The Wirecard scandal sweeping across the European FinTech space intensified over the weekend with CEO Markus Braun leaving the company as the board says the missing €1.9bn ($2.1bn) “do not exist.”
The missing money, which account for roughly of a quarter of Wirecard’s balance sheet, were supposed to be held by two Asian banks but on Sunday the central bank of Philippines revealed that none of the money appears to have entered the country’s financial system, the BBC reported.
The German FinTech has been forced to withdraw its financial results for 2019 and the first quarter of 2020, which were due last week. As FinTech Global reported last week, the auditor Ernst & Young (EY) had refused to sign off on the financial results.
“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 [€1.9bn] do not exist,” the company said in a statement on Monday.
The scandal follows from a long series of reports by the Financial Times, which accused Wirecard’s Asian branches of serious accounting irregularities. For instance, the articles alleged that people within Wirecard had forged backdated contracts and that an external law firm had found “serious offences of forgery and/or falsification of accounts”. Wirecard has previously responded to this series of reports with threats to sue the publication.
Wirecard is reportedly discussing a financial lifeline with banks and is considering restructuring its operations and selling shutting down parts of the business.
Wirecard has been considered one of the biggest FinTech success stories coming out of Europe since its launch in 1999. It is also considered a crucial member in both Visa and Mastercard’s network. At one point the company worth more than €24bn and even replaced Commerzbank in the German blue-chip index. Since then its market capitalisation has fallen to just €6.5bn.
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