A DAX company with a glaring hole of 1.900.000.000 € in the balance sheet. By this time, every person interested in finance should have heard something about the Wirecard scandal. In this article, we will reflect the chronology of the deep fall of the Wirecard AG and reveal similarities, effects, and possible risks in the crypto-industry.
What happened to Wirecard?
On January 30, 2019, a report appeared for the first time in the Financial Times, alleging that high-ranking Wirecard managers had falsified contracts and engaged in money laundering in the previous year. As a result, the company’s share price plummeted by more than 20 %. Two days later, another critical report followed in the Financial Times, referring to the audit of Wirecard’s Singapore branch by the law firm Rajah & Tann, in which evidence of serious criminal activities regarding the accounting was supposedly found. There followed another report in the Financial Times, in which even more accusations of improper business practices were made against seven high-ranking Wirecard employees. The company is said to have systematically developed a fraud model over the years. One day later, the Singapore judicial authorities ordered a raid on the local branch office.
After all, the BaFin also got involved in mid-February 2019 because of all the turbulences and imposed a short-selling ban on Wirecard shares, an event never seen before. In the past, of course, there have been bans on short-selling certain financial products, but never on an individual company.
Meanwhile, the Munich Public Prosecutor’s Office I announced investigations against one of the authors of the Financial Times on suspicion of a violation of the German Securities Trading Act.
A few days later, the Handelsblatt reported that there had also been raids on Wirecard’s corporate offices in India. The reason given for the raids is the suspicion of money laundering and document falsification.
The Financial Times again takes off and reports about an ongoing investigation by the law enforcement authorities in Singapore for fraud, mainly involving transactions totaling €2,000,000, which were allegedly authorized by Wirecard employees and of which the former Chief Operating Officer, Jan Marsalek, is also said to have been aware.
Short term recovery
At the end of March, with the publication of parts of an audit report by the law firm Rajah & Tann, which had previously made serious accusations against Wirecard, the company caused a sigh of relief among investors for a short time. Although Wirecard admitted to mistakes made by individual employees from several branch offices, it generally considered itself to be innocent or exonerated. As a result, the publication of the balance sheet was postponed for the first time.
The payment service provider announced that it will file a lawsuit against the Financial Times at the Munich public prosecutor’s office. Soon afterward, the Federal Financial Supervisory Authority (BaFin) also filed charges against up to 9 people on suspicion of market manipulation. There were several confrontations between Wirecard and the Financial Times, in which the British finance newspaper rigorously denied the accusations of market manipulation through collusion with short-sellers.