Wirecard AG, the disgraced German payments provider that filed for insolvency last week over a $2.1 billion accounting scandal, told customers it’s business as usual at all but one of its subsidiaries.
In a posting on its website, the suburban Munich company said Wirecard Bank is not part of the insolvency proceedings and electronic fund transfers are not affected.
“Payouts to merchants of Wirecard Bank will continue to be executed without restrictions,” the company said in a statement. “The management board is of the opinion that continuation is in the best interests of the creditors. With the exception of a small development branch office, no insolvency applications have been filed by (Wirecard) Group companies at present.”
On Friday, the Financial Conduct Authority (FCA), the United Kingdom’s financial watchdog, froze Wirecard subsidiary’s assets and cash in its Newcastle, England location, as regulators determine the next steps. As a result of the action, Wirecard Card Solutions’ customers will not have access to their accounts, the FCA said.
In addition, Wirecard said its Management Board of Wirecard AG expects an insolvency administrator to be appointed shortly.
Wirecard has been reeling since auditors could not find missing deposits, 25 percent of the company’s holdings, that the company said it had deposited in two Philippines banks. BDO Unibank Inc. and the Bank of the Philippine Islands have said the money never entered the country.
Markus Braun, Wirecard’s 51-year-old founder and CEO, was arrested last week on charges of manipulating the market and misrepresenting accounts. He has denied any wrongdoing, posted bond and was released.
On Friday (June 26), PYMNTS reported Ernst & Young (EY), the independent auditor hired by Wirecard, said the company lied about the supposed deposits and accused the company of an “elaborate and sophisticated fraud involving multiple parties around the world” with regard to the $2.1 billion that may not exist.
Visa and Mastercard have said they are considering cutting ties with Wirecard.
Wirecard also said it is “in constant contact with the credit card organizations,” the statement said.