Collapsed fintech firm has admitted that half of its revenues and cash worth 1.9 billion euros is missing from accounts
Topics
Companies | SoftBank | financial fraud
BS Web Team |
Last Updated at July 11, 2022 15:17 IST
German fintech giant Wirecard, before it collapsed in 2020, allegedly forged client data and internal records to secure 900 million euros as investment from Japanese conglomerate SoftBank, said a media report on Monday.
Wirecard allegedly cited SoftBank’s assistance to secure a separate funding of 500 million euros, UK’s Financial Times (FT) reported citing whistleblowers. The German company collapsed on June 25, 2020, and filed for insolvency admitting that half of its revenues and cash worth 1.9 billion euros were missing. It is considered the biggest financial fraud in Germany since Volkswagen’s ‘dieselgate’ crisis of 2015. Wirecard was once among the top 30 most-valued firms on the Frankfurt Stock Exchange and
valued at $28 billion.
What went wrong at Wirecard?
FT reported
in 2019 that Wirecard’s partners in Manila, Singapore and Dubai were obscure and accounted for half of its revenues. The whistle-blowers alleged the company had used fake sales transaction figures to inflate its revenue and profits.
Subsequently, KPMG was appointed as the outsider auditor to run an independent probe. The consultancy firm reported in 2020 it could not verify cash balances worth 1 billion euros. On June 19, 2020, Wirecard’s CEO Markus Braun stepped down from his post.
EY, which had been the company’s auditor for over a decade, reported that month it could not verify balances worth 1.9 billion euros. It accounted for a quarter of Wirecard’s whole balance sheet. The company insisted that the money had been sent to banks in the Philippines. However, Germany’s central bank stated that the money never entered the country’s monetary system. Braun was arrested on June 23.
On June 25, when the company filed for insolvency, it owed 3.5 billion euros to its creditors.
Did Wirecard deceive SoftBank?
According to FT, SoftBank officials were shown a fake client list by Wirecard in 2019. In the same year, a similar deception was planned for the KPMG special audit. The company’s head of accounting, Stephen von Erffa, reportedly admitted to forging the documents during the KPMG audit. He told German prosecutors that Braun was under the impression that the spreadsheets were authentic.
Braun and two former managers are expected to face a trial later in 2022 for charges of fraud, market manipulation and breach of trust.
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
First Published: Mon, July 11 2022. 15:17 IST
Stay connected with us on social media platform for instant update click here to join our Twitter, & Facebook
We are now on Telegram. Click here to join our channel (@TechiUpdate) and stay updated with the latest Technology headlines.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.