{"id":4306,"date":"2020-06-19T20:16:13","date_gmt":"2020-06-19T20:16:13","guid":{"rendered":"https:\/\/aviancetechnologies.com\/blog\/blog\/wirecard-a-payments-firm-is-rocked-by-a-report-of-a-missing-2-billion\/"},"modified":"2020-06-19T20:16:13","modified_gmt":"2020-06-19T20:16:13","slug":"wirecard-a-payments-firm-is-rocked-by-a-report-of-a-missing-2-billion","status":"publish","type":"post","link":"https:\/\/aviancetechnologies.com\/blog\/wirecard-a-payments-firm-is-rocked-by-a-report-of-a-missing-2-billion\/","title":{"rendered":"Wirecard, a Payments Firm, Is Rocked by a Report of a Missing $2 Billion"},"content":{"rendered":"

\u00a0\u00a0 <\/p>\n

[responsivevoice_button rate=”1\u2033 pitch=”1.2\u2033 volume=”0.8\u2033 voice=”US English Female” buttontext=”Story in Audio”]<\/p>\n

Wirecard, a Payments Firm, Is Rocked by a Report of a Missing $2 Billion<\/h2>\n

<\/p>\n

\n
\n

Wirecard, a Germany company that soared in value in recent years as it provided a widening array of payment services around the world, was suddenly collapsing on Friday amid questions surrounding missing cash balances amounting to 1.9 billion euros, about $2.1 billion.<\/p>\n

The scandal caused an 80 percent plunge in the company\u2019s stock price over the last two days, threats of shareholder lawsuits amid an investigation by prosecutors and the German financial regulator, and a dizzying transition in the company\u2019s leadership.<\/p>\n

The company\u2019s longtime chief executive, Markus Braun, stepped down on Friday, succeeded by James Freis, a former compliance officer at Germany\u2019s stock exchange who was hired only the day before to serve on the company\u2019s management board.<\/p>\n

Wirecard, a fintech company that was founded in 1999 and is based in Munich, boomed in recent years as a provider of digital payment services. It prospered by making contactless payments seemingly effortless for hundreds of thousands of merchants, with customers like Apple Pay, Google Pay and Visa.<\/p>\n<\/div>\n<\/div>\n

\n
\n

In 2016, it ventured into North America by acquiring Citibank\u2019s prepaid card division for an undisclosed sum. Over all, it was praised in Germany as a homegrown tech success, and in 2018 it was propelled into Frankfurt\u2019s blue chip stock index, the DAX, pushing out an aging bank of a different era, Commerzbank.<\/p>\n

The crisis at Wirecard stems from an article in The Financial Times, which reported in October that staff appeared to conspire to fraudulently inflate sales and profit and mislead EY, the company\u2019s auditor.<\/p>\n

Wirecard, which has denied any wrongdoing, responded to the reports by delaying EY\u2019s annual report for 2019 and hiring KPMG to provide an independent assessment of the company\u2019s books.<\/p>\n

KPMG released its report in April, and said it could not provide sufficient documentation to address all allegations of irregularities.<\/p>\n

In the most serious finding, covering 2016-18, KPMG said it had been unable to verify the existence of \u20ac1 billion in revenue that Wirecard booked through three obscure third-party acquiring partners. The findings led to calls by some investors for Mr. Braun\u2019s ouster.<\/p>\n<\/div>\n<\/div>\n

\n
\n

The KPMG report appeared to attract the attention of Germany\u2019s financial regulator, BaFin, which had previously suspected short-sellers of manipulating Wirecard\u2019s stock price.<\/p>\n

On June 5, prosecutors raided the company\u2019s headquarters and opened proceedings against management as part of the inquiry initiated by BaFin. Prosecutors said in a statement that the company was suspected of releasing misleading information that may have affected Wirecard\u2019s share price.<\/p>\n

Wirecard said it would cooperate with the investigation. \u201cThe board is optimistic that this matter will be resolved and that the accusations will be shown not to be founded,\u201d it said in a statement.<\/p>\n

The scandal came to a focus this week because EY was scheduled on Thursday to publish Wirecard\u2019s 2019 annual report, which had been delayed by the KPMG review.<\/p>\n

But EY said it would not be able to issue the report because it could not confirm the existence of \u20ac1.9 billion in cash balances on trust accounts, representing around a quarter of its balance sheet. As Wirecard\u2019s stock price tumbled, Mr. Braun appeared in a video with other company executives, where he said the bank had been the victim of fraud, and pointed to irregularities at two unnamed banks.<\/p>\n

\u201cAt present it cannot be ruled out that Wirecard A.G. has become the aggrieved party in a case of fraud of considerable proportions,\u201d he said.<\/p>\n

Investors were not convinced. The company had said it was facing a crisis because failure to provide a certified annual report could cause about \u20ac2 billion in loans to be called in as soon as Friday.<\/p>\n<\/div>\n