Wirecard said on Monday that 1.9 billion euros ($2.9 billion canadian dollars) missing from its accounts, was probably never there and he was looking to the sale or closure of certain parts of its business as it sought to avoid the threat of a monetary tightening.
The German former stock market darling, which processes payments for companies, including Visa and Mastercard, saw billions of euros wiped off its value in the last few days and began on the Frankfurt stock exchange decreased 40 percent.
Wirecard is scrambling to strengthen its finances and has appointed investment bank Houlihan Lokey, as it seeks an agreement with the creditors, after having seen its credit rating reduced to “junk” by the rating agency Moody’s on Friday.
In a statement, Monday, Wirecard also withdrew financial statements for 2019 and said that it was the consideration of cost reductions to cope with the crisis that has befallen what was once hailed as a rare success in the history of the German technology sector.
“The management Board of Wirecard assesses … that there is a dominant probability that the bank balances of trust accounts in the amount of 1.9 billion EUROS do not exist,” he said.
Wirecard, said Thursday that the auditor EY had refused to sign the 2019 accounts as it was unable to confirm the existence of 1.9 billion euros in cash balances in the trust accounts, about a quarter of its balance sheet.
They had regularly approved Wirecard accounts in recent years, and its refusal to sign up to 2019 confirmed the defects found in an external investigation by KPMG in April, which in turn followed a report by the Financial Times.
Wirecard the latest announcement follows the release Friday of the former chief executive Markus Braun, who was replaced by James Freis, a former compliance officer for Germany at the stock exchange.
The company has been under surveillance since a whistleblower alleged that it owes its success in part to a website of false transactions. This has resulted in a search for the missing cash, which hit a deadlock in the Philippines.
The Philippines central bank has said none of the money seems to have entered the country, after the Bank of the Philippine Islands (BPI) and BDO Unibank said documents purporting to show It had deposited funds with them were false. Both say It was not a customer.
BPI told Reuters that it had ” suspended an assistant manager and whose signature appeared on any of the documents, while BDO has said that the central bank of one of its marketing agents seems to have produced a certificate from the bank.
“The central bank is doing its own investigation,” Bangko Sentral ng Pilipinas Governor Benjamin Diokno said television channel ANC on Monday.
Munich-based Wirecard has been lauded as a home-grown fintech success, and has been propelled in the German blue-chip DAX index in 2018. Analysts at Mirabaud said that its DAX membership was completely inappropriate and should be reviewed.
Some fear the growing scandal of damaging Germany’s reputation and Fabio De Masi, a member of the Bundestag, said the country’s financial watchdog Bafin had failed in its duty.
Wirecard operates both as a transmitter of real and “virtual” payment card for the consumer, and as a buyer for the account of dealers.
The company has marketed as a universal payments platform positioned to take advantage of the growth in digital payments. It has also launched smartphone payment applications for merchants and consumers.
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