CEO of scandal-hit Wirecard resigns

FRANKFURT, Germany – The founder and chief executive of scandal-hit Wirecard resigned on Friday, June 19, after the German payments provider was hit with fresh fraud allegations that have left it struggling for survival.

Markus Braun “resigned today with immediate effect,” the firm said in a statement, adding that the decision was made “in mutual consent with the supervisory board.”

He will be replaced on an interim basis by US manager James Freis.

The bombshell comes a day after auditors from Ernst & Young said 1.9 billion euros ($2.1 billion) were missing from Wirecard’s accounts, intensifying a months-long crisis in the company.

The news prompted investors to abandon the once popular fintech company in droves, sending Wirecard’s share prices into a tailspin.

The stock has plunged by more than 76% since Thursday morning and was trading at 23.90 euros a share by 1130 GMT on Friday.

It marks a stunning fall from grace for the Bavarian start-up, set up in 1999 and once seen as a darling of the fintech scene thanks to the growing global popularity of electronic payments.

It entered Germany’s prestigious DAX 30 index with great fanfare in 2018 after nudging out traditional lender Commerzbank.

But since then, Wirecard has been dogged by a series of articles in the Financial Times alleging accounting irregularities in its Asian operations.

The company’s 4 board members – including Braun – have been under investigation since early June by Munich prosecutors for “market manipulation,” and Wirecard’s headquarters were searched as part of the probe.

The scandal deepened on Thursday when the firm was forced to delay the publication of its 2019 results for a fourth time.

Instead, Wirecard said in a statement that auditors Ernst & Young had identified “spurious balance confirmations” relating to “cash balances on trust accounts.”

 Ticking clock

The auditors’ red flag was raised over escrow accounts at two Asian banks, which were supposed to hold 1.9 billion euros to manage risk for merchants using Wirecard’s payment services.

Wirecard said there were “indications” that the balances had been falsified “in order to deceive the auditor.”

The two Philippine banks that were supposed to hold the cash denied having a relationship with Wirecard, according to Bloomberg News.

Wirecard’s board responded by fling a legal complaint against “unknown persons,” saying they could have fallen victim to a vast fraud.

“It is currently unclear whether fraudulent transactions to the detriment of Wirecard AG have occurred,” Braun said on Thursday.

But the clock is ticking for Wirecard, as two billion euros of credit could be withdrawn if it is unable to publish its results for last year by Friday.

According to preliminary figures, the group said it had processed 173 billion euros of transactions in 2019, up 38.5%.

Revenues grew 37.5%, to 2.8 billion euros, while net profits added 39% at 482 million, Wirecard said. – Rappler.com