icon bookmark-bicon bookmarkicon cameraicon checkicon chevron downicon chevron lefticon chevron righticon chevron upicon closeicon v-compressicon downloadicon editicon v-expandicon fbicon fileicon filtericon flag ruicon full chevron downicon full chevron lefticon full chevron righticon full chevron upicon gpicon insicon mailicon moveicon-musicicon mutedicon nomutedicon okicon v-pauseicon v-playicon searchicon shareicon sign inicon sign upicon stepbackicon stepforicon swipe downicon tagicon tagsicon tgicon trashicon twicon vkicon yticon wticon fm

Wirecard goes bust after arrest of former boss over missing billions

Wirecard goes bust after arrest of former boss over missing billions
German payments provider Wirecard announced on Thursday it has filed for insolvency. The move follows the firm’s disclosure of a $2.1 billion financial hole in its accounts, which led to the arrest of its former chief executive.

The legal proceedings have been opened in Munich “due to impending insolvency and over-indebtedness,” Wirecard said, adding it was also evaluating whether insolvency applications would have to be filed for its subsidiaries. The company controls a bank in Munich as well as a card-issuing unit in the UK.

On Monday Wirecard revealed that €1.9 billion ($2.1 billion) of cash on its balance sheet had gone missing. It has further admitted that the cash (roughly a quarter of its assets) probably never existed in the first place.

Wirecard’s ex-CEO Markus Braun has been arrested on suspicion of having artificially inflated the company's balance sheet and sales through fake transactions. Prosecutors said the chief executive wanted, in this way, to make the firm appear stronger and more attractive for investors and customers.

Also on rt.com Former CEO of scandal-hit Wirecard arrested on suspicion of falsifying revenue – German prosecutors

Braun, who led Wirecard for 18 years, stepped down last week after auditors Ernst & Young (EY) made an announcement on Thursday about the missing billions from the company’s accounts. The firm was scheduled to publish Wirecard’s 2019 annual report on Thursday but said it would not be able to, because it could not confirm the existence of €1.9 billion in cash balances on trust accounts.

Braun said that Wirecard had been the victim of fraud, pointing to irregularities at two unnamed banks. Wirecard had been claiming that the missing amount was held in a trust account in the Philippines.

However, the central bank of the Philippines said that none of the missing money ever entered its financial system and that Wirecard used the names of the country’s two biggest banks (BDO and BPI) to try to mislead eventual investigators. 

Also on rt.com Wirecard crisis deepens as company claims missing billions may not exist

Braun has since been released on a five-million-euro bail bond and has to report to police once a week. 

Wirecard shares, which have lost 90 percent of their value in less than a week, were suspended on the Frankfurt stock exchange. The fintech company thus became the first sitting member of Germany's blue-chip share index DAX to go out of business.

For more stories on economy & finance visit RT's business section

Dear readers and commenters,

We have implemented a new engine for our comment section. We hope the transition goes smoothly for all of you. Unfortunately, the comments made before the change have been lost due to a technical problem. We are working on restoring them, and hoping to see you fill up the comment section with new ones. You should still be able to log in to comment using your social-media profiles, but if you signed up under an RT profile before, you are invited to create a new profile with the new commenting system.

Sorry for the inconvenience, and looking forward to your future comments,

RT Team.