In a fire in an asylum accommodation in Dornach near Munich, a person was injured early Thursday morning. She was taken to hospital with burns. The emergency services had been alerted because fire had broken out in seven residential containers, the police said. They burned out completely.
As a result, almost 40 residents of the entire accommodation had to be brought to safety – they were accommodated in other homes, it said. The residential containers were located in the industrial area of Dornach, a district of Aschheim in the district of Munich, directly on the city limits to Munich.
According to the police, the alarm came at around 1:45 a.m., a local resident called. The cause of the fire was initially unclear, the criminal police in Munich started the investigation that night.
Dhe list is long: on more than 60 pages, the British speculator Fraser Perring of the analysis company Viceroy Research has made serious allegations. It’s about fraud, balance sheet falsification and money laundering of an aspiring German financial service provider. For once, we are not talking about the scandalous payment processor Wirecard.
The allegations are directed against a leasing company from tranquil Baden-Baden, Grenke AG. The German investor scene is startled. Is this possibly repeating the inglorious story of the crash of a favorite on the stock exchange?
Last week the payment service provider Wirecard filed for bankruptcy because two billion euros are missing from the balance sheet. Now it also affects five subsidiaries of the Dax group.
The balance sheet scandal at the Dax Corporation Wirecard after the parent company now also affects five subsidiaries financially. As the Munich District Court announced on Thursday, these five companies have now also filed for bankruptcy. The preliminary insolvency administrator is, as with the mother Wirecard AG, the lawyer Michael Jaffé.
All five subsidiaries, like Wirecard AG, are located in the Munich suburb of Aschheim, which are companies that offer services and software for the parent company. These include the sales and marketing company Wirecard Global Sales and the software company Wirecard Issuing Technologies.
The Wirecard Group had admitted that the annual balance sheet lacked 1.9 billion euros and that the money probably does not exist. The share price then plummeted – a share now only costs around three euros. In mid-June it was still more than 100 euros. A week ago, the Wirecard parent company filed for bankruptcy.
Investor protection: “Don’t need undead in the Dax”
Shareholder protectors are now demanding that the scandal company Wirecard be immediately removed from the German stock index (Dax). So far, Wirecard’s remaining in the leading German index is not good for the Dax, the stock exchange and Germany as a location, said the managing director of the German Protection Association for Security Ownership (DSW), Marc Tüngler, of the “Neue Osnabrücker Zeitung”.
The next review of the composition of the Dax is scheduled for September. However, this is too late for Tüngler. The German stock exchange can now not adhere to its rules, but must react – “to protect other companies and the stock culture”.
Only “good companies” should be in the Dax and not “those that are broke or cheated”. The shareholder protector emphasized that other indices such as the EuroStoxx had already acted and that Wirecard had passed after the company’s bankruptcy application. “We don’t need an undead or a memorial in the Dax,” said Tüngler.
Search by Wirecard investors show interest in certain areas
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Several Wirecard properties have been searched since morning. The insolvency administrator expects the company to be broken up. A “large number” of investors are interested. Today it is decided whether BaFin boss Hufeld will keep his job.
BAt Wirecard, the investigators have moved again. Since morning, five Wirecard properties have been searched, including the company’s headquarters in Aschheim near Munich and two buildings in Austria, the prosecutor said on Wednesday.
Twelve prosecutors, 33 police officers and other IT specialists were on site with Austrian colleagues. It is primarily about the allegations that the basis of the investigation against ex-CEO Markus Braun are, i.e. incorrect information and market manipulation in several cases. This was preceded by notices against Braun and his colleague Marsalek, who is believed to have gone underground in Asia. Both are Austrians.
It also became known on Wednesday that the Munich public prosecutor’s office is now investigating suspected fraud against the former executive board of the insolvent payment service provider. In addition to falsifying the balance sheet and manipulating the market, fraud is also an option, a spokeswoman for the authority said on Wednesday.
Wirecard insolvency administrator Michael Jaffé expects the payment processor to be sold in individual parts. “A large number of investors from all over the world have already registered who are interested in acquiring the core business or the independent and independently operating business units,” said Jaffé.
According to insiders, this includes financial investors, but also rivals such as the French Worldline. The insolvency administrator explained that the creditors had also given the green light for mandating specialized investment banks to deal with the sale of the individual parts of the company.
The US subsidiary Wirecard North America had already put itself up for sale on Tuesday. So far, apart from the parent company from Aschheim near Munich, hardly any subsidiaries have gone bankrupt. The sales proceeds would benefit the creditors of Wirecard AG.
Even the German Wirecard Bank has not been insolvent so far, the BaFin financial regulator has appointed a special representative there so that no money flows to Wirecard AG. “Payments to dealers and customers of Wirecard Bank are carried out without restrictions,” emphasized Jaffé. If possible, operations at Wirecard should not be interrupted or discontinued.
Braun subsequently terminated without notice
After the price slumped by around 99 percent to around one euro within a few days, Wirecard papers had recently recovered a little to 5.73 euros. The stocks seem to have become a short-term speculator, apparently fueled by the vague hope of some investors to sell the company.
The Wirecard supervisory board, meanwhile, terminated the employment contract of the former CEO Markus Braun extraordinarily. Although Braun had resigned almost two weeks ago, employment contracts from top managers usually also include provisions for severance payments and retirement benefits.
However, both the Supervisory Board and the auditing firm EY, which audited Wirecard’s annual balance sheets, are confronted with lawsuits and threats from angry investors.
As things were, Wirecard managers had made up a significant portion of the company’s sales and profits in Southeast Asia and the Middle East. The alleged bogus transactions were posted as sales and profits with subcontractors who allegedly processed payments on behalf of Wirecard.
Wirecard had to admit that its annual balance sheet lacked 1.9 billion euros.
Today, Wednesday, BaFin boss Felix Hufeld has to face the MPs in the finance committee of the Bundestag. Critics accuse the BaFin financial regulator of failing to control the payment service provider and thus complicit in the billion-dollar balance sheet scandal.
Whether Hufeld will remain the top German financial supervisor will also depend on his appearance behind closed doors of the Finance Committee.
In the meantime, Allianz must discontinue its “Pay & Protect” payment app. The app was developed with Wirecard.
The Financial Times has since raised new allegations of the scandal. Wirecard’s actual business was therefore based on far fewer customers than the company stated. In 2017, Wirecard generated more than half of its sales with just 100 customers.
DThis time it could be really tight for Markus Braun. The Austrian has been CEO of Wirecard for 18 years. From a start-up whose customers came from the porn and gaming industry, among others, he created a Dax group, one of the few digital figureheads of the German economy. Incidentally, Braun himself became a billionaire.
Braun also owes its rise to his pioneering spirit. Wirecard entered a rapidly growing market early on: cashless payments. If someone buys in an online shop anywhere in the world or pulls out their credit card in a shop that is connected to the company’s systems, Wirecard handles all money transactions in the background.
For this, the group receives small fees – which add up to billions in sales due to the mass of payments. It was two billion euros in 2018. The result for 2019 is not yet known. And that has to do directly with Braun’s current problems.
If you only look at the growth of the company, its global expansion, then one could think of Braun as a small Bill Gates or at least a Dietmar Hopp, the co-founder of SAP.
After all, Wirecard is the only really large digital company in the country besides the Walldorf software company, even if it is currently worth 13 times less. However, such comparisons are wrong. Braun is currently criticized more than ever – and the number of its advocates is shrinking ominously.
External attacks have accompanied Wirecard’s rise for years. Braun had to fight back time and again: against speculators who bet against his company with fabricated or over-the-top allegations, caused the share price to collapse and earned large sums.
Wirecard shares fell by 40 percent according to the KPMG report
He campaigned against reports in major media, a trial against the “Financial Times” is still ongoing. Violations of money laundering rules were assumed by Wirecard and the manipulation of its own balance sheet. The company has always denied the allegations, the share price always recovered over time. And Braun could always be sure of the support of its most important investors.
But now the manager is standing with his back to the wall. Since the company published the report on an internal special audit by the auditing company KPMG, the share has fallen by around 40 percent. Powerful fund managers are moving away from him.
“The time of whitewashing is over,” said Andreas Mark of Union Investment of the “Financial Times”. The company has just reduced its stake from more than four to 3.1 percent. And the fund company Deka demanded Braun’s resignation in the “Wirtschaftswoche”.
The loss of confidence in the capital market can only be repaired by someone else taking over the chief position, said Ingo Speich, Head of Sustainability and Corporate Governance at Deka.
Wirecard sees itself relieved by the report. The balance sheets of the past years do not have to be corrected. However, the auditors were also unable to completely refute the allegations of manipulation because they were not presented with sufficient evidence.
They also criticize the internal organization sharply and complain about the sluggish cooperation with the company. Even the authorities are listening.
Bafin two-part test procedure
A financial review of Wirecard has been underway at Bafin Financial Supervisory Authority since the end of January 2019. “The KPMG report flows into our already ongoing market manipulation investigation,” said a Bafin spokeswoman for WELT. For the first part of the investigation, the agency filed a lawsuit a year ago against speculators who had bet against the Wirecard share.
The second part of the test, which relates to the company itself, is still ongoing. “Here, we are investigating whether Wirecard has informed the capital market fully and in good time about inside information,” said the spokeswoman.
In the KPMG report, the supervisors look for statements as to whether Wirecard has withheld information that is subject to publication or has provided incorrect information about it. “As far as we find evidence of this, we also report this to the public prosecutor,” said the Bafin spokeswoman.
Rarely has there been so much excitement about the management and internal processes of a Dax group. Many details from the KPMG report cause investors to shake their heads. For example, that Wirecard has not made minutes of board meetings for years.
Only the resolutions were noted. Or that a trustee who managed billions of dollars for the company has “stopped responding to requests from Wirecard since the fourth quarter of 2019”. A side note of the story is that Braun worked at KPMG before he started working at Wirecard.
Balance sheet 2019 not yet presented – punishment threatens
The company is now even fined on the stock exchange for not yet presenting its 2019 balance sheet. “As is customary in such cases, the initiation of a sanction procedure is now being examined due to the failure to deliver the annual financial report on time,” the Frankfurt Stock Exchange said.
Such a procedure is an extremely unusual disgrace for a Dax company. The fine table ranges up to one million euros. The management of the public-law part of the stock exchange, which is chaired by Hauke Stars, is responsible for the examination.
Another side note: Stars should move to Wirecard’s supervisory board this summer after their management board mandate has ended in Frankfurt.
EY’s auditors are putting additional pressure on this process. After the special audit had shown such blatant gaps in the documentation, questions had arisen as to how the balance sheets had actually been checked in previous years.
In a six-page document on the KPMG report, the company explains the differences between a balance sheet audit and a forensic examination, as KPMG did. One conclusion: “Wirecard’s balance sheet is correct: The accounting for our third-party business is underpinned by external legal opinions and an expert opinion on the application of IFRS in the case of trust accounts.”
This is astonishing statements for a Dax member – when managers have to emphasize that their balance sheets are in order. However, the company does not have to worry about being thrown out of the stock exchange upper house.
Good leadership is not a criterion, transparency is only indirect. “Membership in the Dax is primarily determined by market capitalization and exchange turnover. But of course it is clear that a company in the Börsen-Bundesliga is expected to meet certain standards, ”says Klaus Nieding, Vice President of the German Association for the Protection of Securities (DSW).
“At Wirecard, I’ve been questioning compliance and ad hoc publicity for a long time.” A company that has been exposed to speculative attacks in the past must be particularly transparent and correct in communication. “Wirecard has a lot of catching up to do.”
A Wirecard spokeswoman admits problems: “At various points in the KPMG report, a. internal processes and deficiencies in governance criticized, especially in previous years, ”she writes at WELT’s request. “We take this criticism very seriously and already invested in compliance in 2018/2019 and better positioned our organization.”
A separate corporate department has been taking care of the topic since last year. From July 1, it will also be significantly more present on the board. Then the American James Freis is supposed to act as a board member for compliance at Wirecard. So far, he has been head of compliance at Deutsche Börse, the company announced on Friday evening.
The existing management board will be expanded and converted from four to seven members. Markus Braun will “in future focus his work on the strategic development of Wirecard AG”, says the message. But he remains CEO.
Why Goldman Sachs holds around 15 percent
Is he still the right one at this point? Braun himself holds seven percent of the shares, and he has amassed an almost irreplaceable knowledge of power over the years. Brown is Wirecard, but can Wirecard also exist without brown? Those who stand by him outside the group do not make public statements.
Brown is Wirecard, but can Wirecard also exist without brown? Those who stand by him do not express themselves publicly.
On the shareholders’ side, there are fewer institutions than it seems. The largest position according to ad hoc releases is held by the US investment bank Goldman Sachs with around 15 percent. However, this is not about shares and voting rights. Rather, Goldman buys derivatives on the Wirecard share or borrows shares to allow hedge fund speculation on the price performance. In this case, the bank sees itself only as a so-called market maker.
Wirecard fans include DWS, the fund management company of Deutsche Bank. It previously held a total of just under six percent in the company and has now reduced the share to five percent. A first distancing?
The DWS remains silent about this. However, it holds an extremely large number of Wirecard shares in several funds. And it gives an indirect indication of how it views the Group’s governance: The DWS ESG Investa fund, which focuses on particularly ecological, social and well-managed companies, has invested 9.1 percent of its investment in Wirecard. It is the second largest position.