Wirecard collapses amid accounting scandal
26 Jun 2020
German fintech Wirecard, which has become mired in an accounting controversy over €1.9bn (£1.7bn) of missing cash, has gone into administration owing around €3.5bn, citing ‘impending insolvency and over-indebtedness’
26 Jun 2020
The online payments specialist is the first company in Germany’s Dax 30 to file for insolvency since the listing was founded 32 years ago.
Wirecard joined the Dax 30 two years ago, at a valuation of €24bn, but as a result of the accounting scandal its share price has crashed and its current valuation is less than €400m.
EY, which has been the company’s auditor since 2007, refused to sign off its 2019 accounts, saying it was unable to obtain sufficient evidence to confirm €1.9bn of cash balances on trust accounts, which represented approximately a quarter of the consolidated balance sheet total.
Wirecard CEO and founder, Markus Braun, has been arrested on suspicion of inflating the company's balance sheet and revenues to make it appear stronger and more attractive for investors and customers.
Braun has now been released on €5m bail. Three other managers are also under investigation.
EY Germany said Wirecard provided ‘false confirmations and statements with regard to escrow accounts’ in the audit for 2019.
The firm said: ‘There are clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception.’