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Wirecard CEO exits as shares plummet over missing €1.9 billion

The CEO of Wirecard Markus Braun has resigned as shares in the German payments company collapse over the announcement that it is missing €1.9 billion in cash.

Braun’s resignation comes as shares in Wirecard dropped by more than 60 per cent on Thursday as the FinTech announced that its auditor EY could not find evidence for €1.9 billion in its balances, thereby refusing to sign off on the 2019 accounts.

The company fell a further 50 per cent on Friday as Wirecard said it might have been subject to ‘a case of fraud of considerable proportions’. Moreover, it is now facing threats of legal action from two of Germany’s biggest investors, Union Investment and asset manager DWS.

The resignation also follows news that the search for the missing cash has hit a dead-end in the Philippines when the two banks BPI and BDP both stated that Wirecard is in fact not a client of theirs and alleged that documents had been falsified.

James Freis has been appointed as interim CEO, after being named a member of the management board a day earlier.

In a personal statement, Braun, who has been managing the company for 18 years, said he respects that responsibility for all business transactions lies with the CEO.

“As most of you are aware, I, as a shareholder, am also personally and massively affected by the events of the past few days, weeks and months,” Braun said. “Wirecard AG has an excellent business model, outstanding technology and sufficient resources for a great future. I do not want to burden this future.”

Wirecard has also warned that loans up to 2 billion euros could be terminated if its audited annual report was not published on Friday – and according to data from Bloomberg, at least 18 commercial banks are involved in Wirecard AG’s existing revolving credit facilities, which are worth almost €2.5 billion.

Markus Braun resigns as CEO of Wirecard

Markus Braun resigns as CEO of Wirecard

According to the company, EY said an audit opinion for 2019 requires further audit procedures due to the almost €2 billion being missing from escrow accounts at two Asian banks. There were also indications that a trustee of Wirecard bank may have provided spurious confirmations.

The two banks took on the management of the trust accounts in 2019, following a change of trustee.

In the Thursday statement, before his resignation, Markus Brown defended the company against accusations of accounting fraud. He said: “According to EY, there are indications that the auditors have been presented with incorrect balance confirmations for fraudulent purposes, by a trustee or from the area of these banks. The trustee, who has been mandated since 2019, is in continuous contact with the banks and Wirecard AG.

“It is currently unclear why the two banks have stated to the auditor, that the confirmations are spurious. The trustee has announced to Wirecard AG that he will clarify the facts of the matter with the two banks managing the trust accounts at short notice. At present, it cannot be ruled out that Wirecard AG has become the aggrieved party in a case of fraud of considerable proportions,” he said.

Short sellers, which have been betting on share prices falling, have cashed in large amounts on the collapse, with one German-based trader telling Reuters he profited €750,000 in less than 30 minutes, despite the difficulty in borrowing Wirecard shares.

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