Wirecard shares crashed another 50 per cent in chaotic trading on Friday, as two of Germany’s biggest investors threatened legal action over an escalating accounting scandal that leaves the future of the once high-flying payments company in doubt.
Union Investment, which was until recently a top 10 shareholder, joined fellow asset manager DWS in threatening to sue the company that for almost two decades was regarded as a rare German tech success story.
Wirecard was plunged into crisis on Thursday when it revealed that €1.9bn held in escrow accounts at two Asian banks was missing. It was told by EY, its longstanding auditor, that there were indications a trustee of Wirecard bank accounts had attempted “to deceive the auditor” and may have provided “spurious cash balances”.
Bank of the Philippine Islands is one of the two Asian banks that Wirecard said it had deposited money with, according to a person familiar with the matter.
On Friday, the bank told the Financial Times that a document showing that Wirecard was the bank’s client was “spurious”, adding that the German company “is not a client”. The bank said it continued to investigate the matter.
In a video statement published late on Thursday night, Wirecard chief executive Markus Braun said it was “unclear” why the Asian banks “have stated to the auditor that the confirmations are spurious”.
Mr Braun, who spearheaded the company’s meteoric growth that at one point turned him into a billionaire and catapulted Wirecard into Germany’s premier stock market index, said that “it cannot be ruled out that Wirecard has become the aggrieved party in a fraud of considerable proportions”.
Shares in the German fintech were trading 48 per cent lower at €20.58 in late morning trading, after falling as much as 51 per cent earlier.
The unravelling in Wirecard’s shares and bonds caps an 18-month period in which the company has tried to assuage fears over its accounting, including commissioning a special audit from KPMG. The findings of the special audit, published in late April, failed to allay concerns.
Yesterday’s disclosure that money was missing from its accounts left Wirecard unable to publish its 2019 results as promised and gives its lenders the options to terminate €2bn of loans if the results are not released on Friday.
The Financial Times reported in October that Wirecard staff appeared to have conspired to fraudulently inflate sales and profits at Wirecard subsidiaries in Dubai and Dublin and mislead EY, the group’s auditor for a decade.
The continued drop in the share price has left the stock of the Aschheim-based company down almost 80 per cent in the past two days, wiping out €10bn of its market capitalisation.
Last month, one of Germany’s most prominent securities lawyers already filed an investor lawsuit against Wirecard. Tübingen-based lawyer Andreas Tilp, who is leading a €10bn collective lawsuit against Volkswagen and Porsche, is accusing the payments group of “false, omitted and incomplete” disclosures.
Wirecard has always denied any wrongdoing.