Phantom billions plunge payments company Wirecard into chaos as it holds emergency talks with banks
- State prosecutors in Munich investigating the case are now considering issuing arrest warrants for its former CEO, Markus Braun
Wirecard said on Monday that 1.9 billion euros (US$2.1 billion) it had booked in its accounts likely never existed, a black hole that threatens to engulf the payments company and tarnish the reputation of Germany’s financial watchdog.
The one-time investor darling is holding emergency talks with its banks, which are owed roughly 1.75 billion euros, to avert a looming cash crunch triggered by the missing money.
The episode marks a dramatic turn in the fortunes of a home-grown tech firm that attracted some of the world’s biggest investors before a whistle-blower alleged that it owed its success in part to a web of sham transactions.
Wirecard said last week that auditor EY had refused to sign off its 2019 accounts as it was unable to confirm the existence of 1.9 billion euros in cash balances in trust accounts, about a quarter of its balance sheet.
On Monday, the company was frank.
“The Management Board of Wirecard assesses … that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion euros do not exist,” it said.