German payment services provider Wirecard said on Monday that it has concluded that 1.9 billion euros (US$2.1 billion), which were supposed to be held in two accounts probably does not exist, the deepening of the problems last week, prompted the resignation of its chief executive officer. Wirecard AG was once considered a star of the growth of the financial technology sector, but its shares fell after the company has been the subject of several Financial Times reports on the irregularities in the accounts of its activities in Asia. Wirecard disputed the reports, which began in February 2019, and has said that he was the victim of speculators.
Last week, the company revealed that listeners could not find the accounts containing the 1.9 billion euros, and has postponed its annual report. On Friday, CEO Markus Braun resigned and was replaced by James Freis.
Two banks in the Philippines that have been said to hold the money in escrow accounts said that they had no dealings with Wirecard.
The Bank of the Philippine Islands, according to a document affirming that the company has been a customer has been “falsified”. “BDO Unibank said that a document asserting the existence of a Wirecard account has been tampered with and” bears the forged signatures of bank officers. “The country of the governor of the central bank said none of the missing money has entered the Philippines’ financial system.
Monday, Wirecard, said his board of directors ” assesses, on the basis of the continuation of the review that there is a dominant probability that the bank balances of trust accounts in the amount of 1.9 billion euros do not exist. ”
Hours later, he announced the dismissal of its chief operating officer Jan Marsalek, who had been suspended from the management of the board of directors last week. German press agency dpa has reported that Marsalek had been in charge of overseeing the day to day operations, including in South-east Asia, where the possible fraud.
Wirecard says that he is in “constructive discussions” with banks on the continuation of lines of credit, and is ” evaluating options for a sustainable financing strategy for the company. “He said that the examination of other possible measures to sustain its activities, including the restructuring and disposal of business units.
After a sharp drop last week, Wirecard shares took another dive on Monday. They were down from 44.9% to 14.02 euros in afternoon Frankfurt trading.
The chairman of the financial regulator, German BaFin, Felix Hufeld, has described the situation as “a complete disaster” and said “it’s a shame that something like this happened,” news agency dpa reported.
“We are in the midst of the most terrible situation I’ve ever seen a DAX company,” Hufeld said at a conference in Frankfurt, in reference to Germany’s leading index of safe values.
He acknowledged the criticism of regulators including BaFin, saying that ” we have not been effective enough to prevent this from happening. ”
Moody’s Investors Service, on Monday, withdrew Wirecard rankings, saying that ” it believes it has insufficient or otherwise inadequate information to support the maintenance of the rating. ”
The company was once considered a star of Germany’s tech sector; its market value at one time exceeded that of Deutsche Bank. Wirecard pushed Germany’s No. 2 bank, Commerzbank, on the DAX.
The company has quickly expanded outside of Germany, the construction of an Asia-Pacific and entering the North American market through the purchase of Citigroup’s prepaid card services business in 2016.
“You have to pinch yourself and wonder if what’s happening at Wirecard is true,” said Robert Halver, an analyst at Baader Bank in Frankfurt.
He noted that Germany “is not the embarrassment of high-tech companies” and raised the possibility of the German government is considering measures to preserve Wirecard technology, arguing that ” it would be bad if It became an acquisition of control of the object for China. ”
Christoph Noelting in Frankfurt, Germany, contributed to this report.