Security & Fraud

Wirecard Seeks Forensic Investigation Into Its Collapse

Wirecard

Wirecard AG, the German payments company fighting for survival, has hired a forensic team to investigate the accounting scandal that led to its insolvency, sources told Reuters.

Once worth $28 billion before it collapsed last month, Wirecard has contracted with Alix Partners, the New York-based forensic accounting firm, to explore the two missing deposits in Philippines banks totaling more than $2 billion uncovered by its auditor Ernst & Young and nearly $4 billion it owes creditors.

Alix Partners has been contracted to discover which Wirecard employees and board members knew what about potentially criminal acts, the sources said. Its findings are expected to assist litigation against Wirecard workers and officers, the report said.

The investigation is being carried out with the consent of the insolvency administrator for Wirecard, the sources added.

The news service reported that sources said a dozen Wirecard subsidiaries in Singapore, Indonesia, South Africa and Turkey are for sale. Proceeds from the sale of those operations could total as much as 100 million euros ($114 million).

Meanwhile, Wirecard is seeking buyers for its European operation and Wirecard Bank, its lending operation, Reuters sources said.

Today, Wirecard Bank’s value is 160 million euros ($183 million), but experts expect it will sell at a huge discount.

Late last month, Wirecard North America Inc. in Pennsylvania, a company that is separate from Wirecard AG, hired an investment bank to manage its sale.

Last week, one of the unnamed jailed executives in the Wirecard scandal reportedly admitted guilt to fraud and money laundering.

Nicolas Fruehsorger, a defense lawyer for the executive, said his client “has voluntarily given himself up for the proceedings and in contrast to others takes individual responsibility.”

The executive traveled from Dubai to turn himself in last week but was not named to avoid prejudice in how the case is judged later.

Also last week, PYMNTS reported the troubles afflicting Wirecard extended to European lenders who say they expect to recover as little as 20 percent of the nearly $2 billion they are owed.

Alix Partners declined to comment for the Reuters report, which also said Wirecard was not immediately available for comment.

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