The Financial Times cites documents describing potential fraud and money laundering at the German payments firm.
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A senior executive at German fintech firm Wirecard was suspected last year of forging and backdating contracts in what an internal presentation outlined as possible violations of Singapore law, the Financial Times reported Wednesday.
The report sent Wirecard’s shares plunging over 20 percent at one point Wednesday on the Frankfurt Stock Exchange, where it closed €22.25 lower at €145.15, a drop of over 13 percent. The payments firm, founded in 1999, has been wildly successful and with a stock market value of €20 billion ($22.8 billion) has overtaken Deutsche Bank in market cap. Last year, it replaced the venerable Commerzbank in the DAX index of 30 blue chips.
A company spokesman denied the FT report as “false, inaccurate, misleading and defamatory,” Handelsblatt reported. The FT article, the company said in a statement, “lacks any substance and is completely meaningless.”
According to the FT, a May 2018 presentation entitled “Project Tiger Summary,” described transactions ordered by Edo Kurniawan, who heads up Asia-Pacific accounting for the firm, which potentially amounted to “falsification of accounts” and “money laundering” in violation of Singapore law.
Kurniawan remains in the same position of responsibility in Wirecard’s Singapore office, which prompted a whistleblower to disclose the internal document to the British newspaper. When the FT contacted him, Kurniawan said to email questions, but he did not respond to the emailed questions.
Wirecard has been plagued over the years with reports of inconsistencies in its accounts, the FT said. Analysts questioned the accounts in 2008, 2015 and 2016, but the company dismissed the criticism as attempts to manipulate its stock.
The company offers electronic payment transactions as well as physical and virtual payment cards. It belongs to Visa and Mastercard networks and processes hundreds of millions of euros in transactions every day. Chief Executive Markus Braun has promoted a vision of a cashless society and has become a billionaire in the process.
The new kid on the DAX has big ambitions. It aims to multiply its stock-market value by four. Tougher still, the fintech wants to wean its countrymen off cash.
Wirecard has maintained it takes all regulatory obligations extremely seriously. The FT reported that the Project Tiger document presented last May to four top executives, including Braun, showed how €37 million had been transferred through various accounts in a suspicious manner.
The presentation, for instance, detailed contracts valued at €13 million with Flexi Flex, a hydraulics and piping company in Singapore and Malaysia, and the FT has seen some invoices with the Flexi Flex logo to a Wirecard unit. But officials at Flexi Flex said they had not heard of Wirecard and did not sell the products invoiced.
Other transactions included what appeared to be round-trip transactions, the FT reported, a fraudulent accounting technique often used to resemble legitimate business. These transactions involved Hermes and GI Technology, two Indian units Wirecard acquired in 2015. Their growth helped propel Wirecard earnings and stock price.
Darrell Delamaide is a writer and editor for Handelsblatt Today based in Washington, DC. To contact the author: [email protected]
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