The CEO of scandal-hit Wirecard resigns after company reveals $2 billion has gone missing – Business Insider
Wirecard CEO Markus Braun resigned suddenly Friday as the fintech firm’s share price nosedived by 80% over two days of trading.
The German payments firm is at the center of a huge accounting scandal after it revealed it was unable to trace 1.9 billion euros, or about $2 billion, in cash balances.
The company has also been subject to a long-running investigation by the Financial Times over its accounting practices.
In a terse statement issued Friday, Wirecard said that Braun stepped down with the agreement of its board and that the company’s chief compliance officer, James Freis, would temporarily take on the CEO role.
The chief executive of the scandal-hit German payments firm Wirecard abruptly stepped down Friday, after a torrid 48 hours during which the firm revealed that nearly 2 billion euros in cash balances had gone missing.
Wirecard announced the immediate departure of Markus Braun in a short statement Friday. It said the company’s chief compliance officer, James Freis, would take up the CEO role in the interim.
Freis joined Wirecard only on Thursday via an emergency appointment to the board. His start date was meant to be July 1.
Braun’s resignation is the latest in a wave of developments that have sent Wirecard’s share price crashing by 80% over two days.
The once highly valued firm said on Thursday that its auditors at EY, formerly known as Ernst & Young, could not confirm “sufficient audit evidence” of about 1.9 billion euros, or $2 billion, in its cash balances, effectively saying the money had gone missing.
Wirecard had said it had deposited the money at two Asian banks, but EY told the firm that it couldn’t locate the cash and that documents seeming to account for the money were “spurious.”
Both banks, the Bank of the Philippine Islands and BDO Unibank Inc., publicly denied having any business relationship with Wirecard.
“Wirecard is not a client of the bank. The document claiming the existence of a Wirecard account with BDO is a falsified document and carries forged signatures of bank officers,” BDO said, according to Reuters.
BPI also said Wirecard was 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. We continue to investigate this matter.”
On Thursday, before he resigned, Braun said he did not know why the banks denied having the money. He suggested that Wirecard itself might have been the victim of fraud.
“It cannot be ruled out that Wirecard AG has become the aggrieved party in the case of fraud of considerable proportions,” he said.
Wirecard on Thursday said it would delay the publication of its financial results for 2019, which were due Thursday. Wirecard has pushed back its financial results three times since March.
The firm warned that it risked losing 2 billion euros in loans if it did not publish its audited report by Friday.
The German fintech firm was once heralded as a high-flying tech company, and it was worth about 24.6 billion euros when it floated on the DAX index in September 2018.
The firm is now worth about 3.2 billion euros, or $3.6 billion. The company was the subject of an in-depth investigation by the Financial Times in 2019 over its accounting practices, with documents obtained by the newspaper appearing to indicate that the firm inflated figures for its sales and profits.
Germany’s financial regulator, BaFin, is running three simultaneous investigations into Wirecard. The Financial Times reported Friday that two of Wirecard’s biggest investors, Union Investment and DWS, had threatened legal action against the company.