Former Wirecard CEO arrested

Former Wirecard CEO arrested. IT Market


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Anna Savelyeva | 06/23/2020

Former Wirecard CEO arrested

Marcus Brown is suspected of falsifying company earnings. Thus, he tried to make Wirecard strong and attractive in the eyes of investors and customers.

On Monday, the German fintech company reported that the 1.9 billion euros (2.15 billion dollars), which are indicated in its statements, most likely never existed. In fact, they created
“Black hole”, which may violate the stable position of a solvent corporation.

The audit organization EY refused to sign the reports for 2019, as it could not confirm the presence of 1.9 billion euros in the balance of the target accounts, which is about a quarter of the balance sheet.

After that, Wirecard shares fell more than 60%. Over the three sessions, as a result, the paper lost more than 85%.

As explained by the Munich prosecutor’s office, Brown surrendered in the evening of June 22. Before that, last week, he resigned. On Tuesday, June 23, the first hearing is held, at which the judge will decide whether
whether the accused is in custody.

Markus headed Wirecard since 2005, and it was he who turned a small Berlin startup into an international corporation.

At the moment, he is credited with misrepresenting company reports and manipulating the market by falsifying revenue from transactions with so-called third-party buyers. However, the procurator
is considering issuing an arrest warrant for Jan Marsalek, a member of the board of directors. He was temporarily suspended from work, after which, on Monday, he was fired.

Emergency negotiations are underway with banks, which owed about 1.75 billion euros to urgently close this “hole”.

Audit problems were noted last year, when Wirecard employees overestimated the sales and profits of its divisions in Dubai and Dublin. The KPMG auditing company, hired at the same time, could not
track an impressive portion of the transactions behind Wirecard’s profit from 2016 to 2018.

Wirecard is unlikely to be able to continue its activities, and the risks of litigation currently exclude the sale of assets. The main question is whether to allow the firm to work.
for several weeks to give time to recover.

However, on Tuesday, the Central Bank of Singapore received an application from Wirecard to issue a license in accordance with the new Law on payment services in the country.

Recall that the amendments should create an innovative environment for financial technology, and are aimed at combining the regulation of services. Previously, it was carried out separately.

The main activity of Wirecard indicated the processing of payments by sellers and assisting companies in the issuance of “pre-paid cards” (cards with a certain face value without the possibility
replenishment).

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