German payment processor and financial services provider Wirecard AG claimed on Monday that €1.9 billion ($2.2 billion) missing from its accounts was likely never there, reports Reuters.
The company also announced it was tearing up its full-year 2019 and first-quarter 2020 financial results.
“The Management Board of Wirecard assesses on the basis of further examination that there is a prevailing likelihood that the bank trust account balances in the amount of €1.9 billion do not exist,” said the company in a statement.
The scandal-plagued company, which is listed on the German stock exchange (DAX) and processes payments for companies including Visa and Mastercard, has been in the spotlight for failing to post annual financial statements on four separate occasions and for alleged fraud, and is reportedly mulling the sale or closure of parts of its business, restructuring and cost reductions to shore up finances.
Earlier, the Chief Executive Officer of the firm, Markus Braun, stepped down on 19 June after auditor Ernst & Young refused to sign the German company’s 2019 accounts over the missing amount in cash balances in trust accounts.
The vanished sum represents about a quarter of Wirecard’s balance sheet.
According to the company, the missing money was supposedly held in accounts at two Philippine banks, BDO Unibank Inc and Bank of the Philippine Islands, set aside for "risk management".
However, Ernst and Young said the banks had been unable to provide the account numbers.
The Philippines' central bank said on Sunday that the cash belonging to the German payment firm had not entered the country's financial system.
In its statement, released on 18 June, Wirecard said that auditors had identified "spurious balance confirmations" regarding cash balances on trust accounts that should have contained €1.9 billion ($2.1 billion).
The announcement triggered a drop in the company share prices by 66.5 percent, to reach €35.
Good morning from #Germany, where accounting scandal surrounding #Wirecard has badly damaged image of Germany as business location & benchmark index Dax. Following VW emissions scandal, Germany has another prominent case of cheating. Wirecard mkt cap now €3bn, one 8th of ATH. pic.twitter.com/CGzyEeycgk
— Holger Zschaepitz (@Schuldensuehner) June 20, 2020
The scandal surrounding Wirecard, which operates both as an issuer of real and ‘virtual’ payment cards to customers, flared up after a spate of articles in The Financial Times in 2019 that alleged accounting irregularities in the company’s Asian operations.
