The missing €1.9 billion was meant to be held in accounts looked after by a trustee on behalf of Wirecard and payment-processing partners in some countries. Wirecard said the missing money may have never existed. Its stock is now seriously down again.
German payment processor and financial services provider Wirecard AG (ETR: WDI) has recently got into hot water. It got involved in a big accounting scandal as €1.9 billion in cash was missing from the Wirecard’s balance sheet. The company lost credit of its clients and as a result, Wirecard shares started plummeting. On Friday, Wirecard said the missing money probably did not exist at all. Following the statement, Wirecard stock dropped further, opening 46% lower today.
At the moment of writing, Wirecard stock is 35.52% down, €16.65 per share.
Roots of the Scandal that Brings Wirecard Stock Down
Last Thursday, the management of Wirecard announced that auditors from Ernst & Young indicated that as much as €1.9 billion in cash was missing from the Wirecard’s balance sheet. It is not clear how such a sum could disappear. On hearsay, improper corporate governance practices took place at the payments company.
After Ernst & Young disclosed Wirecard’s accounting practices, the company stated that the missing funds were in two banks in the Philippines. In response, the banks, BDO and BPI, claimed that they have no relationship with Wirecard.
BDO Unibank representative said:
“The document claiming the existence of a Wirecard account with BDO is a falsified document and carries forged signatures of bank officers.”
Bank of the Philippine Islands stated:
“Wirecard is not a client. Their external auditor presented to us a document that claimed that they are a client. We have determined that the document is spurious.”
On Friday, Wirecard announced the resignation of its CEO Markus Braun who has been with Wirecard for 18 years. James Freis, former head of compliance at Deutsche Börse, will be a new Wirecard leader.
Missing Cash Doesn’t Exist, Says Wirecard
The missing €1.9 billion was meant to be held in accounts looked after by a trustee on behalf of Wirecard and payment-processing partners in some countries. However, after the money has not been found in the banks where it was supposed to be, Wirecard said the missing money may have never existed.
Wirecard 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 company further added:
“Wirecard continues to be in constructive discussions with its lending banks with regard to the continuation of credit lines and the further business relationship, including the continuation of the current drawing coming due at the end of June.”
According to Wirecard, it was also considering several rescue plans. They include cost cuts, the restructuring of its operations, and selling or shutting parts of the business.
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