Wirecard shares plunge after new FT report

Shares in German payments processing firm Wirecard have been on a a rollercoaster ride this year, following reports by the Financial Times that it was cooking its books. The FT's probe focused on a Dubai-based payments processing company called Al-Al
Shares in German payments processing firm Wirecard have been on a a rollercoaster ride this year, following reports by the Financial Times that it was cooking its books. The FT's probe focused on a Dubai-based payments processing company called Al-Alam. PHOTO: AGENCE FRANCE-PRESSE

Paper alleges that documents from German firm contain evidence of fake transactions

FRANKFURT • Shares in German firm Wirecard plunged yesterday, after the Financial Times published new documents alleging accounting irregularities.

By 0800 GMT in Frankfurt, shares in the payments processing firm were down 15.6 per cent, at €118.15, making up some of the losses suffered immediately after the report's publication.

Lawyers for Wirecard told the FT the company "does not believe the document (on which much of the report was based) to be authentic".

Wirecard's shares have been on a rollercoaster ride this year.

The German authorities had earlier this year said they would investigate the FT after fintech rising star Wirecard denied its previous reports that the firm was cooking the books, which sent the group's stock tumbling 40 per cent - or €9 billion (S$13.6 billion) - in a few weeks.

But the financial broadsheet yesterday published internal communications and financial reports that it alleged contained "strong indications" that hundreds of millions of euros worth of payments processed for some Wirecard clients "could not have taken place".

The FT's probe focused on a Dubai-based payments processing company called Al-Alam.

While Wirecard documents show that Al-Alam accounted for around half the group's profits in 2016, processing around €350 million of payments per month in 2016-17 for 34 major clients, the FT said it could not confirm any of those client relationships.

The FT said its "findings cast doubt on whether substantial sales and profits were actually travelling through Al-Alam to Wirecard - or were simply invented".

Of 15 clients that they reached, just four told the FT that they did use Wirecard directly for payments processing, rather than go through Al-Alam.

Others did not respond, could not be tracked down or had long since shuttered.

The FT said its "findings cast doubt on whether substantial sales and profits were actually travelling through Al-Alam to Wirecard - or were simply invented".

German financial markets watchdog Bafin in February ordered a ban on "short-selling" or betting against Wirecard shares after wild stock price moves following the FT's allegations that the firm was padding the books in its Singapore office.

The same month, Munich prosecutors said they were investigating an FT journalist over the reports, and in March, Bafin filed charges against unnamed people over alleged market manipulation to undermine Wirecard's share price.

While Wirecard published a report from Singapore-based law firm Rajah & Tann that it said cleared up allegations of accounting irregularities, the FT has always stood by its reporting, publishing a legal report it had commissioned that found no wrongdoing by the journalist behind the articles.

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on October 16, 2019, with the headline 'Wirecard shares plunge after new FT report'. Print Edition | Subscribe