Chris Hohn, director of the $ 24 billion children’s investment fund, called on Wirecard’s supervisory board to fire chief executive Markus Braun after KPMG said it was unable to verify whether much of the profit from fintech was real.
The call from the activist short seller, one of Europe’s best-known and most successful investors, adds to the pressure on Thomas Eichelmann, president of Wirecard, after KPMG listeners said they had faced delays and obstacles in carrying out the six-month survey.
German specialist Dax 30 payments specialist shares fell 26% on Tuesday when he released commissioned audit results after the Financial Times reported relationship-focused accounting fraud reports of the group with third parties.
In its audit report released on Tuesday, KPMG said it “informed the Supervisory Board in a letter of a considerable delay in the submission by Wirecard AG of the documents requested by us”. He added that the company had “repeatedly postponed the individual meetings agreed with the main internal contacts of Wirecard”.
Hohn warned that the supervisory board “has extensive legal obligations” to oversee the board of directors and “is legally obliged to intervene.” In our view, the necessary intervention is now to remove the CEO from all of his management functions, “he said in a letter posted on TCI’s website on Tuesday.
Wirecard had to answer analysts’ repeated questions on Tuesday about the company’s cooperation with KPMG. Braun said the audit was independent, found no evidence of misstatement on the balance sheet, and took time due to the complexity of the data involved.
The call for action for TCI, which short sold 1% of Wirecard’s shares, came as other investors expressed dissatisfaction with the results of the special audit. Ingo Speich, head of sustainable development and corporate governance at Deka Investment, which owns 1.3% of Wirecard’s capital, asked for further investigation into the third-party acquisition of Wirecard on Thursday. “Wirecard must act as soon as possible and finally create transparency to avoid further damage,” he said.
Wirecard said part of KPMG’s work, examining data for December 2019, would continue. Hohn said if the supervisory board should not fire Mr. Braun, he should at the very least “remove Wirecard’s management from any involvement in this audit until all allegations have been fully resolved” .
The investor also raised concerns about Wirecard’s compliance with anti-money laundering regulations following KPMG’s failure to identify certain Wirecard customers at the heart of whistleblower fraud allegations. “How is it possible to comply with these regulations if Wirecard does not know or will not disclose who its customers are? Asked Mr. Hohn.
Wirecard has always declared that it complies with all applicable rules and regulations.
The investor waged previous militant battles in Germany, including a fight against executive compensation at Volkswagen in 2016 and an earlier campaign to oust the CEO of Deutsche Börse when the investor was described as a “locusts” hedge fund .
Wirecard sued the FT for misuse of trade secrets in Munich regarding articles published in January and February 2019. The FT sticks to its reports and defends the trial.