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What Happened At Wirecard?

1.9 Billion Euros that were supposedly safely sitting in a bank account in the Philippines were discovered to be missing in 2020. It may be the biggest fraud since Steinhof and Enron.

Who Are Wirecard?

Wirecard is a Germany based payment provider who began trading in 1999. They began their business helping organise payments for porn and gambling sites during the start of the electronic payment boom before later expanding to handle payments for other industries. The company listed on the DAX (stock exchange) and is based in Munich which is also home to BMW and Siemens. They handled payments for all sorts of clients like soccer club Bayern Munich, Mobile Carrier Orange and even furniture giant Ikea.

One of the firms biggest lenders is the Deutsche Bank but there were many others including several big European banks.

The Missing Funds

Audit reporting from the firm said that a quarter of the entire company’s balance sheet was sitting safely in trust accounts in the Philippines. After some investigation, the bank in the Philippines said that they did not actually have Wirecard as a client and the money had never been deposited with them. It seems that this claim was made by the company to try and hide the missing Billions.

It is possible that the company’s auditors (Ernst and Young) had become aware of this information some time ago (according to the bank) and had held off on publicising this at first. The media, however, have been warning about financial irregularities in the companies Asian decision for over a year.

1.9 Billion Euros equals R37 Billion Missing

It is unclear what other revelations may come to light as the scrutiny intensifies. It may be that many of the firms that Wirecard have bought over time may also not exist or may have simply been a shell to hid funds or losses. This information will become available after further investigation by authorities.

Wirecard’s Shares Plummet

Shares in Wirecard (which were traded on the stock exchange) dropped overnight once the scandal broke from around 100 Euros a share down to 16 Euros and lower. Moodeys pulled their ratings of the company and senior staff began to quit and jump ship.

Interestingly, some smart or possibly complicit people began to bet against the stock just before its collapse (so they made a lot of money when that actually happened). This is now also being investigated by regulators.