FRANKFURT: Wirecard AG said neither the company nor a law firm it hired found conclusive evidence of criminal misconduct, helping it recover some of the 7 billion euros 250 billion baht) in market value lost last week amid allegations of fraud.
The digital payments company stepped up its defence after being rocked by two Financial Times stories that a senior company executive in Singapore was suspected of using forged contracts for several suspicious transactions. Police there said they are looking into the matter.
In a statement detailing the allegations and its response, the company said “we fundamentally contradict” the fraud claims. The shares rose as much as 18% and were trading up 8.7% at 11.23am in Frankfurt. A conference call with investors is scheduled for 1pm.
Given its complex business model, “the nerves of Wirecard investors are easily jangled,” said Mirko Maier, an analyst with Landesbank Baden-Wuerttemberg in Stuttgart. “The company was just winning trust, and it is certainly going to take time for grass to grow over this latest episode.”
Rajah & Tann, the law firm hired by Wirecard, is about to complete its investigation after reviewing documents and interviewing a Wirecard employee in Singapore who alleged in April that a member of the company’s finance team engaged in potential accounting breaches, Wirecard said in a statement on Monday. The firm was officially mandated to conduct a full inquiry on May 18 last year.
Past Allegations
It’s not the first time that the company has had to defend its reputation. The shares dropped after past claims were published about accounting irregularities in 2008 and fraud allegations in 2016. On Friday, the shares tumbled 25% -- the worst decline since July 2008 -- despite repeated denials of wrongdoing.
The latest alleged breaches took place between 2015 and 2018 and relate to revenue totalling 6.9 million euros, costs of 4.1 million euros and intellectual property valued at 2.6 million euros, said the company, which is based near Munich. Analysts estimate the company generated 2.06 billion euros in revenue last year. An internal compliance inquiry concluded the claims were unfounded and may have been motivated by “personal animosity”.
Rajah & Tann said in a statement posted on Wirecard’s website that the inquiry is “ongoing” and “no conclusive findings of criminal misconduct” have been made to date.
Police Inquiry
The digital payments company -- which supplanted Commerzbank AG in Germany’s benchmark DAX index last year -- operates in the tangled world of online payments. Founded in 1999, Wirecard initially provided financial services to online gambling and adult websites, barely surviving the dot-com bust. It’s now threatening traditional financial services and until recently was worth more than Deutsche Bank AG, Germany’s largest lender.
The Singapore police “are looking into the matter,” a spokeswoman for the authorities said Monday. In Germany, financial regulator BaFin is looking at the issue for signs of possible market manipulation, and Munich prosecutors are also reviewing the facts to decide whether to open a probe.