Wirecard CEO Markus Braun resigned on Friday.

Wirecard CEO Resigns due to $ 2 Billion Disappearance, Fraud Claims Growing

Wirecard (WCAGY) It postponed publishing its 2019 financial results on Thursday, saying its auditors could not calculate 1.9 billion euros ($ 2.1 billion) in cash. Then on Friday, the German CEO, Markus Braun, resigned. Investors responded by pushing shares in the company down more than 75% during two trading sessions.

“Without a very brief explanation in a short time, we fear Wirecard will go to zero,” said Jasper Lawler, head of research at the London Capital Group.

Wirecard was founded in 1999 and was once considered one of the most promising technology companies in Europe. It handles payments to consumers and businesses, and sells data analytics services. The company, which has nearly 6,000 employees in 26 countries around the world, recorded revenues in excess of 2 billion euros ($ 2.2 billion) in 2018, or more than four times the figure from 2013.

Investors realized its potential: stocks reached an all-time high above 190 euros ($ 213) in September 2018, the same month they Commerzbank (CRZBF) at Germany’s 30 Best Companies List. At that point, Wirecard was worth more than 24 billion euros ($ 26.9 billion). The stock closed at 25.82 euros ($ 28.88) On Friday, the company estimates less than 3.2 billion euros ($ 3.6 billion).

The explosion this week comes after the company’s troubled 18 months that were peppered with allegations of fraud, short-sided attacks and questions about its accounting practices.

The success story began to unfold in January 2019, when The Financial Times reported Wirecard is fraudulent and decades old in a series of suspicious transactions in Singapore. The company denied the report, which was prepared with the help of whistleblowers, but its shares declined. In February 2019, the authorities in Singapore said they would investigate.
Another blow landed late last year, when FT published a report and company documents This indicates that profits and sales have been magnified at front-end Wirecard locations in Dubai and Ireland. Wirecard again denied these allegations. But a KPMG investigation published in April found that the company did not provide enough information to fully explain the issues raised by the Financial Times.

Billions disappeared

The retreat from Grace accelerated on Thursday, when EY auditors announced that they could not locate the € 1.9 billion ($ 2.1 billion) in cash that was supposed to be in Wirecard’s accounts.

“We have information indicating that false or false assurances were made of the balance in relation to these accounts,” the accounting firm said in a statement.

Brown suggested that Wirecard might be himself a victim of fraud.

“It cannot be ruled out that Wikkard has become the party affected by fraud in large proportions,” Brown said in a video statement released before his resignation.

In a letter of resignation published by the company, Brown said he did not want to overburden Wirecard.

“The capital market’s confidence in the company I have run for 18 years has been severely shaken,” Brown wrote in the message. “By my decision, I respect the fact that the responsibility for all commercial transactions rests with the CEO.”

The company is now scrambling to find money to keep creditors in a tight spot. According to Wirecard, 2 billion euros ($ 2.2 billion) in loans may be called to the company on Friday if auditors do not sign their results.

Wirecard said in a statement on Friday that it is “in constructive discussions with lending banks regarding the continuation of credit lines and more business relationships.”

In Germany, the Wirecard scandal raises questions about the Federal Financial Supervisory Authority, or BaFin.

BaFin has been a spectator for a very long time and instead has been accused Financial reporters to manipulate the market“Now a small number of small investors are suffering. BaFin must radically change its approach to regulation,” German parliamentarian Fabio de Masse said on Twitter.

The organizer said on Friday that it is actively investigating Wirecard.

“We are studying Wirecard’s disclosure from yesterday as part of our investigation on whether the company violated the rules against market manipulation,” BaFin said in a statement.

Leave a Reply

Your email address will not be published. Required fields are marked *