FRANKFURT: Police and public prosecutors raided Wirecard’s headquarters in Munich and four properties in Germany and Austria on Wednesday as they widened their fraud investigation into the payments company that collapsed last week.
Prosecutors are now investigating board members Alexander von Knoop and Susanne Steidl, in addition to Wirecard’s former Chief Executive Markus Braun and director Jan Marsalek, a spokeswoman for prosecutors in Munich said.
None of the four could immediately be reached for comment and the prosecutor’s office declined to give further details on the premises being searched.
Wirecard filed for insolvency last week owing creditors almost US$4 billion after disclosing a €1.9 billion hole in its accounts that its auditor EY said was the result of a sophisticated global fraud.
Braun, who is Austrian, was arrested last week and released on bail of €5 million. Marsalek’s lawyer and prosecutors declined to comment on his whereabouts, or whether they know where he is.
Von Knoop and Steidl were still working for Wirecard, according to recent information from the company.
Wirecard’s administrator Michael Jaffe, who has started scouting for potential buyers of the company’s assets to recoup some of the money owned to creditors, said late on Tuesday he had received strong interest.
“A large number of investors from all over the world have contacted us, interested in acquiring either the core business or business units that are independent of it,” Jaffe said.
Wirecard’s US subsidiary — which was Citi Prepaid Card Services before Wirecard bought it in 2016 — was put on the block earlier this week.
Turning their backs
Investment banking boutique Moelis has been tasked with finding a buyer for the US business while Alvarez & Marsal is scouting the market for interest in Wirecard’s UK subsidiary, according to people familiar with the matter.
Alvarez & Marsal declined to comment while Moelis was not immediately available for comment.
“The most urgent goal in the provisional insolvency proceedings is to stabilise the business operations of the company’s subsidiaries,” Jaffe said, adding that insolvencies of individual divisions could not be ruled out.
Britain’s Financial Conduct Authority earlier this week lifted restrictions on Wirecard, allowing it to resume operations so customers could use their cards as usual.
Wirecard’s woes have prompted some firms to start looking for new service providers. However, keeping the customer base is seen as crucial to Jaffe’s efforts to stabilise Wirecard and reap a satisfying price for any assets sold.
“For any buyer, the most interesting aspect may be Wirecard’s customer list and the contracts for processing payments for credit card firms,” one investment banker said.
Wirecard started out handling payments for gambling and adult websites and now processes payments for companies including Visa and Mastercard.
The administrator has started marketing Wirecard’s assets to rivals such as Ingenico, Adyen, Worldline and Nets, as well as to banks and private equity groups, people familiar with the matter said.
“Key customers and employees are starting to turn their backs on Wirecard, significantly reducing its value. If Visa and Mastercard pull out, it’s game over,” one of the people said.
While some of the operating assets were expected to find new homes, the fate of Wirecard’s bank — which has been ring-fenced to prevent any outflow of cash — remains unclear.
“Wirecard Bank is still not insolvent. Payouts to merchants and customers of Wirecard Bank are being executed without restrictions,” the administrator said.
It is up to German financial regulator BaFin to decide whether Wirecard Bank also has to file for insolvency. Deposits are safeguarded by Germany’s deposit protection scheme.
The scheme may, however, opt for winding down the bank to avoid deferring problems and having to shut it later, a person familiar with the matter said.