Wirecard: Former boss arrested over €1.9bn scandal

Wirecard CEO out as search for billions turns up empty

MAS' statement came just before German prosecutors announced yesterday that Wirecard's former chief executive Markus Braun had been detained on suspicion of market manipulation, after the company admitted that €1.9 billion (S$3 billion) missing from its accounts likely "do not exist".

German financial regulators called the situation a "scandal" and a "disaster".

Germany's scandal-hit payments supplier Wirecard said Monday there was a possibility the lost 1.9 billion euros from its balances only didn't exist.

On Monday, Wirecard said that missing money likely never existed in the first place- a figure that makes up almost a quarter of its balance sheet.

Stock in the company, which was once regarded as a star of the growing financial technology sector, has now fallen over 85 percent since the scandalous revelations last week, combined with the threat of shareholder lawsuits.

Wirecard's market value now stands at 1.8 billion euros, compared to Deutsche Bank's 17.2 billion euros.

Wirecard is being advised by investment bank Houlihan Lokey and the creditors by law firm Allen & Overy.

News of the missing cash prompted Wirecard's stock price to plunge by over 60% on the DAX last Thursday (18 June), and to collapse again on 19 June by nearly half, chopping around €10bn off its value in less than two days.

In his 18 years in charge, Braun transformed an offshoot of the dot-com boom, known for handling payments for online gambling and adult entertainment sites, into a $20 billion-plus "fintech" that won a place in Germany's blue-chip DAX index.

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Now Wirecard's name is more frequently heard in association with Enron.

Another blow landed late past year, when the FT published a report and company documents suggesting that profits and sales had been inflated at Wirecard outposts in Dubai and Ireland.

Yet another blow landed late very a year ago, when the FT released a report and business files suggesting that earnings and income had been inflated at Wirecard outposts in Dubai and Ireland.

The missing cash was held to cover risks in trading supposedly carried out by third parties on Wirecard's behalf.

"The company continues to examine, whether, in which manner and to what extent such business has actually been conducted", Wirecard added.

On Sunday, the Philippines central bank said that none of the missing $2.1 billion had entered the Philippine financial system.

The Bank of the Philippine Islands said a document claiming the company was a client was "spurious". Wirecard is also exploring measures such as cost reductions, restructuring, disposal or termination of business units, Reuters reported.

EY is Ernst and Young, Wirecard's in-house auditor.

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