What? (The Introduction)
Wirecard, a German payments processor and financial services provider company with nearly 6,000 employees in 26 countries around the world, also called by some as ‘The Enron of Germany’ announced on June 18, 2020 that the auditors could not confirm the existence of EUR 1.9 Billion of cash on its balance sheet. – Subsequently on June 19, its CEO Markus Braun resigned and was arrested on June 23.- The company filed for insolvency on June 25, the first DAX listed company ever to do so.
When? (The Timeline)
Founded in 1999 in a Munich suburb, Wirecard joined the Frankfurt stock exchange in 2005.-
In 2006, it acquired XCOM and became Wirecard Bank, licensed by Visa and Mastercard.-
In 2010, Jan Marsalek became the COO.
In Oct 2015, Wirecard announced acquisition of the payments business of Great Indian Retail Group, a major Southeast Asian electronic payment and eCommerce business in a EUR 340 Million deal and took over 900+ staff in India, the Philippines, Indonesia and Malaysia. –
August 2018 Wirecard shares hit a peak of €191, valuing it at more than €24 Billion.
In September 2018, Wirecard replaced Commerzbank in the prestigious Dax 30 index, becoming Europe’s largest Fintech.
Followed by reports published in the Financial Times in Jan 2019, Singapore Police raided Wirecard’s offices In Feb 2019 and BaFin announced a two month ban on short selling of Wirecard’s shares after the share price fell below EUR 100.
April 2019, Wirecard announced EUR 900 Million investment by SoftBank.
March 2020, KPMG’s Audit report is postponed and later on published on April 28, 2020.
June 16, 2020 The Philippines Banks BPI and BDO inform EY that documents supposedly detailing EUR 1.9 Billionin balances are ‘spurious’
June 18, 2020 instead of publishing audited results for 2019, Wirecard announces EUR 1.9 Billion is ‘missing’.
Who? (The people involved)
Markus Braun took over Wirecard as a CEO in 2002 and merged with a Munich Rival, Electronic Business Systems. he continued to lead the company till June 19, 2020 when he resigned and subsequently was arrested twice.- Jan Marsalek, currently missing with a possibility of being in Belarus (as per an article published on July 18 on bellingcat.com), was appointed COO in 2010. He started as a Project Manager for payment systems at Wirecard between 2000-2001.
Where? (The geographies / locations)
The first attack on Wirecard was in 2008 by German shareholder association suggesting balance sheet irregularities.
Between 2011 and 2014 Wirecard acquired payment companies across Asia with Singapore becoming it’s Asia headquarters.
In October 2019, The Financial Times published that profits at Wirecard units at Dublin and Dubai were fraudulently inflated.
On June 21, Philippine’s central bank clarified none of Wirecard AG’s missing EUR 1.9 Billion of cash entered the Philippine financial system after two of its major lenders – BDO Unibank Inc., the country’s biggest bank, and Bank of the Philippine Islands, denied holding funds for Wirecard.
Why? (Who knows?)
Why would someone end up in jail after 18 years of running once the largest Fintech of Europe? Was a compensation of ~ EUR 3.5 Million (as quoted by an article on wallmine.com) not sufficient ?
Why would someone like to go absconding after being a COO for almost 10 years? Was a compensation of ~EUR 2.7 Million (as quoted by an article on wallmine.com) not enough?
Why did EY fail to uncover the fraud much earlier?-
And there will be many more WHYs depending on reader’s own perspective and awareness of the matter.
How? (Everyone wants to know !)
As expected, Wirecard’s collapse sparked blame game in corporate and political circles with multiple questions being directed at the German Financial Regulator BaFin.
The investigations are going on and like me, you, everyone is eagerly waiting to know the secret behind the EUR 1.9 Billion hole.
About the Summary writer
Vivek Chaudhary is the Founder & CEO of Crossbar Financial Crime Academy. A versatile leader with 20+ years of extensive Financial Services experience, Vivek is specially passionate about the Financial Crime Compliance Domain and likes reading, writing and sharing blogs / stories in this domain.
Disclaimer
This summary has been created using references from the information available open-source. The articles published in The Financial Times, www.bellingcat.com, Bloomberg, CNBC and others are extensively referred to gain the information about the scandal.
The sole purpose of this summary to create awareness and education only, at no point of time we intend to claim any copyright of any sort, All the original articles published deserve the due credit and acknowledgement.
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