Security & Fraud

Wirecard Denies New Fraud Allegations Amid Decline In Shares

Fraud

Wirecard, the German-based payments company, saw its stock tank again Thursday (Feb. 7) after the Financial Times ran a new report alleging more fraud at the company.

The Financial Times report laid out an elaborate scheme orchestrated by Edo Kurniawan, Wirecard’s head of Asia-Pacific accounting and finance, in which he taught employees how to cook the books to win a license from the Hong Kong Monetary Authority. In a practice known as round-tripping, Wirecard would reportedly transfer money from the bank it owns in Germany to a unit in Hong Kong that is not operational. The money would move from there to an external customer and then be transferred to Wirecard’s India office. The goal was to make it appear as if there was real revenue coming from the dormant Hong Kong unit, the report said.

According to the report, Kurniawan told those gathered in a conference room that winning the license so that Wirecard could issue prepaid bank cards in Hong Kong was the top priority and to meet that end Kurniawan developed the scheme in which it money was transferred around for the purpose of making it look like real business revenue. Wirecard was reportedly trying to take over Citigroup’s payment operations.

The incident with Kurniawan wasn’t done in isolation, according to the FT, which said a preliminary report by an Asian legal firm shows the practice was part of a pattern across the firm’s Asian operations for several years. The paper did not disclose the name of the law firm. The report noted that two senior executives at the headquarters, Thorsten Holten, treasury head, and Stephan von Erffa, head of accounting, had at least some idea of what was going on.

The latest revelations sent shares of Wirecard’s stock declining and prompted a statement by the payments company which denied the report. “Wirecard firmly rejects the media coverage of FT,” a spokeswoman said in an emailed statement to Reuters. “Nothing about the article published today is true.”

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