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The Wirecard Scandal

Axeesys News

24 Aug 2022

A financial house of cards, once a German 'Unicorn' company, and now the largest business fraud in 75 years on German soil.

Photo Credit: BBC



Wirecard is a unique financial scandal that stunned Europe and financial regulators across the world, putting a spotlight on German’s publicly listed companies as a whole, leaving dozens of financial authorities all over the world questioning how this fraud happened and how it was not revealed for several years. The German payments firm holds the title of being the biggest post-war (1945-2020) fraud case.


The company was established in 1999 as InfoGenie AG and become Wirecard in 2005 after years of corporate instability. In 2004, at a general meeting of InfoGenie it was decided to reposition Wirecard in the corporate structure, whose primary business activities were real-time payment processing on the Internet, to InfoGenie AG by way of a capital increase against investment in kind, and to rename InfoGenie to Wire Card. Wirecard became a stock corporation listed on the Prime Standard stock market through a reverse IPO.


Over the next several years the company went on an expansion strategy, first it founded Wirecard Asia Pacific, a year later in 2008 it introduced a virtual prepaid credit card for online payments. Wirecard had expanded to Australia, New Zealand, South Africa, and Turkey by 2014. The company acquired a Citigroup prepaid card services division to obtain a presence in the USA market. Over the next following years, they made more acquisitions in the Brazilian and Chinese financial services market.


Some of Wirecard’s services and products include, international supplier of electronic payment and risk management services, and services in the areas of mobile payments, e-commerce, digitisation, and finance technology.


To give our readers a full picture of the size of Wirecard so you may fully comprehend the scandal these are 2018 figures:


Revenue - $2.31 billion (R34.65 billion)

Net Income - $397.7 million (R5.97 billion)

Total Assets - $6.697 billion (R100.46 billion)


By as early as 2015 a Financial Times blog call FT Alphaville published a series of stories that challenged Wirecard’s business model and accounting policies. A year later a German newspaper Zatarra Report appeared to allege that Wirecard was involved in fraud and money laundering. By 2017, the German Manager Magazin published an article about Wirecard in which it detailed alleged misleading reporting practices.


In January 2019 the firms shares plunged following a report by FT that highlighted a senior Wirecard executive was suspected of falsification of accounts, and money laundering through its Asia-Pacific operations. The accounting firm KPMG was hired by Wirecard for an independent audit to address the mentioned allegations. In March 2020, Wirecard claimed that KPMG concluded that no discrepancy was determined during the audit.


However, by 28 April 2020, Wirecard share price tumbled 26% when the KPMG auditor revealed that it had not received all sufficient documentation to adequately address all allegations of accounting irregularities put forward by multiple players.


On 5 June, Wirecard's head offices were searched by police as part of a criminal investigation into potentially misleading statements to investors by CEO Markus Braun, on 18 June 2020 the company reported $2.15 billion (R32.25 billion) in missing funds following an additional audit by Ernst & Young. After the resignation of CEO Markus Braun, the company share price dropped by 72%.


Days after the Markus Braun resignation the Wirecard management board disclosed that an internal investigation revealed that the $2.15 billion did not exist. Two banks in the Philippines who were allegedly holding the money said that they did not have the sum and never did.


The UK Financial Conduct Authority (FCA) froze the activities of Wirecard's British subsidiary, Wirecard Card Solutions Limited, between 26 June 2020 and 30 June 2020, after which Wirecard UK operations were allowed to resume with relaxed restrictions. Singapore's central bank, the Monetary Authority of Singapore (MAS), announced in September 2020 that it has directed Wirecard's Singapore branch to stop their payment services there and return all funds owed in light of the company's insolvent business and inability to continue providing payment services in Singapore.


Today Wirecard as an organisation does not exist after filing for insolvency.


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