Wirecard scandal
Allegations of accounting malpractices have trailed the company since the early days of its incorporation, reaching a peak in 2019 after the Financial Times published a series of investigations along with whistleblower complaints and internal documents.
After Markus Braun joined as CEO in 2002, the company focused on online payment services, starting with porn and gambling websites as clients.
[5] By taking over the listing of InfoGenie AG, a defunct call centre group, Wirecard entered the Neuer Markt stock market segment, an action that has been criticised as avoidance of proper scrutiny during an initial public offering.
[13] In response, Wirecard retained the services of Schillings, a UK law firm, and FTI Consulting's public relations agency in London.
[14] In 2016, a critical report published by a previously unknown entity named Zatarra Research led to share price crashes, prompting BaFin to launch an investigation into possible market manipulation.
[16] Critics point to Wirecard's global acquisitions as a means to mask trouble with organic growth by adding revenues from external sources, a tactic referred to as a rollup.
In 2015, Wirecard purchased an Indian payments group for €340m, despite the founders of those businesses failing to raise funding while valuing their key assets at €46m.
[17] Wirecard responded to the reports by claiming that its payment technologies were superior and arguing that the rapid growth of the cashless fintech industry justified such valuations.
[12] In January 2019, Financial Times reported on irregularities uncovered by Wirecard's Singapore investigation, which began in March 2018 internally but a whistleblower feared was being squashed.
In 2019, the company hired former head of Libyan foreign intelligence Rami El Obeidi to conduct sting operations against journalists and public short sellers.
[29] El Obeidi presented evidence that the Financial Times colluded with short sellers,[30] which the newspaper rejected after an investigation by an external law firm.
[31] And while prosecutors did not name his clients directly, the convicted felon Aviram Azari, a private detective caught in hacking-for-hire schemes, had targeted companies critical of Wirecard.
[32] BaFin conducted multiple investigations against journalists and short sellers because of alleged market manipulation, in response to negative media reporting about Wirecard.
[33][34] As revealed by KPMG's special audit, Wirecard's long time auditor EY failed to verify the existence of cash reserves in what appeared to be fraudulent bank statements.
[29] During the special audit, Wirecard made misleading statements to investors, resulting in a criminal investigation after a complaint was referred to prosecutors by BaFin.
In 2018, they questioned Wirecard's poor positioning within the German e-commerce payments market[39][40][41][42] and raised concerns related to financial controls.
[57] On 1 September 2020, the German parliament announced that it would organise an inquiry in order to fully investigate the reasons why the government failed to prevent corporate fraud.
Christopher Bauer, the company's former Asia manager and son of Paul Bauer-Schlichtegroll, former chairman of the advisory board, died in Manila, Philippines.
