WIRECARD CEO QUITS OVER ‘LOST’ $2-B; 2 PH BANKS NIX LINKS TO FIRM
More than $2 billion has gone missing at one of Europe's most vaunted tech companies. If it's not found quickly, the digital payments firm may never recover, Charles Riley and Eoin McSweeney reported for CNN Business on June 19, 2020. Wirecard delayed the publication of its 2019 financial results on Thursday, saying its auditors couldn't account for €1.9 billion ($2.1 billion) in cash.
Then on Friday, the German company's CEO, Markus Braun, resigned. Investors reacted by pushing shares in the company down by more than 75% or $11.2 billion over two trading sessions. Two Philippine banks, BDO and Bank of the Philippine Islands (BPI) have denied claims that they were Wirecard clients, saying documents showing so are spurious.
"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.
Investors recognized its potential: Shares reached an all-time high above €190 ($213) in September 2018, the same month it replaced Commerzbank in Germany’s list of top 30 companies. At that point, Wirecard was worth more than €24 billion ($26.9 billion). The shares closed at €25.82 ($28.88) on Friday, valuing the company at less than €3.2 billion ($3.6 billion). 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. The success story began to unravel in January 2019, when the Financial Times reported that Wirecard forged and backdated contracts in a string of suspicious transactions in Singapore.