Despite an audit that raised questions about operations at Wirecard, a publicly traded financial services provider based in Munich, its CEO has ignored calls to resign.
In an interview with Bloomberg News on Sunday (May 3), Markus Braun said he won’t step down and vowed investors’ confidence will be restored following his implementation of a series of measures designed to improve compliance and control.
Braun told the news outlet the payment processing company will unveil nine initiatives intended to overhaul how it reports and punishes compliance violations and deals with business partners.
The survey by KPMG, a global auditing firm, criticized the company’s lack of transparency and cooperation. In addition, it failed to rule out balance sheet manipulation. KPMG said it was unable to obtain the data it needed for the audit, and criticized the company for shortcomings and an unwillingness by its third-party partners to contribute to the report.
Release of the audit caused Wirecard’s shares to plummet by fall more than 33 percent last week. The company employs 5,300 workers.
The Financial Times raised the issue of Wirecard’s troubles more than a year ago in a series of investigative reports.
The audit revealed while evidence provided for revenues of 1 billion euros ($1.1 billion) in transactions with third parties was enough for reporting purposes, it was inadequate for the forensic probe. The survey said Wirecard has an accumulation of software contracts without economic substance.
Braun told Bloomberg he planned to stop doing business with third-party business partners which represent about half of its transactions. Those companies, he said, process payments in countries where Wirecard is not licensed to operate.
“We will massively cut back our third-party business and replace it with our own licenses within the next two years,” Braun said.
Last week, investor Chris Hohn of TCI Fund Management Ltd., called on Braun to resign.
But Braun told the news outlet that as CEO he brings substantial value-enhancing potential to Wirecard. His plan will boost revenues and profits by multiple times within the next decade.
“We are on course to meet our financial targets for 2020 and keep our long-term guidance,” Braun said.
Wirecard is scheduled to release its first quarter earnings on May 14. Its audited annual report is slated to be issued on June 4.