Scandal-hit Wirecard withdraws 2019 results, says missing 1.9 billion euros likely 'do not exist'

Wirecard's stock has plummeted 75 per cent since EY refused to sign off its 2019 accounts last week. PHOTO: EPA-EFE

FRANKFURT (AFP, REUTERS) - Scandal-hit German payments provider Wirecard on Monday withdrew its preliminary financial results for 2019 and the first quarter of this year, admitting that 1.9 billion euros (S$2.97 billion) that auditors said were missing from its accounts likely "do not exist".

It followed the resignation of the company's founder and chief executive on Friday after the start-up was hit with fresh fraud allegations that left it struggling for survival.

"The Management Board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist," Wirecard said in a statement.

The company's stock has plummeted 75 per cent since EY refused to sign off its 2019 accounts last week.

The development comes after chief executive officer Markus Braun quit on Friday with the company scrambling to secure a financial lifeline from its banks, while its search for the money hit a dead end in the Philippines.

The Philippine central bank said none of the money appeared to have entered the country, after Bank of the Philippine Islands (BPI) and BDO Unibank Inc said documents purporting to show Wirecard had deposited funds with them were false. Both said Wirecard was not a client.

BPI, however, told Reuters it had suspended an assistant manager whose signature appeared on one of the fraudulent documents. BDO told the central bank one of its marketing officers appeared to have fabricated a bank certificate.

"The central bank is actually doing its own investigation," Bangko Sentral ng Pilipinas Governor Benjamin Diokno told channel ANC on Monday. "To the extent we are very strict on knowing our clients, I think we should also be strict in knowing the officers of the bank."

Munich-based Wirecard has been lauded as a home-grown fintech success and was propelled into Germany's blue-chip DAX index in 2018 at the expense of Commerzbank AG. On Thursday, it said auditor EY refused to sign off its 2019 accounts as it was unable to confirm the existence of 1.9 billion euros in cash balances in trust accounts, representing about a quarter of Wirecard's balance sheet.

EY had regularly approved Wirecard's accounts in recent years, and its refusal to sign off for 2019 confirmed failings found in an external investigation by KPMG in April, which in turn followed probing reports by the Financial Times.

Wirecard, which has long been a target of short sellers questioning its financials, on Friday said it may be the victim of "fraud of considerable proportions". On Monday, it said it is examining a range of measures to ensure continued operations, including cost reduction, restructuring, disposal or termination of business units.

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