The scandal exploded last week when Wirecard’s auditor EY said he could not find the funds in trust accounts and refused to sign in the company’s financial results.
Founded in 1999, Wirecard was once considered one of the most promising technology companies in Europe. It processes payments and sells data analysis services for consumers and businesses. The company has around 6,000 employees in 26 countries of the world.
According to Refinitiv’s data, Austrian Braun, who also served as Wirecard’s chief technology officer, had led the company since 2002.
The company now faces an existential crisis. A crazy search for lost money has come to a dead end in the Philippines, where the central bank denies its denial of entering the country’s financial system. Shares of the company fell on Monday and fell 85% from the stock price in three trading sessions. Wirecard ended the day with a market value of € 1.7 billion ($ 1.9 billion).
Wirecard is trying to keep creditors away, a task that can be complicated by the arrest of its former CEO. The company said that it hired Houlihan Lokey, the investment bank, to form a new financing strategy late Friday.
The explosion comes after an 18-month turbulent pursuit for the company, which ended with questions about fraud allegations, short sellers’ attacks, and accounting practices.
The success story began to emerge in January 2019, when Financial Times reported that Wirecard has contracted and supported a series of suspicious transactions in Singapore. The company refused the report produced with the help of whistleblower, but its shares fell. In February 2019, officials in Singapore said they would investigate.
The FT began late last year with the publication of a report and company documents showing that the profits and sales were inflated at FT’s Wirecard outposts in Dubai and Ireland. Wirecard again denied the allegations. However, an investigation published by KPMG in April found that the company did not provide enough information to fully explain the issues raised by FT.
Braun informed the prosecutors Monday evening after his arrest was ordered. According to prosecutors, the judge will decide whether to remain in custody late Tuesday. The former CEO announced his decision to leave employees last week in a letter to employees and shareholders.
“The capital market trust in the company I’ve managed for 18 years has been deeply shaken … I respect the responsibility of the CEO for all business transactions.” Said.
– Mark Thompson contributed to the reports.