Resignation of Wirecard CEO Was Announced After $2 Billion Went Missing And Fraud Allegations Flew

Jul-2020 | Others

At one of Europe’s most hyped tech companies, more than $2 billion went missing. The digital payments firms will not be recovered if it will not be found rapidly. On Thursday, Wirecard (WCAGY) said that its auditors couldn’t account for €1.9 billion ($2.1 billion) in cash and thus the publication of 2019 financial results are postponed. A resignation by Markus Braun, the German company’s CEO, was made on Friday. Over the two trading sessions, more than 75% of the company shares were pushed down by the Investors. Head of research at London Capital Group, Jasper Lawler said that lacking a very brief clarification in short order, we fear Wirecard is directed to zero. In 1999, Wirecard was founded and was once counted among the most promising tech firms in Europe. They sell data analytics services and processes payments for consumers and businesses. In 26 countries, they have nearly 6000 employees. The company reported revenues of over €2 billion ($2.2 billion) in 2018 or more than 4 times the figure of 2013.

In September 2018, the shares reached an all-time high above €190 ($213). In the very month, it also replaced Commerzbank (CRZBF) in Germany's list of top thirty firms. At that point, the firm became more worthy (worth more than €24 billion or $26.9 billion). On Friday, the share closed at €25.82 ($28.88). Ultimately, valuing the company at not as much of €3.2 billion ($3.6 billion). Currently, the firm’s implosion is followed by a riotous eighteen months for the firm disrupted by the contentions of fraud. Short sellers’ attacks and inquiries over its accounting practices also played a role in degrading the company. In January 2019, the success story began to unravel. It happened when the Financial Times reported that Wirecard fake and signed deals in a series of wary transactions in Singapore. This report was denied by Wirecard – the shares plunged and was produced by the aid of whistleblower.

On Feb 2019, the authorities in Singapore decided to investigate the matter. Last year, another blow landed after the FT published a report and firm documents. These suggested that profits and sales had been bloated at Wirecard outposts in Dubai and Ireland. Once again, the allegation was denied by Wirecard. In April, KPMG published an investigation and was revealed that the firm had not delivered enough information to fully explain the issues raised by the FT.

On Thursday, bad time became the worst time for Wirecard when it was announced by auditors at EY that they could not locate €1.9 billion ($2.1 billion) in cash that was thought to be in Wirecard's accounts. The accountant firm stated that they have information signaling that forged or fake balance confirmations have been provided following the accounts defined. It was suggested by Braun that Wirecard may itself be the prey of scam. Braun delivered a video statement before his resignation. In the video, he stated that it cannot be ignored that Wirecard has become the wounded party in the case of scam of significant shares. He added to his resignation letter that he didn’t intend to burden Wirecard.