On 1 January 1999 Wirecard AG (then named InfoGenie AG) was founded. At its peak in 2018, the German tech favorite had a valuation of almost €25 bn. Twenty-one and a half years later, on 18 June 2020, it announced that €1.9 bn that was supposed to be in Philippines banks was “missing”. 4 days later, it admitted the “missing” funds likely did “not exist”. 3 days after the admission, the Munich-based global payment processor and financial services provider filed for insolvency.
What went wrong?
While investigations are ongoing and more information will likely surface, we note the following key points highlighted so far:
1. German financial regulators were made aware of the problems are Wirecard in January 2019 by an anonymous whistleblower to the Financial Times
2. Investigations began in Germany, and the Singapore Commercial Affairs Department (CAD) began criminal investigations into Wirecard’s Asia Pacific HQ in Singapore in February 2019, raiding the local office after fraud allegations were made
3. The Philippines Central Bank claimed no money from Wirecard entered the country’s financial system
4. Two banks named by Wirecard, Bank of the Philippines Islands and Banco de Oro Unibank, have publicly stated that Wirecard is not a client.
5. Key points from the Financial Times report:
1. Whistleblowers were integral in bringing the alleged misconduct to the attention of regulators, the investment community and the public, despite Germany not having private sector whistleblower laws. Wirecard employees would have no legal remedies if they are fired or demoted.
2. Corporate governance and internal controls have to be properly implemented, not just established on paper. Examples:
3. Independent auditors have a key role to play in reviewing controls without fear or favour. Rotation of auditors every few years should be considered
RHT Compliance Solutions comprises experienced and certified professionals with extensive regulatory, compliance and risk management experience from Singapore, Hong Kong and the region. The team aims to provide clients with insightful, risk-focused and cost-effective solutions through their extensive experience in serving a wide spectrum of clients across diverse financial sectors from regulators, asset managers, fintech firms, insurance agents and brokers, remittance to commodities and corporate services.
RHT Governance, Risk & Compliance is a professional services firm specialising in risk management, internal audit, IT audit, sustainability reporting, governance review and scrutineering. As trusted partners, our team recognises individual organisations’ requirements for managing growth and operational challenges whilst being mindful of the business risks and to achieve good corporate governance and meet regulatory requirements.
RHT Group of Companies
1 Paya Lebar Link #06-08
PLQ 2 Paya Lebar Quarter