Wirecard goes from boom to bust

Wirecard accounting scandal under investigation in Philippines, while former CEO posts bail

Markus Braun resigned as CEO on Friday after the company said that auditors could not find accounts containing 1.9 billion euros (£1.69 billion).

Bank of America Merrill Lynch slashed its share-price target to 1 euro from 14 euros on Wednesday, saying customers may be starting to abandon Wirecard, while banks it owes 1.75 billion euros to may be weighing the closure of credit lines.

Shares in the company, which have lost 90% of their value in less than a week, were suspended on the Frankfurt stock exchange.

As reported by Wall Street Journal and others, Wirecard filed an application with the Munich district court to begin preparing for insolvency resolution procedures.

During Braun's 18 years as CEO, Wirecard grew into a $28 billion "fintech" firm that won a spot in 2018 in Germany's DAX blue-chip index.

Justice Secretary Menardo Guevarra said he had instructed state investigators to coordinate with the central bank's anti-money laundering council, and immigration records had shown that former board member Jan Marsalek - who was sacked on Monday - had been in the Philippines from March 3-5.

It also said it was evaluating whether to file for insolvency proceedings for its subsidiaries.

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BaFin started to investigate both short-sellers as well as Wirecard at the end of January last year, but the regulator was unable to ask law enforcement to take on the latter until auditors weighed in earlier this year, according to a spokesman.

A second source close to talks with creditors said although the company had a healthy core, about two-thirds of sales had been faked in its accounts.

"There is no way that they could repay their total debt of €3.5 billion with that core, notwithstanding all the legal challenges ahead of them", the source said on condition of anonymity.

The ascent of Wirecard, which was founded in 1999 and is based in a Munich suburb, was dogged by allegations from whistleblowers, reporters and speculators that its revenue and profits had been pumped up through fake transactions.

Marsalek was sacked by Wirecard on Monday after it disclosed that the billions, purportedly held at two Philippine banks which have denied any connection with the German firm, probably did not exist.

Although a warrant against the 50-year-old Austrian has been lifted, he remains under investigation by Munich prosecutors who suspect him of misrepresenting Wirecard's accounts and falsifying income.

Braun has suggested that Wirecard may itself be the victim of fraud. Its chief operating officer Jan Marsalek is fired.

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