Jun 23, 2020
So how exactly do you “misplace” €1.9 billion? That’s the conundrum Wirecard auditors Ernst and Young need to unravel. That particular question was first asked last Friday. The first answer came from the markets as the former darling of the Fintech world shed 80% of its share value following the revelations.
Image courtesy of Finanzen.net
The next step was the resignation of Marcus Braun with the company’s chief compliance officer James Freis stepping in to fill the role of interim CEO. Following the discovery of the missing funds, Wirecard was forced to withdraw its financial results for 2019 and 2020 to date.
An arrest warrant was issued for Mr. Braun on charges of market manipulation and false financial reporting. Mr. Braun, until recently a paper billionaire, turned himself in to authorities in Munich.
The case centered on the small question of €1.9 billion in missing funds from the company’s balance sheet uncovered by Ernst and Young. In a brief statement, Wirecard later claimed the amount most probably never existed in its accounts.
“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,”
Wirecard is (or perhaps more accurately, was) a payment processor and financial services provider. Until recently considered one of the rising stars of the Fintech world, it looks highly unlikely the company will avoid insolvency. Misplacing over two billion dollars is never good for any type of business, but it seems particularly bad when your core business is handling and safeguarding money!