Technology Lajcaj consultants, fake accounting, billions in a trap. ...

Lajcaj consultants, fake accounting, billions in a trap. How the fraud that shook Germany developed

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The Germans will provoke a war here and there, other times they will pull Europe out of the crisis and about once every five years they will come out with a monumental corporate scandal. And while, for example, the emission data was lost in the past, this time the 1.9 billion euros, ie about 51 billion crowns, disappeared, and with them the dream of a German technological star.

Wirecard’s story, which mediates electronic payment transactions, sometimes reminiscent of Enron’s legendary downfall, has it all – sloppy consultants, fake accounting records, stock movements of hundreds of percent in both directions, and global overlap.

Let’s take a look at how more than hundreds of thousands of Czechs have gotten to malfunctioning payment cards since the first business report, which indicated something unfair.

September 5, 2018
Commerzbank is dropped from the German stock index DAX 30, which includes thirty German companies with the largest market capitalization. Wirecard replaces her.

October 3, 2018
The Financial Times notes that rocket growth raises questions and lays the groundwork for a series of investigative articles. The stock is trading at almost $ 200 – forty times the expected earnings per share in 2019.

February 1, 2019
The Financial Times office receives an internal document from Wirecard, where lawyers hired by the company itself to investigate the proceedings of its Singapore branch raise suspicions of falsifying accounts, which could theoretically be fraud, corruption or money laundering. At that time, the shares fell to one hundred dollars, despite the fact that Wirecard still has a larger market capitalization than, for example, Deutsche Bank.

April 24, 2019
A new strategic investor is entering Wirecard, a Japanese conglomerate Softbank investing in a German payment company through convertible bonds of 900 million euros (the misfortune is simply sticking to Masayoshi Son!).

September 12, 2019
Wirecard boasts the successful issuance of bonds in the amount of 500 million euros. Moody’s gives them Baa3, in other words the lowest investment rating. Of course, Deutsche Bank could not miss it, as could many other large banks.

October 21, 2019
After a categorical rejection of all illegal practices, Wirecard hires KPMG. A member of the Big Four is due to take a closer look at corporate accounting, while CEO and founder Markus Braun let it be heard that this will cleanse the German company.

March 13, 2020
The audit results from KPMG are being postponed.

April 22, 2020
The shift occurs a second time.

April 28, 2020
After six months, KPMG comes to light with an audit. The auditors failed to verify the authenticity of a large part of the business and the shares, after a previous increase, fall from 140 again to the hundred-dollar limit.

June 3, 2020
The company again denies any wrongdoing and announces that the coronavirus pandemic will not harm its business.

June 5, 2020
At the initiative of the German regulatory authority, police forces invaded Munich’s Wirecard headquarters. The company’s boss Markus Braun and three other members of the board of directors are being investigated.


June 18, 2020
10:43
On its website (where, by the way, the claim “the future of financial commerce starts here” still shines), Wirecard is postponing the publication of financial results for fiscal year 2019. The reason is that the long-term auditor – the German branch of the consulting company EY – cannot find 1 , 9 billion euros, which, according to the balance sheet, the company should have. At that time, the stock of Wirecard was trading for almost 100 euros.

11:08
The stock costs 35 euros.

12:00
The news is being grabbed by world websites, the missing 1.9 billion euros becoming the news of the day.

June 19, 2020
Markus Braun (finally?) Reserves, the shares cost 25 euros.

June 22, 2020
Wirecard admits possible fraud for the first time, and the president of the regulatory authority talks about a complete disaster and disgrace for the whole of Germany.

June 23, 2020
Markus Braun is detained. The plaintiffs claim that Braun is suspected of manipulating the company’s financial realities, in any case he is released on bail of 5 million euros and has to report to the police every week.

June 25, 2020
Wirecard declares insolvency.

June 26, 2020
The founder and head of the Czech payment startup Twisto, Michal Šmída, is sending a comment on the air that after the weekend the company will start sending new cards to clients. The original ones, used by tens of thousands of Czechs, cease to function forever after the English regulator of Wirecard suspends the banking license. Šmída adds that a few months ago Twisto decided to change the card solution provider to the American company Marqueta.

The outage also affected the Direct Fidoo service. “Wirecard Card Solutions Limited, which Fidoo uses as a partner for card transactions, is not insolvent, and has not yet shown any signs of operational or financial problems,” Fidoo said on its website.

Similarly, the scandal affected O2’s eKas, which caused the suspension of card payments. O2 “solves the situation intensively” and will inform customers about further developments.

Wirecard shares are reaching an all-time low on this day, below 1.3 euros.

Short around and around makes a lot of sense, as always when you look in the rearview mirror (congratulations to those who really hit him!). Now, however, we can only hope that the big four will not overlook other Wirecards in this way…

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