German payment service provider Wirecard said Monday it has concluded that $2.1 billion that was supposed to be held in two accounts probably doesn't exist, deepening troubles that prompted the resignation of its chief executive. The company was once considered a star of Germany’s tech sector; its market value at one point exceeded that of Deutsche Bank. But its shares have fallen sharply after the company became the subject of multiple Financial Times reports about accounting irregularities in its Asian operations. Wirecard disputed the reports, which started in February 2019, and said it was the victim of speculators. But last week, the company disclosed that auditors couldn't find accounts containing the billions and postponed its annual report. On Friday, CEO Markus Braun resigned. The latest:
- On Monday, Wirecard said its management board "assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of [$2.1 billion] do not exist.”
- Two Philippine banks that were said to hold the money in escrow accounts said that they had no dealings with Wirecard, reports the AP. The Bank of the Philippine Islands said a document claiming the company was a client was “spurious.” BDO Unibank said that a document claiming the existence of a Wirecard account was falsified and “carries forged signatures of bank officers.” The country's central bank governor said none of the missing money entered the Philippines' financial system.
- The Wall Street Journal sums up the allegations: that Wirecard tried to beef up the perceived size of its business by using third parties to drum up business—but most of those third-party transactions couldn't be verified, according to an outside special auditor report published in April. The scope, per the Journal: "The likely fictitious $2 billion is equivalent to all the net income Wirecard has reported over more than a decade."
- Wirecard said it is in “constructive discussions” with banks on continuing credit lines, and is “assessing options for a sustainable financing strategy for the company.” It said it's examining other possible measures to keep the business going, including restructuring and disposing of business units.
- Bloomberg reports Wirecard disclosed it couldn't find the money on Thursday; shares are down 85% from Wednesday's close.
- CNN reports the company's shares hit a high of $213 in September 2018—the month it booted Commerzbank off of the DAX, Germany's list of 30 major companies, with a value of nearly $27 billion. As of CNN's Monday report, shares had dropped as low as $14.56, putting the company's value at less than $2.2 billion.
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