Wirecard sees no conclusive fraud evidence as police start probe

Wirecard was rocked last week after two reports by the Financial Times that a senior company executive in Singapore was suspected of using forged contracts for several suspicious transactions. (Bloomberg pic)

FRANKFURT: Wirecard AG said neither the digital payments company nor a law firm it hired have found conclusive evidence of criminal misconduct as Singapore police scrutinize allegations of fraud, helping clawback some of last week’s stock drop.

Rajah & Tann, the law firm, is about to complete its investigation after reviewing documents and interviewing a Wirecard employee in Singapore who alleged in April that a member of the company’s finance team engaged in potential accounting compliance breaches, Wirecard said in a statement on Monday. The stock climbed as much as 11% and was trading up 8.7% at 9:12am in Frankfurt, rebounding somewhat from last week’s plunge.

Wirecard was rocked last week after two reports by the Financial Times that a senior company executive in Singapore was suspected of using forged contracts for several suspicious transactions. The company said in a statement on Monday that “we fundamentally contradict” the reporting.

The Singapore police said they “are looking into the matter,” a spokeswoman for the authorities said Monday by email. Rajah & Tann said in a statement posted on Wirecard’s website that the inquiry is “ongoing” and “no conclusive findings of criminal misconduct” have been made to date.

Employee Allegations
The allegations by the Wirecard employee in Singapore relate to potential breaches between 2015 and 2018 with revenue totalling 6.9 million euros (US$7.9 million), costs of 4.1 million euros as well as an internal transfer of intellectual property valued at 2.6 million euros, the company said on Monday. The company said the law firm was mandated to conduct a full independent investigation on May 18.

On Friday, the shares plunged 25% — the worst since July 2008 — capping a tumultuous three days that shaved about 7.2 billion euros off the company’s market value, despite the repeated denials of wrongdoing.

The digital payments company — which supplanted Commerzbank AG in Germany’s benchmark DAX index last year — operates in the tangled world of online payments. Founded in 1999, Wirecard initially provided financial services to online gambling and adult websites, barely surviving the dot-com bust. It’s now threatening traditional financial services and until recently was worth more than Deutsche Bank AG, Germany’s largest lender.

Wirecard said its own investigation found no evidence to support the allegations and concluded that they were unfounded. “Furthermore, there were indications that the allegations could be related to personal animosity between the employees involved,” the company said.

Wirecard had previously said that “it is untrue that Rajah & Tann Singapore LLP has ever uncovered any findings of material misconduct of any Wirecard employee in matters of accounting practices.”