Categories: Security & Fraud

EY Says Wirecard Gave False Statements During 2019 Audit

According to auditor Ernst & Young (EY), German payment processor Wirecard knowingly gave false statements and was in the midst of “elaborate and sophisticated fraud involving multiple parties around the world” in regards to $2.1 billion on its books that may not exist.

The company was involved in deliberate deceit and had given false statements on escrow while EY was carrying out the 2019 audit of the company, which EY took to the relevant authorities, Reuters reported.

As the case of billions of missing dollars unfolded, Wirecard had to file for insolvency on Thursday (June 25) amid a loss of 90 percent of its shares and over $12 billion in market value.

The matter concerns the $2.1 billion, which was roughly around a quarter of the company’s books and which no one could prove existed. Wirecard said it had deposited money in two banks in the Philippines, but when the island nation launched an investigation, it found that the money had never been deposited there.

EY said it seemed that fraudulent balance confirmations had been made by Wirecard to auditors in order to craft a dishonest perception of the amount of money Wirecard had overall.

The controversy saw the outings of several top Wirecard officials earlier in the week, including founder and CEO Markus Braun, who was arrested earlier this week on charges of manipulating the market and misrepresenting accounts. He posted 5 million euros in bail and was released on Tuesday (June 23). Thus far, he has denied any wrongdoing.

The Wall Street Journal characterized the fall of Wirecard as the demise of a former “rising star” that was previously thought to be on the cutting edge of the European tech scene. The 50-year-old Braun oversaw the company’s shares rising and claimed the company’s payment processing machinations would be a massive boost for worldwide commerce.

EY said it was continuing to do the work on reporting to authorities, according to Reuters.

Get our hottest stories delivered to your inbox.

Sign up for the Newsletter to get updates on top stories and viral hits.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

Recent Posts

Agora Services Debuts New Tools For SMB Banking

Challenger bank Agora Services wants to address challenges with banking for small businesses with a new solution called Agora SMB,…

1 hour ago

Google Almost Done With Transition To SAP Ariba Network

Google's transition to SAP Ariba's cloud-based services has a completion date set for Aug. 24 after multiple waves that began…

1 hour ago

Fed Moves Ahead With FedNow Despite Objections

Not everyone favors the Federal Reserve Board’s launch of its settlement service designed to eliminate the three-day check clearing and…

2 hours ago

Pelosi, Mnuchin Call For Reopening Stimulus Talks

Weeks of failed negotiations on pandemic-related aid has led to House Speaker Nancy Pelosi and Treasury Secretary Steve Mnuchin, representing…

2 hours ago

Bitcoin Daily: S. Korea To Use Blockchain To Collect Highway Tolls; Polish Financial Watchdog Warns Of Fake Crypto Scams

South Korean highways could see blockchain-based toll booths before the end of the year, according to a report from Crypto…

3 hours ago

CHAMPS Group Purchasing Works With Procurement Partners On Smoother P2P Services

CHAMPS Group Purchasing is partnering with Procurement Partners, which works in procure-to-pay (P2P) solutions, to provide a new service for…

3 hours ago