In the past week, news broke that EY auditors refused to sign-off on Wirecard’s accounts for 2019, citing the fact that a sum of €1.9 billion was unaccounted for and purportedly held in two bank accounts in the Philippines. CEO Markus Braun claimed that the company was the “the victim in a substantial case of fraud,” and COO Jan Marsalek was suspended, later to be terminated. Braun then resigned from the company on Friday.
It is said that Braun turned himself over to Munich police on Monday evening after realizing that a warrant has been issued for his arrest. The former CEO is suspected to have recorded doctored transactions to artificially inflate Wirecard’s sales, increasing its value in the eyes of customers and investors. Philippine authorities are also investigating the whereabouts of Marsalek as part of a broader probe into the company.
Just days after a €1.9 billion hole was found in its balance sheet, the German payments company is starting out insolvency proceedings and its former CEO is now being charged with fraud.
On Thursday, the company announced in a statement that it would be sending an application to the Munich district court to open insolvency proceedings as a result of its “impending insolvency and over-indebtedness.”
The Frankfurt Stock Exchange had just suspended the company’s shares before the announcement was released.
Wirecard was taking on the form and reputation of a giant in the German fintech scene – a DAX 30 company which was once valued at €24 billion. Of course, that value has crashed through the floor as new shocking revelations unfolded through the week.
After experiencing a brief 27% increase on the heels of the news of Braun’s arrest, which circulated on Tuesday, trading activities on Thursday showed Wirecard’s value dropping even further by a staggering 76%, as soon as news of its insolvency broke.
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