Wirecard chairman quits as accounting controversy lingers

SAN FRANCISCO • Wirecard chairman Wulf Matthias has resigned after months of controversy over the digital payments company's accounting practices involving its Singapore operations.

Mr Matthias, 75, has stepped down as chairman of the supervisory board for personal reasons, and will be replaced by Mr Thomas Eichelmann, the Germany-based firm said on Friday. Mr Matthias will remain a member of the board.

The payment processor's shares have whipsawed for more than a year after several media reports raised questions about accounting methods, all of which the company has rejected. Wirecard has said its reporting obligations were "followed properly". Shares are down more than 40 per cent from their peak in March 2018.

Mr Eichelmann, 54, a former chief financial officer of the Frankfurt Stock Exchange, was a member of Wirecard's supervisory board and head of the body's audit committee. He has held various other supervisory positions over the past decade, including at financial services company Wuestenrot & Wuerttembergische.

Supervisory boards in Germany play an important role as they are formed of shareholders and employee representatives, who oversee the management and approve major business decisions.

The role of the supervisory board is key, especially in Wirecard's case, said analyst Neil Campling at Mirabaud Securities. KPMG, appointed to do an independent special audit on the back of the claims, is accountable only to the supervisory board, he said.

"Eichelmann is the man who was tasked with supporting the audit on Wirecard's side."

Mr Matthias has faced a battle to calm investors rattled by reports of accounting irregularities.

Wirecard's revenue soared in 2018 after it bought more than 15 companies in a few years. But in a series of articles last year, the Financial Times in London reported allegations of accounting fraud at Wirecard in Singapore and other Asian countries. The company denied the allegations and sued the FT, which stands by its reporting.

 

Police raided Wirecard's Singapore offices last February, carting away files and electronics. Singapore prosecutors said in March that eight Wirecard subsidiaries were under investigation in a criminal probe of suspected "forgeries, falsified documents, money laundering, and the round-tripping of funds to support false transactions that were believed to have taken place between 2014 and 2018".

"Round-tripping" is where sales and profits are faked by sending money to a third party, which then uses it to buy goods and services from the sender in a pretence of real commerce.

The company hired law firm Rajah & Tann to investigate. A final report from the firm last March acknowledged accounting oversights and potential criminal liability among some Singapore staff, but did not find evidence of criminal activity linked to Wirecard's German headquarters.

The FT then reported in October that payments processed by a Dubai-based partner firm in 2016 and 2017 may not have taken place. This led Wirecard to hire KPMG to conduct an outside audit that is expected to be completed by March.

Wirecard called those claims "total nonsense", but the controversy has continued to dog the company, which is a member of Germany's benchmark DAX index.

BLOOMBERG, FINANCIAL TIMES, REUTERS

A version of this article appeared in the print edition of The Straits Times on January 13, 2020, with the headline 'Wirecard chairman quits as accounting controversy lingers'. Print Edition | Subscribe