Wirecard challenges fraud allegations after stock plunge

A Wirecard spokesman said the firm had "provided the police with comprehensive supporting material with regard to their inquiry".
A Wirecard spokesman said the firm had "provided the police with comprehensive supporting material with regard to their inquiry".PHOTO: EPA-EFE

MUNICH • German online payments firm Wirecard has seen its stock plunge by more than a third in recent days on reports of accounting misdeeds at its Singapore unit. Now, the company is fighting back by questioning the foundations of the allegations.

A preliminary review last May by a respected Singapore law firm lists allegations of potential financial irregularities, money laundering and forgery at Wirecard's Asian unit. But the German company says the report is based on evidence that is either faulty or forged.

A deeper investigation by the law firm so far has not "found any evidence of criminal misconduct", Wirecard chief executive officer Markus Braun said by phone on Friday from the company's headquarters near Munich. "This whole issue will be resolved quickly."

Yet investors got another red flag when Singapore police raided Wirecard's offices on Friday, ratcheting up concerns over its accounting practices.

A company spokesman said the firm had "provided the police with comprehensive supporting material with regard to their inquiry".

The 31-page initial investigation that the law firm Rajah & Tann completed was largely based on the accounts of a person the lawyers call "Bobby". It described allegations of criminal activity ranging from backdated agreements to forged invoices.

Rajah & Tann declined to comment.


Wirecard said the report was authentic, but that the findings relied on documents of suspicious provenance, possibly intended to damage Wirecard or profit from short-sales as its stock has lost some €9 billion (S$13.8 billion) in value since the Financial Times published the allegations on Jan 30.

"We think this was all done to put pressure on the share price," Mr Braun said.

German prosecutors say they have launched a market manipulation probe in response to a criminal complaint Wirecard filed after the share drop.

Officials have not named any suspects and said they have not found any reason to investigate Wirecard employees over accounting fraud allegations.

After Rajah & Tann wrapped up the May report, Wirecard said it hired the firm to do a fuller investigation.

Mr Braun saw the May report for the first time over a week ago, and he said that until then the entire affair had been handled by the company's internal compliance team, which by design does not include the CEO in order to avoid undue pressure from top management.

Mr Braun said a final report would be available in "a matter of weeks" and he was confident it would clear the company and its employees of wrongdoing.

Rajah & Tann's preliminary investigation focused on three Wirecard employees in Singapore.

There was evidence to suggest they "knowingly worked together to create and backdate agreements billed by Wirecard Singapore up to three years prior", the report said.

The documents cited actual companies, but the lawyers said they did not include correspondence to back up a real commercial relationship.

"To date, we have not seen a single e-mail from any of the counter-parties which, given the nature and size of the deals, raises doubt as to the authenticity of the same," the lawyers wrote. "There are strong reasons to believe that both the agreements and invoices may be fictitious."

Mr Braun said the investigators preparing the report did not have access to the company's servers to judge the authenticity of those e-mails. He pointed to a statement last week by Rajah & Tann that said in preparing its new report, the lawyers had "made no conclusive findings of criminal misconduct on the part of any officer or employee of the Company".

A version of this article appeared in the print edition of The Sunday Times on February 10, 2019, with the headline 'Wirecard challenges fraud allegations after stock plunge'. Print Edition | Subscribe