[ad_1]
Like no other German company, Wirecard divides the business savvy public into staunch supporters and suspicious skeptics: Is the Aschheim payment processor near Munich Germany’s response to Silicon Valley tech giants, its boss Markus Braun a genius, And the group in the stock market with more reason? worth more than Deutsche Bank? Or does Wirecard invent sales, operate with nonexistent business partners, and acquire competitors behind which there are dubious addresses?
The British newspaper “Financial Times” has been accusing the DAX company of the latter for years. To clarify the violent allegations, which are almost impressive for local conditions, once and for all (and at best, of course, to refute them), Wirecard commissioned KPMG auditors in a special report in October from the that nothing less than the existence of the company could depend. This report has been available since Tuesday morning, after several delays and sufficient opportunity to light communicative fog candles.
It is, one can say a lot, a document of horror.
The “smoking gun,” that is, the definitive proof that Wirecard invents or inflates sales or has done so in the past, is missing. But whoever reads what the auditors put up against their conclusions as a warning could bluntly conclude that this evidence could hardly be provided.
Documents delayed for months or not delivered
Because there it says that Wirecard delayed the requested documents for months or did not deliver them at all and postponed interview appointments with key employees multiple times. Examiners were denied access to the IT system and documents were only released as a copy instead of the original. Additionally, some of Wirecard’s key business partners had blocked the disclosure of data.
At least as remarkable: Although Wirecard originally announced the release of the report for the first quarter, management suddenly submitted documents between April 17-24, so the release was delayed again. KPMG’s suggestion that the documents submitted later could no longer be verified to verify their authenticity seems almost resigned. The report also reached the German financial regulator shortly before its publication.
The allegations made by the “Financial Times” and investigated by KPMG can be divided into four categories:
-
Wirecard should Sales through fictitious customer relationships. in third party acquisition (TPA). These are payments that Wirecard processes through external partner companies. Profits from this are said to have flowed through Wirecard companies in Dubai and Ireland.
-
Wirecard awarded to retailers Loansstretching customer payments until they are processed. Wirecard is said to have failed to correctly identify these commercial cash advance transactions.
-
About Cycle reservations and order reversals Wirecard is said to have reported that sales in Singapore were too high.
-
Wirecard is said to be in India You paid an excessive purchase price when you took over a payment processor. It is unclear who benefited from it.
Wirecard rejects all allegations.
And the report?
Looking at that Associated Business TPA KPMG does not relieve the group. In summary, the auditors write “regarding the amount and existence of sales” of business relationships between Wirecard’s subsidiaries in Dubai and Ireland and external partners, KPMG “regarding the investigation period 2016 to 2018, nor can they make a statement that sales exist and that According to the correct amount, the statement that sales revenue does not exist and that the correct amount is not correct. ” In this regard, there is an “obstacle to investigation”.
KPMG justifies this with flaws in Wirecard’s internal organization and the unwillingness of partner companies to “participate fully and transparently in this special investigation.” Bank statements and bank confirmations were missing, and auditors could not have fully understood the chains of transactions. Among other things, KPMG reports on payments to trust accounts worth a billion euros, of which there is insufficient evidence.
Auditors draw attention to control defects in Wirecard. “In this context, KPMG believes that the internal controls that have been established are not completely sufficient to fully guarantee the level and existence of sales revenue during the investigation period,” the third-party business said. Elsewhere it is said that the procedure does not meet the requirements for proper documentation.
In view of the complexity of this third-party business, “KPMG believes that the availability of a contract that includes all side agreements that have been completed and also formally complete and consistent (at all times) as mandatory.”
Critical Classification of the Singapore Case
It was only in December 2019 that Wirecard changed payment processing for the business associated with a new platform. KPMG started analyzing the data for this new platform in December, but no final results are available yet. Furthermore, KPMG makes it clear that this month’s results do not allow conclusions to be drawn on the accuracy of the above figures.
For Wirecard, KPMG’s decision is more favorable Dealer Loan Business (MCA) problems. It was mainly about doing business in Turkey and Brazil. The auditors declare that they have found no evidence “of the legal inadmissibility of these transactions.”
KPMG, on the other hand, sees that Singapore cause Critical The allegation that Wirecard had increased sales there through circular transactions had already been investigated by law firm Rajah & Tann, then again by another law firm, and finally by Wirecard auditor Ernst & Young (EY). .
According to KPMG, the Rajah & Tann investigation shows weaknesses that the second law firm, as well as EY, did not fully resolve. In the first investigation, the database, especially accounting and email information, was incomplete, which the other two auditors were unable to repair.
“Not registered or not correctly registered in accounting”
KPMG confirms some of the findings already obtained by EY, such as that there is a “group of software contracts without economic substance” that “was not recorded or was not recorded correctly in the accounts of the respective company”. Authorities in Singapore are still investigating these problems. Like EY, KPMG noted “weaknesses in the areas of accounts receivable and claims management, contract management and control, as well as reporting.”
The result of the investigation regarding the Acquisition of the Indian company. for 340 million euros. The seller was a fund, the sponsors of which were previously unknown. There are allegations that current or former Wirecard managers could be behind the fund and benefit from Wirecard having overpaid.
KPMG now recognizes that it is still completely in the dark. One simply does not know who the seller is, and as long as this remains anonymous, further investigations would also make no sense. Wirecard assured that it had not benefited from the agreement; According to the company, the company does not know who is the beneficiary of the sale. The only thing that was clear was that the $ 1 billion market entry in India was of utmost importance to the group.
Wirecard feels relieved
The results of the investigation, but especially the numerous critical comments, are sometimes devastating given the months of KPMG’s investigation, public expectations, and potential damage to land for Germany’s financial center. Reminder: Wirecard is a member of the German Dax Stock Selection Index and boasts of being a “global player”. Wirecard is relieved by the report.
Of course, if the KPMG report can change anything on the front line among Wirecard fans and critics. So far, it’s only clear that investors don’t see the report as a test of confidence, at least in the short term: Wirecard’s share fell as much as 20 percent at the start of the trade, and is still it was about 16 percent weaker at lunchtime.
