The fall of Wirecard
Wirecard AG who were “missing” €1.9 billion have now filed for insolvency last month, with CEO Markus Braun being arrested on suspicion of inflating the company’s balance sheet and revenues to make it appear stronger and more attractive for investors and customers.
Europe’s largest fintech, heralded for its innovation, Wirecard was undoubtably a leader in the industry. Crediting its superior services and technology for its ever-growing share price, reaching a market valuation of €24.6 billion in September 2018.
However, not everyone was sold on Wirecards rapid and increasing success. Short-sellers were adamant and vocal about their doubts on the data that backed this success story and seeing irregularities with their overseas offices and third parties. Though in January 2019, when the Financial Times published information given to them by a Wirecard whistle blower who claimed an internal investigation had been covered up, the German regulator BaFin did nothing to investigate the accusation, and instead, went after the journalists. BaFin investigated the FT over an allegation of market manipulation and went on to enforce a two-month ban on short-selling, citing Wirecard’s “importance for the economy
The FT continued to investigate and report suspicious activity and so with pressure from investors Wirecard appointed KMPG to carry out an Audit. When the results were finally due to be released in June 2020, rather than present the report, Wirecard announced that the 1.9 billion Euros were missing, and had probably never existed.
