(Antfer) #1

B U S I N E S S


12


Edited by
James E. Ellis
and David Rocks

ThequestioneveryoneintheGermanbusiness
worldis askingthesedaysis assimpleasit is per-
plexing:How,exactly,do youmisplace more
than$2billion?That’sthemysterysurrounding
WirecardAG.Thedarlingofthefinancialcommu-
nitywasfoundedtwodecadesagoasa processor
ofpaymentsforpornandgamblingwebsites,but
it morphedintoa developerofsoftwareforonline
transactionswitha rosterofA-listcustomerssuch
asFedEx,Ikea,andSingaporeAirlines.OnJune18,
Wirecardsaidauditorscouldn’tlocate€1.9bil-
lion($2.1billion)—about four-fifths of its net cash—
that was supposed to be held at a pair of banks in
Asia. That spurred a sharp drop in the company’s
already battered share price (it’s now down more
than 90% from its 2018 peak) and the departure
of Markus Braun, the Austrian who’d been chief

executiveofficersince2002.Ina resignation note,
Braunsaid,“Responsibilityforallbusinesstransac-
tionslieswiththeCEO.”OnJune23,German pros-
ecutorssaidtheyhadarrestedhimonsuspicion of
accountingfraudandmarketmanipulation.
Thesordidtalehasbecomeanembarrassment
forGermany,whichhasbeena laggardintechnol-
ogy despite its engineering prowess and position
as Europe’s biggest and most advanced economy.
Wirecard was the financial-tech whiz kid that was
supposed to change all that, with internet payment
systems, fraud detection software, and an online
bank serving both individuals and companies.
Two years ago the interloper elbowed 150-year-old
Commerzbank out of Germany’s 30-company DAX
stock index, taking a seat alongside titans such as
Adidas, BMW, and SAP. But shortly after that mile-
stone, the Financial Times in January 2019 reported
irregularities in Wirecard’s accounting, saying Asian
units had inflated sales and profits. As the company
launched an internal investigation, short sellers—
investors who bet that shares will fall—piled in and
soon controlled 14% of Wirecard’s stock.
What should have been a warning sign to the

Germany’s Fintech


Dreams, Interrupted


● Wirecard was supposed
to breathe new life into the
country’stechsector.Then
$2billion in cash went missing