Wirecard chief leaves as crisis deepens

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Wirecard chief executive Markus Braun has resigned with immediate effect, the share price of the payment group continuing to plummet a day after it revealed that it was short of 1.9 billion euros in cash.

The shares of the German high-end payments firm fell 80% in two chaotic trading days after it said that EY auditors had received “fake” documents detailing the cash balances.

The company said in a regulatory statement on Friday that its new chief compliance officer, James Freis, who had joined the company on Thursday only from Deutsche Börse, had been named interim CEO.

Wirecard said the resignation of Braun, who is also the largest shareholder in fintech, occurred “in mutual agreement with the supervisory board.”

Braun’s resignation follows Thursday’s suspension of Wirecard chief operating officer Jan Marsalek.

Earlier, two of Germany’s largest investors had threatened to sue the escalating accounting scandal that casts doubt on the future of the once high-paying payment company.

Union Investment, which until recently was one of the top 10 shareholders, joined fellow asset manager DWS to threaten to sue the company, which for almost two decades was considered a rare success German technological.

Wirecard was plunged into crisis Thursday when he revealed that 1.9 billion euros in escrow accounts at two Asian banks were missing. EY, his longtime auditor, said there were indications that a Wirecard trustee in bank accounts had attempted to “deceive the auditor” and that he may have provided “false cash balances” ”

Bank of the Philippine Islands is one of two Asian banks where Wirecard said it deposited money, according to a person familiar with the matter.

The bank told the Financial Times on Friday that a document showing that Wirecard was the bank’s customer was “false”, adding that the German company “was not a customer”. The bank said it was continuing to investigate the matter.

In a video statement released late Thursday, Braun said it was “unclear” why Asian banks “told the auditor that the confirmations were false.”

Braun, who led the meteoric growth of the company that turned him into a billionaire at one point and catapulted Wirecard into the top German stock index, said that “it cannot be ruled out that Wirecard has become the injured party in fraud of considerable proportions ”. .

German fintech stocks traded 43% to € 22.00 early in the afternoon, after falling 51% earlier.

The unwinding of Wirecard’s shares and bonds ends an 18-month period during which the company attempted to allay fears about its accounting, including by ordering a special audit from KPMG. The findings of the special audit, released in late April, did not dispel the concerns.

Yesterday’s revelation that there was money in its accounts did not allow Wirecard to publish its 2019 results as promised and gives its lenders the possibility of canceling 2 billion euros in loans if the results fail are not published on Friday.

The Financial Times reported in October that Wirecard staff appeared to have conspired to fraudulently inflate the sales and profits of Wirecard’s subsidiaries in Dubai and Dublin and to mislead EY, the group’s auditor for a decade.

The continuing decline in the share price has caused the Aschheim-based company to drop nearly 80% in the past two days, canceling out 10 billion euros in market capitalization.

Last month, one of Germany’s most prominent securities attorneys filed a lawsuit against Wirecard. Tübingen’s lawyer Andreas Tilp, who is leading a € 10 billion class action lawsuit against Volkswagen and Porsche, accuses the group of “false, omitted and incomplete” disclosure payments.

Wirecard has always denied any wrongdoing.

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