Wirecard is facing a fight for survival amid scrutiny into its accounting practices.
, once hailed as the darling of Germany's financial technology scene, is now facing a fight for survival amid scrutiny into its accounting practices., for the fourth time, that it couldn't publish its financials for 2019. Auditors at EY couldn't account for 1.9 billion euros of cash on its balance sheet, it said.
Markus Braun, CEO of the technology and financial services company Wirecard, poses in the company headquarters in Aschheim near Munich, southern Germany, on September 18, 2018. Markus Braun, an Austrian computer scientist, joined Wirecard in 2002 and became both chief executive and chief technology officer of the company.
Notable among Braun's achievements was overseeing the sharp increase in Wirecard's share price, and its replacement ofOnce a little-known name, the company had by then gained a reputation as one of Germany's top tech companies, climbing to the ranks of the likes of SAP and Infineon.It began in January last year, when the newspaper published a report about the alleged use of forged and backdated contracts at its Singapore office to inflate revenue.
An illuminated logo sits on the exterior of Wirecard's headquarters in the Aschheim district of Munich, Germany.Wirecard did not immediately respond to a request for comment when contacted by CNBC, but put out a video online on Friday in which Braun said it "cannot be ruled out" that Wirecard was itself the victim of "considerable" fraud.
It presents a liquidity crunch for the firm, according to Richard Sbaschnig, a senior analyst on the forensic team at investment research firm CFRA. That's in part due to the fact that 1.7 billion euros of Wirecard's cash is held by regulated entities — Germany-based Wirecard Bank and U.K.-based Wirecard Card Solutions.
"Braun has brazenly tried to portray the company as a victim of fraud and instead tried to focus investors on apparently strong reported revenue growth," said Norris. "If the cash balances are non-existent, then logic would also suggest that current trading is equally fictitious."
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