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Wirecard denies fraud allegations that sent stock plunging
FRANKFURT AM MAIN, Oct 16, 2019 (BSS/AFP) – German payments processing firm
Wirecard denied Tuesday a new round of allegations of accounting
irregularities, after a Financial Times article sent its stock plunging.
Since the start of the year, Wirecard has denied repeated FT reports
claiming it was padding the books, even accusing the financial broadsheet of
colluding with investors betting against the company.
But the FT stood by its reporting even when German authorities announced
an investigation.
The paper published Tuesday internal communications and financial reports
it said contained “strong indications” that hundreds of millions of euros of
payments processed for some Wirecard clients “could not have taken place”.
The company firmly rejected the accusations.
“Wirecard categorically rejects these allegations of impropriety,” it said
on its investor relations website.
By 3:45 pm (1345 GMT) in Frankfurt, the shares were down 14.2 percent, at
120.10 euros ($132.06), making up some of the losses suffered immediately
after the report’s publication Tuesday morning.
After FT articles in January-February reporting the firm’s Singapore-based
Asian arm was cooking the books, the stock tumbled 40 percent — wiping nine
billion euros off its market capitalisation — within a few weeks.
– ‘Invented’ sales and profits? –
The FT’s latest report focused on a Dubai-based payments processing
company and Wirecard partner called Al-Alam.
While Wirecard documents show Al-Alam accounted for around half the
group’s profits in 2016, processing around 350 million euros of payments per
month in 2016-17 for 34 major clients, the FT said it could not confirm any
of those client relationships.
Of fifteen named clients they reached, just four told the FT they dealt
with Wirecard directly for payments processing, rather than going through Al-
Alam.
Others did not respond, could not be tracked down or had long since
shuttered.
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The FT said its “findings cast doubt on whether substantial sales and
profits were actually travelling through Al-Alam to Wirecard — or were
simply invented”.
Al-Alam told the paper that it “was not involved in any alleged process to
fake revenues or profits”.
– Legal battle –
German financial markets watchdog Bafin in February ordered a ban on
“short-selling” or betting against Wirecard shares after wild stock price
moves following FT allegations of accounting issues in its Singapore office.
The same month Munich prosecutors said they were investigating a Financial
Times journalist over the reports, and in March Bafin filed charges against
unnamed people over alleged market manipulation to undermine Wirecard’s share
price.
Wirecard on Tuesday again accused the FT of colluding with short sellers
“which casts doubt on (the paper’s) motivation”.
Bafin told AFP “the latest incident will flow into our market manipulation
probe, which is still ongoing”.
Wirecard in March published a report from Singapore-based law firm Rajah &
Tann it said cleared up allegations of accounting irregularities in its Asian
subsidiary.
The FT meanwhile added that a law firm it commissioned, RPC, “found no
evidence of collusion between FT reporters and market participants”.
Wirecard had long been seen as a figurehead for “fintech” companies that
are upending the traditional world of banking and payments.
Founded in 1999, massive growth in the electronic payments it guarantees
in exchange for a commission has helped shoot it into the blue-chip DAX 30
index.
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