Editorial | Wirecard scandal sends out a warning
- German fintech group with huge financial hole serves as a reminder for investors and regulators that even companies with a high public profile may implode because of improprieties
The financial scandal surrounding Wirecard, the once stellar European financial technology group, has shocked and captivated people around the world. Although it happened in Germany, regulators and investors everywhere should be concerned, especially those in Hong Kong.
‘After all, this is a city enamoured with listing firms that have a shiny “hi-tech” company wrapper around them, affecting even their stock valuation. If they come with a “fintech” tag, even better.
The scandal involved €1.9 billion euros (US$2.14 billion) missing from the accounts of the German company, which it now admits may never have even existed. Questions are being raised about how its auditor EY could have missed such a huge amount.
Germany’s regulators have been accused of ignoring the warning signs for 18 months. Worse, they even banned, for a short while, short-sellers from targeting Wirecard.
Interestingly, EY was also involved in another recent financial scandal, Luckin Coffee, which operates in China but is listed in the United States. Then, though, it was EY that first raised the alarm and exposed financial irregularities at the company which once billed itself as the mainland answer to Starbucks.