The German payment service Wirecard, a competitor of the Dutch Adyen with services that KLM uses, for example, did not have a good week, to say the least. The company's accountants were 'lost' 1.9 billion, the company lost three-quarters of the stock market value in two days and the CEO stepped down. What exactly happened?
The Wirecard disaster week starts on Thursday morning, when accounting firm EY does not give the green light for the fourth time to publish the 2019 annual report. What seems? The accountants cannot find an amount of 1.9 billion euros that is on the balance sheet. The 1.9 billion represents a quarter of the company's total balance sheet.
In Thursday's press release, Wirecard writes that there are signs that a trustee was trying to mislead EY. Nor can it exclude "fraud of significant proportions", CEO Markus Braun said in a recorded video.
Less than 24 hours later, the same Braun, who has been at the helm of the payment service since 2002, keeps the honor to himself and resigns. COO Jan Marsalek had already been suspended a day earlier. James Freis, who is due to take office next week to lead the company in the area of compliance (legal and regulatory compliance, ed.), Is being pushed forward to immediately replace Braun as CEO.
It is not the first time that Adyen's German competitor has been in the news about financial impropriety. A year and a half ago, Financial Times ( FT ) revealed that documents had been falsified in order to trick accountants. Wirecard has always strongly opposed the publications of FT.
Money shortages ahead?
After the news was released on Thursday, the company's stock price fell by 62 percent. On Friday there will be a further drop of 36 percent, when it is announced that lenders can reclaim 2 billion euros if the annual report is not published on Friday. This would put the company in acute liquidity problems.
The annual report will not be published on Friday, which indicates that the problems surrounding the 'lost' 2 billion are not over yet. However, it is still unclear whether the multibillion-dollar loans have been recovered and whether the company is therefore in financial difficulties.