Shooting-star German payments provider Wirecard on Monday admitted 1.9 billion euros that auditors say are missing from its accounts likely "do not exist", fueling fraud suspicions that saw its CEO resign.
The group withdrew preliminary results for 2019 and the first quarter of this year as well as financial targets for 2025, and said: "Potential effects on the annual financial accounts of previous years cannot be excluded."
The scandal marks a stunning fall from grace for the Bavarian start-up, set up in 1999 and once seen as a darling of the fintech scene owing to the global increase in electronic payments.
Wirecard's revelation followed the resignation of the company's founder and chief executive Markus Braun on Friday after the firm was hit with fresh fraud allegations that have left it struggling for survival.
Auditors Ernst & Young said on Thursday that 1.9 billion euros ($2.1 billion) were missing from Wirecard's accounts, and Braun resigned the next day.
"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 1.9 billion EUR do not exist," the Wirecard statement said.
"The company previously assumed that these trust accounts have been established for the benefit of the company in connection with the so called Third Party Acquiring business and has reported them as an asset in its financial accounts."
From humble beginnings processing payments for porn and gambling sites, the firm entered Germany's prestigious DAX 30 index with great fanfare in 2018 after elbowing out traditional lender Commerzbank.
But since then Wirecard has been dogged by a series of articles in the Financial Times alleging accounting irregularities in its Asian operations.
On Sunday, the Philippines central bank said that none of the missing $2.1 billion had entered the Philippine financial system. The names of two of the country's biggest banks — BDO and BPI — were used to try to mislead eventual investigators, it added.
Both BDO and BPI have said that Wirecard was neither a client nor a business partner, the central bank said.
They informed Ernst & Young that documents attesting to the presence of the supposed funds were "spurious", the central bank added.
The company's four board members -- including Braun -- have been under investigation since early June by Munich prosecutors for "market manipulation", and Wirecard's headquarters were searched as part of the probe.
Shooting-star German payments provider Wirecard on Monday admitted 1.9 billion euros that auditors say are missing from its accounts likely “do not exist”, fueling fraud suspicions that saw its CEO resign.
The group withdrew preliminary results for 2019 and the first quarter of this year as well as financial targets for 2025, and said: “Potential effects on the annual financial accounts of previous years cannot be excluded.”
The scandal marks a stunning fall from grace for the Bavarian start-up, set up in 1999 and once seen as a darling of the fintech scene owing to the global increase in electronic payments.
Wirecard’s revelation followed the resignation of the company’s founder and chief executive Markus Braun on Friday after the firm was hit with fresh fraud allegations that have left it struggling for survival.
Auditors Ernst & Young said on Thursday that 1.9 billion euros ($2.1 billion) were missing from Wirecard’s accounts, and Braun resigned the next day.
“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 1.9 billion EUR do not exist,” the Wirecard statement said.
“The company previously assumed that these trust accounts have been established for the benefit of the company in connection with the so called Third Party Acquiring business and has reported them as an asset in its financial accounts.”
From humble beginnings processing payments for porn and gambling sites, the firm entered Germany’s prestigious DAX 30 index with great fanfare in 2018 after elbowing out traditional lender Commerzbank.
But since then Wirecard has been dogged by a series of articles in the Financial Times alleging accounting irregularities in its Asian operations.
On Sunday, the Philippines central bank said that none of the missing $2.1 billion had entered the Philippine financial system. The names of two of the country’s biggest banks — BDO and BPI — were used to try to mislead eventual investigators, it added.
Both BDO and BPI have said that Wirecard was neither a client nor a business partner, the central bank said.
They informed Ernst & Young that documents attesting to the presence of the supposed funds were “spurious”, the central bank added.
The company’s four board members — including Braun — have been under investigation since early June by Munich prosecutors for “market manipulation”, and Wirecard’s headquarters were searched as part of the probe.
