Bloomberg Businessweek - USA (2020-06-29)

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