Wirecard says missing $3b likely 'does not exist'

FRANKFURT • German payments provider Wirecard yesterday withdrew its preliminary financial results for 2019 and the first quarter of this year, admitting the amount of €1.9 billion (S$2.97 billion) auditors said was missing from its accounts likely "does not exist".

This prompted German public prosecutors to say yesterday that they were probing all possible criminal offences in connection with the scandal-hit company.

"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 do not exist," Wirecard said in a statement.

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.

German financial watchdog Bafin yesterday said that the developments were a "total disaster".

"It is a scandal that something like this could happen", Bafin president Felix Hufeld said at the sidelines of a conference in Frankfurt.

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

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 yesterday. "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."

Wirecard said yesterday that it is examining a range of measures to ensure continued operations, including cost reduction, restructuring, disposal or termination of business units.

Interim chief executive James Freis has tasked investment bank Houlihan Lokey with the tough talks with creditors.

The scandal was first sparked by auditor EY refusing to sign off Wirecard's 2019 accounts last Thursday due to the unaccounted cash.

AGENCE FRANCE-PRESSE, REUTERS