Wirecard was one of the leading payments gateway companies across the world. A Germany-based company that was used to provide payment gateway options. They used to accept payments via debit card or credit card, online banking on behalf of their clients, and charge minimum fees for this service.
Originally, a payment accepting company Wirecard started in 1999, in Germany. They offered their services to various companies to accept the payment. Their foremost clients of revenue businesses were gambling businesses and porn sites. Their services were recognized worldwide and preferred as well. From the revenues of these clients, the company was taking its business across the world. According to Wirecard, approximately 3 Lakhs of companies were used to take services from them including a company like FedEx.
Because of this growth, the market value kept growing. The market cap of this company was valued at $25 Billion. In this way, Wirecard was amongst the most valuable financial institution in Germany. For Germany, it was a great success story. While on one hand, they were getting all the glories, on the other hand, a newspaper in the UK was continuously targeting the company for their doubtful accounting practices. They were accusing the management of these practices.
It all started when they were looking to expand their business in Hong Kong. Their financials were not so strong to convince the government to start operating in HK. So they decided to make their financials strong to get the license to operate in HK. They started manipulating their financials. Mr. Edo Kurniawan is accused of playing the most important part in this manipulation.
There are many ways to manipulate financial statements, and one of them is Round-Tripping. They started doing the same. Another thing where made changes were the payment from gambling and porn websites. They were not happy to show their clients to the general public. So they formed some fake partner company and made it seem like the payment are coming from them.
Ernst and Young, the auditor of this company asked Wirecard on 18th June 2020 about the missing 2 billion $, on which Wirecard responded that it was kept in 2 different banks in the Philippines, which was of course not the case. After which German Authorities arrested CEO Markus accused of showing the increased valuation of assets. It was found out that they had a debt of 3.5 Billion Euros.
After all these there were two questions raised, did EY don’t know all this, they were included in all this?
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