Security & Fraud

Wirecard Denies Fraud Claims, Defends Accounting Practices

Wirecard

Wirecard’s chairman Wulf Matthias does not believe that his company needs an independent forensic audit, despite the fact that the company has been accused of fraudulently inflating sales and profits.

“Prima facie, EY is evaluating the matters sufficiently,” he told The Financial Times.

His comments come after FT published documents last week allegedly provided by whistleblowers that “appear to indicate a concerted effort to fraudulently inflate sales and profits at Wirecard businesses in Dubai and Ireland, as well as to potentially mislead EY, Wirecard’s Tier 1 auditor.”

Wirecard in turn accused FT of market manipulation, which the news outlet denied. The claims were enough to lead to an investigation by Germany’s regulatory authority, BaFin. Wirecard’s shares dropped 6.3 percent on Friday, taking the fall for the week to 21 percent.

Matthias, who is due to step down as chairman next year, called the discussion about the possible accounting issues “an annoyance,” adding that “we have endless stories [about Wirecard], three a day. I have not looked at them in further detail. We have other things to do.”

But an anonymous public letter posted online warned the group’s supervisory board members that they could possibly face personal liability if they chose not to investigate credible fraud allegations. Wirecard has insisted that its “group auditor Ernst & Young GmbH, Germany, confirmed that they have complied and will comply with all statutory and professional audit standards.”

This isn’t the first time FT has published a report accusing Wirecard of accounting fraud. Earlier this year, it published separate reports accusing Edo Kurniawan, Wirecard’s head of Asia-Pacific accounting and finance, of orchestrating a scheme with employees to obtain an operating license from the Hong Kong Monetary Authority — in which Wirecard would transfer funds from its Germany bank to a non-operational unit in Hong Kong. Wirecard denied the allegations.

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