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Shares in Wirecard lost half their value as the German payment processor said on Thursday its auditor can’t find evidence for a quarter of the cash on its balance sheet.
Wirecard WDI, -50.21% WCAGY, +5.27% shares lost 48% as the firm said Ernst & Young said it didn’t have sufficient audit evidence for €1.9 billion euros in cash.
“There are indications that spurious balance confirmations had been provided from the side of the trustee,” the company said.
“Previously issued confirmations by the banks were no longer recognized by the auditor. All parties involved are endeavoring to clarify the matter as quickly as possible,” said Markus Braun, Wirecard chief executive, in a statement. “It is currently unclear whether fraudulent transactions to the detriment of Wirecard AG have occurred.”
Wirecard said the banks managing the escrow accounts are two Asian banks. Both institutions have investment grade ratings. The trustee, who has been in office since 2019, holds numerous mandates in Asia, Wirecard said.
Wirecard postponed its 2019 annual financial statements yet again, and if not completed by Friday, some €2 billion of loans can be terminated.
It is the latest twist in a long-running saga. The Financial Times reported in October that Wirecard staff appeared to have conspired to fraudulently inflate sales and profit at subsidiaries. Wirecard has denied those charges, while KPMG has conducted a special investigation and said it couldn’t prove the revenue of its third-party acquiring business.
Germany’s stock-market regulator separately is investigating Braun over insider trading allegations. Braun held 7% of the stock, according to FactSet data, making him the largest shareholder.
