There has been an update to the Wirecard AG scandal, with the German payments firm, once thought to be the future of fintech in the country, said this Monday that the missing €1.9 billion ($2.13 billion) of cash on its balance sheet might not have existed in the first place.
In a statement today, the company said: “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.”
As Finance Magnates reported, on Thursday of last week, Wirecard revealed that Ernst and Young (EY), the appointed auditor, failed to find the cash which is equivalent to a quarter of Wirecard’s balance sheet.
Since the auditor refused to sign off on the company’s 2019 accounts last week, the fourth time the publication of the company’s financial report has been delayed, Wirecard stocks have plummeted by 75 per cent. Furthermore, the German Fintech said that it has withdrawn its preliminary 2019 and first quarter 2020 financial results as well as forecasts.
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“The Management Board further assesses that previous descriptions of the so called Third Party Acquiring business by the company are not correct. The Company continues to examine, whether, in which manner and to what extent such business has actually been conducted for the benefit of the company,” the statement published today said.
Wirecard CEO Markus Braun steps down
All of this information led to the long-running Chief Executive Officer (CEO) of the fintech, Markus Braun, stepping down on Friday, the day after the missing money was announced. Braun’s resignation on Friday took immediate effect and James Freis, the company’s chief compliance officer, is taking the charge of the company as an interim CEO. Freis joined the company from Deutsche Börse.
Now, the company says it is in “constructive discussions” with its lending banks with regard to the continuation of credit lines, as well as the further business relationship, which includes the continuation of the current drawing which is due at the end of June.
“In addition, the Company is examining a broad range of possible further measures to ensure continuation of its business operations, including cost reductions as well as restructuring, disposal or termination of business units and products segments,” Wirecard said in the statement.