UPDATE 3-Wirecard CEO exits as search for missing billions hits dead end in Asia
* $2.1 bln hole in accounts sends shares into spiral
* Auditor's refusal to sign off accounts could hit loans
* CEO resigns after earlier alleging possible fraud
* Shares slump by up to 50%, as stock rout continues
(Adds CEO comment, expert comment, detail)
By Patricia Uhlig, John O'Donnell and Neil Jerome Morales
FRANKFURT/MANILA, June 19 (Reuters) - Wirecard's
chief executive quit on Friday as the German payments firm's
search for $2.1 billion of missing cash hit a dead end in the
Philippines and it scrambled to secure a financial lifeline from
its banks.
Markus Braun, who built Wirecard into one of the hottest
financial technology investments in Europe before questions over
accounting saw it crash in value, leaves the firm facing a
looming cash crunch and mired in allegations of fraud.
Braun resigned just hours after releasing a video blaming
Wirecard's problems on fraud, saying he accepted "responsibility
for all business transactions lies with the CEO."
Wirecard, which has seen nearly 10 billion euros ($11.2
billion) wiped off its market value in just two days, had been a
welcome technology success story in Germany, a country better
known for its prowess in heavy industry.
But it has been under scrutiny since a whistleblower alleged
that it owed its success in part to a web of sham transactions,
a scandal that some fear will now damage Germany's reputation.
Wirecard said in a statement that James Freis, a former
compliance officer at Germany's stock exchange, had been
appointed as the firm's interim CEO.
It is holding emergency talks with banks to secure a
financial lifeline, three people with knowledge of the matter
said, after its auditor, EY, would not sign off on its accounts.
On Thursday, Wirecard warned that loans of roughly 2 billion
euros ($2.24 billion) could be terminated if its annual report
is not published on Friday and it has until evening to strike a
deal with the banks, the sources told Reuters.
Wirecard's share price dropped by as much as 50% on Friday
in a continuation of Thursday's rout, with the stock hitting 20
euros, a far cry from the 200 euros it was priced at when it
joined Germany's prestigious blue-chip Dax index in late 2018.
"Wirecard is a company that has caused serious damage to the
credibility and trust of the Dax with international investors.
This will have significant consequences for the image of the
German capital market," Carola Rinker, a German economist
specialising in accountancy fraud, said.
Wirecard's shares tanked again on Friday after two
Philippine banks, BPI and BDO, said it was not a client of
theirs and alleged that documents had been falsified.
'SPURIOUS' DOCUMENT
Braun, who has aggressively defended Wirecard against
allegations of accounting fraud, had earlier said that the firm
could itself have been the victim, without giving details.
"Attempts by Wirecard to appear as the victim in the missing
1.9 billion euros have been undone within hours of Wirecard
management’s video yesterday evening," said Neil Campling at
Mirabaud, the only analyst to have a price target of zero.
EY had regularly approved Wirecard's accounts in recent
years, and its refusal to sign off for 2019 confirms failings
found in an external probe by KPMG in April.
While Wirecard did not give any details of where the missing
money is alleged to have gone, statements by the two Philippine
banks denying any involvement spooked investors in the firm.
"The document claiming the existence of a Wirecard account
with BDO is a falsified document and carries forged signatures
of bank officers," BDO said, adding that it had reported the
matter to the Philippines' central bank.
BPI also said Wirecard was not a client, adding:
"Their external auditor presented to us a document that
claimed that they are a client. We have determined that the
document is spurious. We continue to investigate this matter,"
BPI said in a statement.
The Wirecard scandal, which was extensively investigated by
the Financial Times newspaper and has been the subject of
several reports by so-called short sellers, has also damaged the
standing of German financial regulator Bafin.
"Bafin looked on for far too long,” Fabio De Masi, a German
lawmaker said, adding that the agency must be improved.
($1 = 0.8911 euros)
(Additional reporting by Michelle Martin and Douglas Busvine in
Berlin and Anika Ross and Edward Taylor in Frankfurt; Writing by
John O'Donnell; Editing by Jan Harvey, Carmel Crimmins and
Alexander Smith)
((john.odonnell@thomsonreuters.com; +49 69 7565 1366; Reuters
Messaging: john.odonnell.thomsonreuters.com@reuters.net))
Rank : negative
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