In a case that has raised the governance-risk antenna of ESG investors everywhere, German fintech high-flyer Wirecard announced today it was filing for insolvency following a $2 billion accounting scandal.
In a press release this morning, the company wrote:
“The management board of Wirecard AG has decided today to file an application for the opening of insolvency proceedings for Wirecard AG with the competent district court of Munich (Amtsgericht München) due to impending insolvency and over-indebtedness.”
Prior to recent concerns regarding the company’s accounting, Wirecard appeared to be one of Germany’s most successful fintech players, providing a widely-deployed electronic payment solutions connecting consumers, retailers and financial institutions.
Today’s announcement follows the shocking disclosure last week that approximately $2 billion of assets that had been recorded on its balance sheet probably “do not exist,” according to the company. Earlier this week, Wirecard announced the dismissal of COO and board member Jan Marsalek. CEO Markus Braun also announced his resignation on Friday.
Last week’s revelations were the culmination of long-standing scrutiny into the company’s accounting practices. Concerns had been raised in early 2019, after authorities in Singapore raided Wirecard’s offices there, alleging fabricated sales and profits.
The scandal represents another black eye for SoftBank, who had backed the troubled company in a structured investment in April 2019. SoftBank’s normally strong investment record was tarnished last year after governance issues greatly reduced the value of its investment in WeWork, and following the post-IPO collapse in the value of Uber, which it had backed as well.