06.22.20 - Scandal-plagued German digital payments company Wirecard has stated that $2.1 billion its auditors were unable to locate probably never even existed in the first place - deepening an already serious crisis within the company.
The tech firm said in a statement recently issued that after "further examination," its board believes there is a "prevailing likelihood" that $2.1 billion in cash that was supposed to be in its accounts does not exist. Shares in Wirecard predictably and understandably plunged in early trading on Monday. The stock has already lost more than 85% over three trading sessions — wiping out $12.5 billion in its total market value. The Wall Street Journal reported that short-sellers made over $2.6 billion off of Wirecard's plunge, which prompts more additional questions.
On Monday, the company withdrew its preliminary results for 2019, the first quarter of 2020 and its profit forecast for 2020. It warned that financial results from previous years may also be affected by the scandal.
CEO Markus Braun resigned on Friday after the money, which makes up roughly a quarter of the company's total assets, could not be located or found. Before he quit, captain obvious (aka Markus Braun) suggested that the company “may” have been the victim of massive fraud. Duh?
The search for the missing funds had focused on the Philippines, but the country's central bank said in a statement Sunday that it had no record of the money entering its financial system. The central bank has opened an investigation, it added. Wirecard is now scrambling to find the money to keep creditors at bay. Wirecard said late Friday that it had hired investment bank Houlihan Lokey to come up with a new financing strategy.
Founded in 1999, Wirecard was once considered one of the most promising tech firms in Europe. It processes payments for consumers and businesses and sells data analytics services. The company, which has nearly 6,000 employees in 26 countries around the world, reported revenues of over $2.2 billion in 2018.
Source: Wall Street Journal
