Security & Fraud

Report: Some Wirecard 'Partnerships' May Be A Hoax

Wirecard

Wirecard AG, the insolvent German payment processing company facing criminal accusations, may have misled the financial community about its partnerships with blue-chip companies.

While Wirecard touted deals with SAP SE, Zurich Insurance Group and SoftBank Group Corp., The Wall Street Journal discovered some of those partnership announcements were misleading or publicized without the agreement of the companies.

The newspaper said it contacted more than 300 companies with which Wirecard said it had collaborations.

SAP, the German software company said it was surprised to see a news release from Wirecard earlier this year that said it had become an “official development partner.”

“Wirecard announced a partnership with SAP that was never signed by us nor was [it] approved from us to publish a press release,” Marcus Winkler, a company spokesman, told the Journal.

Earlier this month, PYMNTS reported Wirecard’s operating performance was far worse than previously known, according to a report from KPMG, the Netherlands-based global accounting firm.

Wirecard’s filing insolvency last month has exposed a pair of deposits totaling $2.1 billion that were never made in two Philippines banks as the company had said.

Wirecard’s former CEO Markus Braun has been accused by German prosecutors of falsely inflating revenues.

Braun’s attorney did not respond to requests for comment.

Last year, Wirecard distributed more than 100 news releases, according to The Wall Street Journal report, while competitors such as U.S.’s Discover Financial Services issued 80 and Dutch payments processor Adyen NV had 21 announcements.

“If you’re just scratching the surface and you look at headlines, you’ll say ‘oh that’s pretty impressive,’” Neil Campling, head of telecoms, media and technology research at Mirabaud Securities, told the newspaper. “If you looked at the details, you’d realize it was absolutely meaningless.”

Of the 90 companies named in Wirecard’s releases contacted by the WSJ, many declined to comment while others said they did business with Wirecard. Others said the releases overplayed their relationship.

“Wirecard partners with world-wide successful gaming company Gameforge,” said the headline of a 2018 Wirecard press release about a deal with a German videogame company.

“Partnering’ is not quite accurate,” a Gameforge spokesman told the paper. “We are a customer of Wirecard Bank AG. They are one of our payment service providers.”

Partnerships are key to a company’s growth and potential, Sanjay Sakhrani, an analyst with Keefe, Bruyette & Woods, told the newspaper.

“On the surface, when you look at the nature of the announcements and the results, they suggested the company has significant momentum and wind as its back,” Sakhrani said. “What’s difficult to do is the forensic analysis and determine what is real and what is not.”

Last month, a summary of Wirecard’s customers in 2017 revealed just 100 clients represented more than 50 percent of its real sales.

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NEW PYMNTS STUDY: ACCELERATING THE REAL-TIME PAYMENTS DEMAND CURVE – NOVEMBER 2020

About: Accelerating The Real-Time Payments Demand Curve:What Banks Need To Know About What Consumers Want And Need, PYMNTS  examines consumers’ understanding of real-time payments and the methods they use for different types of payments. The report explores consumers’ interest in real-time payments and their willingness to switch to financial institutions that offer such capabilities.

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