SAN FRANCISCO (BLOOMBERG, FINANCIAL TIMES, REUTERS) - Wirecard chairman Wulf Matthias resigned after months of controversy over the digital payments company's accounting practices involving its Singapore operations.
Matthias, 75, stepped down as chairman of the supervisory board for personal reasons, and will be replaced by Thomas Eichelmann, the Germany-based company said on Friday (Jan 10)in a statement. 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.
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 construction group Hochtief and 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, according to Neil Campling, an analyst at Mirabaud Securities. KPMG, which has been commissioned to perform an independent special audit on the back of the allegations, is accountable only to the supervisory board, he said.
"Eichelmann is the man who was tasked with supporting the audit on Wirecard's side."
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 (FT) 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 in February 2019, 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, who 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 in March 2019 acknowledged accounting oversights and potential criminal liability among some Singapore staff, but didn't 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 company in 2016 and 2017 may not have taken place. Wirecard called those allegations "total nonsense," but controversy has continued to dog the company, which is a member of Germany's benchmark DAX index. This led Wirecard to hire KPMG to conduct an outside audit that is expected to be completed by March.
"The more we dig on Wirecard, the more disturbing it looks," Campling wrote in a December research note.