How Germany’s Wirecard fell from grace

Payments firm Wirecard’s (WDIG.DE) collapse has prompted a German parliamentary inquiry after the former stock market star’s disclosure in June of a 1.9 billion euro ($2.3 billion) hole in its accounts triggered its insolvency.

The following timeline summarizes the major developments.

2020
April 28: Independent investigation by KPMG finds Wirecard did not provide sufficient documentation to address all allegations of accounting irregularities made by the Financial Times.

May 25: Publication of final 2019 results postponed for a third time.

June 18: Auditor EY refuses to sign off Wirecard’s 2019 accounts as it was unable to confirm the existence of 1.9 billion euros in cash balances on trust accounts, representing around a quarter of its balance sheet.

June 19: CEO Markus Braun quits as Wirecard’s search for missing cash hits a dead end in the Philippines and it scrambles to secure a financial lifeline.

June 22: Wirecard says that 1.9 billion euros it booked in its accounts likely never existed.

June 23: Braun is released on bail after being arrested on suspicion of falsifying company accounts.

June 25: Wirecard files for insolvency, owing creditors almost $4 billion.

June 29: A Munich court appoints Michael Jaffe to manage the insolvency of Wirecard.

July 1: Police and public prosecutors raid Wirecard’s HQ in Munich and four properties in German and Austria.

July 2: The head of Germany’s financial watchdog calls the accounting scandal “a massive criminal act”.

July 9: German state prosecutors start investigating individuals at Wirecard for suspected money laundering.

July 16: The former head of a Dubai-based subsidiary of Wirecard, admits wrongdoing to prosecutors for his role in a multi-billion-euro fraud.

July 22: German prosecutors arrest three former top executives of Wirecard.

Aug 3: German body in charge of regulating auditors examines the work of EY, Wirecard’s auditor.

Aug 12: Deutsche Boerse (DB1Gn.DE) changed its rules, effectively expelling Wirecard from Germany’s blue-chip index DAX .GDAXI.

Aug 25: Wirecard lays off more than half of remaining staff in Germany.

Sept 1: German lawmakers launch parliamentary inquiry

2019
Jan. 30: Wirecard denies a Financial Times (FT) report that an executive had used forged and backdated contracts in a string of suspicious transactions that raised questions about the integrity of the company’s accounting practice.

March 28: Wirecard sues FT

Oct. 21: Wirecard hires KPMG to conduct an independent audit to address allegations by the FT that its finance team had sought to inflate reported sales and profits.

BACKGROUND
1999: Wirecard founded in Munich.

2002: Markus Braun, previously a KPMG consultant, becomes Wirecard CEO.

2005: Wirecard listed on the Deutsche Boerse Frankfurt (Frankfurt Stock Exchange), Prime Standard segment.

2006: Consolidation of Wirecard Bank AG.

2007: Wirecard Asia Pacific established.

2010: Jan Marsalek appointed Chief Operating Officer.

2016: A negative report by short sellers Zatarra Research alleges fraudulent activity at Wirecard, saying senior executives have committed money laundering offences, as well as defrauding Mastercard and Visa.

2018: Wirecard joins blue chip market index Deutscher Aktienindex (DAX), making it officially one of the 30 most valuable German companies on the Frankfurt Stock Exchange