Visa and MasterCard are considering depriving Wirecard of the ability to make payments through their networks, according to the Bloomberg news agency on Thursday evening, citing people familiar with the matter. Some Wirecard customers have already been contacted to prepare them for this option.
Wirecard filed for bankruptcy on Thursday due to over-indebtedness and impending insolvency. For the Aschheimers, the auditing firm EY, which audited the 2019 annual financial statements, assumes serious crime on a quasi global scale: “There is clear evidence that it is a comprehensive fraud involving several parties around the world and in various institutions were involved with deliberate deception, “explained EY in Stuttgart.
Philippines suspect ex-board member Marsalek in China
A key figure in the billion dollar scandal surrounding the insolvent DAX group may be in China. According to data from the Philippine Immigration Service, former Wirecard board member Jan Marsalek traveled to the Southeast Asian country on Tuesday and to China via Cebu airport on Wednesday. However, the airport’s video footage did not show Marsalek left the country, Justice Minister Menardo Guevarra told CNN Philippines on Thursday.
The manager was responsible for day-to-day operations on the Wirecard board and was dismissed without notice last Monday. The public prosecutor’s office in Munich has been investigating Marsalek, ex-CEO Markus Braun and two other current officers for suspected misinformation from investors for weeks.
The accounting firm EY, which checked Wirecard’s balance sheets, expects extensive fraud with several parties involved around the world. Wirecard filed for bankruptcy on Thursday. The company has granted alleged air bookings in the amount of 1.9 billion euros, which is why the board of directors also expected the termination of loans in the billions in the coming week.
EU Commission engages in European financial supervision
In the Wirecard scandal, the EU Commission is now turning on the European financial regulator ESMA. The supervisors should take a close look at the collapse of the Munich payment service provider and possible omissions by the supervisory authorities. A preliminary investigation report should be available by July 15. This emerges from a letter from the Commission to ESMA, which was received by the German Press Agency on Friday.
The payment service provider had filed for bankruptcy on Thursday. The background to this is a suspected scandal involving air bookings amounting to 1.9 billion euros. The accounting firm EY, which audited the 2019 annual financial statements, assumes serious crime on a global scale.
The letter from the EU Commission to ESMA (European Securities and Markets Authority) in Paris states that a comprehensive description and analysis of the events and an examination of whether the reaction of the supervisory authorities was appropriate were necessary. In Germany, the Federal Financial Supervisory Authority (Bafin) is responsible.
ESMA must look at the incident from the perspective that EU investors are fully protected if they invest in companies that are listed on the regulated market in the EU, the letter said. That is also important for possible further steps. The letter was written by the responsible Directorate General for Financial Stability of the Commission, and is addressed to ESMA chief Steven Maijoor.
Law firm: Wirecard investors can claim damages
According to a law firm, investors in the insolvent payment service provider Wirecard are still entitled to damages from the company. The claim of investors in Wirecard shares, bonds and derivatives would have to be at the bottom of the bankruptcy.
“We currently have indications that there could be valuable claims against the auditors EY and possibly even Bafin,” said specialist lawyer for banking and capital markets law Michael Leipold, according to a press release from his law firm. In the financial supervision Bafin “even the top boss admitted significant mistakes”.
The auditors had apparently audited incorrect DAX group financial statements for several years. As a result, investors are deprived of information in the knowledge of which they have not made the investment, the law firm said.
Claims for damages could therefore arise for all investors who traded securities between February 24, 2016 and June 18, 2020.
At Wirecard, EY is currently expecting extensive and conspiratorial fraud. Wirecard auditors had refused to certify the 2019 annual financial statements because of falsified documents.
The DAX group had filed for bankruptcy on Thursday due to impending insolvency and over-indebtedness. Appropriate applications are also possible for subsidiaries. Wirecard threatened to terminate 1.3 billion euros in loans at the end of June. Wirecard had to admit on Monday that bank balances of more than 1.9 billion euros at two Philippine banks are unlikely to exist.
SdK files criminal charges against auditors of Wirecard AG
After the bankruptcy of the payment service provider Wirecard, the protection association of investors (SdK) filed a criminal complaint against two acting and a former auditor of Ernst & Young GmbH (EY). As of fiscal year 2009, the auditor had been commissioned to audit Wirecard’s consolidated financial statements and annual financial statements. But it was only after eleven years and a special investigation by the competitor KPMG that EY noticed the shortcomings in the group, which is now listed on the DAX, write the shareholder protectors.
EY Wirecard refused to certify the 2019 annual financial statements because of falsified documents. The auditor complained about the lack of more than 1.9 billion euros in alleged bank deposits and is now expecting extensive and conspiratorial fraud.
“Checking the existence of bank balances is one of the easier tasks of an auditor and the procedure is clearly regulated,” said the SdK. However, according to media reports, the auditors did not request a balance confirmation from the banks in question for the years 2016 to 2018. “From the SdK’s point of view, it is also completely incomprehensible that, despite critical questions from the SdK, large hedge funds and, above all, the Financial Times, there has apparently not been an audit in previous years that meets Ernst & Young’s own standards.”
On Thursday, Wirecard filed for bankruptcy due to impending insolvency and over-indebtedness. Wirecard threatened to terminate 1.3 billion euros in loans at the end of June. According to the SdK, the high losses caused by the slump in prices have affected private investors as well as institutional investors.
SdK claims to hold one share of Wirecard AG. The shareholder protectors have announced that they will vote against an appointment of EY as auditor or group auditor at the future general meeting until further notice until the auditor has given a detailed statement on the audit practice and explains how balance sheet manipulations of this magnitude should be uncovered in the future .
Wirecard shares under pressure again
The papers of the payment processor Wirecard, which had sunk in the balance sheet scandal, were again under considerable pressure on XETRA on Friday. At the end of trading, they only cost EUR 1.28 and were thus 63.74 percent in the red – the low was EUR 1.08.
Wirecard had crowned the bad news of the past few days after another shift in the balance sheet for 2019, admission of alleged air bookings in the billions and boss resignation on Thursday with the application for bankruptcy.
Erster Index-Exit
In six trading days, they lost up to 98 percent of their value and, given the current status, lose their place in the DAX in September. As of Tuesday, the Stoxx Europe 600, the index of the 600 largest listed European companies, will no longer be available. shared the index subsidiary Stoxx Ltd. the Deutsche Börse on late Thursday evening. In the Wirecard balance sheet scandal, the accounting firm EY is now assuming serious crime on a quasi-global scale.
Index changes are particularly important for funds that exactly replicate indices. There must then be changed accordingly, which can have an impact on the share prices.
The future of Wirecard is completely uncertain
How things will continue with the company and whether Wirecard has any future prospects is still completely unclear. The board had said on Thursday that the continuity of the company was “not guaranteed”. The “Frankfurter Allgemeine Zeitung” writes, however, without specifying a source, that there are already interested parties for parts of Wircard.
Wirecard is banned from payment services in the UK
Wirecard AG, which is about to go bankrupt, may no longer process electronic payments in Great Britain. The FCA Financial Market Authority immediately prohibited Wirecard Card Solutions Ltd from all regulated activities and at the same time instructed the company to notify its customers. In addition, it banned the transfer of funds and assets.
A statement by the Financial Conduct Authority states that this will secure customer funds with the British company.
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