FRANKFURT AM MAIN: German start-up Wirecard on Monday admitted that €1.9 billion that auditors said were missing from its accounts probably “do not exist”, as the payments provider plunged deeper into crisis.
The group said it had withdrawn its preliminary results for 2019 and the first quarter of this year, adding that “potential effects on the annual financial accounts of previous years cannot be excluded.”
The statement followed the resignation of the company’s founder and chief executive on Friday after the firm was hit with fresh fraud allegations that have left it struggling for survival.
Auditors Ernst & Young said Thursday that €1.9 billion (US$2.1 billion) were missing from Wirecard’s accounts.
The company’s founder and chief executive Markus Braun resigned the next day.
“The Management Board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist,” the Wirecard statement said.
“The company previously assumed that these trust accounts have been established for the benefit of the company in connection with the so called Third Party Acquiring business and has reported them as an asset in its financial accounts.”
The scandal marks a stunning fall from grace for the Bavarian start-up, established in 1999 and once seen as a darling of the fintech scene owing to the global increase in electronic payments.
The firm entered Germany’s prestigious DAX 30 index with great fanfare in 2018 after nudging out traditional lender Commerzbank.
But since then, Wirecard has been dogged by a series of articles in the Financial Times alleging accounting irregularities in its Asian operations.
The company’s four board members — including Braun — have been under investigation since early June by Munich prosecutors for “market manipulation”, and Wirecard’s headquarters were searched as part of the probe.