“Without a very concise explanation in short order, we fear Wirecard is headed to zero,” said Jasper Lawler, head of research at London Capital Group.
Founded in 1999, Wirecard was once considered one of the most promising tech firms in Europe. It processes payments for consumers and businesses, and sells data analytics services. The company, which has nearly 6,000 employees in 26 countries around the world, reported revenues of over €2 billion ($2.2 billion) in 2018, or more than four times the figure from 2013.
This week’s implosion follows a tumultuous 18 months for the company punctuated by allegations of fraud, attacks by short sellers and questions over its accounting practices.
Billions go missing
The fall from grace accelerated on Thursday, when auditors at EY announced that they could not locate €1.9 billion ($2.1 billion) in cash that was supposed to be in Wirecard’s accounts.
“We have information indicating that spurious or falsified balance confirmations have been provided in relation to these accounts,” the accountancy firm said in a statement.
Braun suggested Wirecard may itself be the victim of fraud.
“It cannot be ruled out that Wirecard has become the aggrieved party in a case of fraud of considerable proportions,” Braun said in a video statement released before his resignation.
In a resignation letter published by the company, Braun said he did not want to burden Wirecard.
“The confidence of the capital market in the company I have been managing for 18 years has been deeply shaken,” Braun wrote in the letter. “With my decision, I respect the fact that responsibility for all business transactions lies with the CEO.”
The company is now scrambling to find the money to keep creditors at bay. According to Wirecard, €2 billion ($2.2 billion) in loans to the company may be called in on Friday if auditors don’t sign off on its results.
Wirecard said in a statement Friday that it is “in constructive discussions with its lending banks with regard to the continuation of the credit lines and the further business relationship.”
In Germany, the scandal at Wirecard is raising questions about the Federal Financial Supervisory Authority, or BaFin.
The regulator said Friday that it is actively investigating Wirecard.
“We are examining Wirecard’s disclosure from yesterday as part of our investigation into whether the company violated rules against market manipulation,” BaFin said in a statement.