regulator's Wirecard dealings
December 11, 2020
https://www.rte.ie/news/business/2020/1211/1183855-germanys-wirecard/

German Economy Minister Peter Altmaier promised to investigate after it emerged that the head of the body that regulates auditors had traded in Wirecard stock just weeks before the payment services company collapsed amid massive fraud allegations.

As head of audit regulator APAS, Ralf Bose was responsible for regulating EY, which audited Wirecard's accounts for years until it collapsed following the discovery of a €1.9 billion hole in its accounts.

"We will discuss the matter with the people involved," Altmaier said today, adding that he was "concerned" after learning overnight of Bose's share trading.
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The matter has become an embarrassment for officials and authorities, who have been charged with failing to monitor with sufficient rigour a $28 billion euro company that many had believed was a rare German digital champion.
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