Update: June 2020
EY announced €1.9bn of cash missing, CEO arrested, Wirecard AG filed for insolvency
October 18, 2019
Today we are releasing an open letter to Wirecard’s Supervisory Board, after the first two letters we privately sent to the board went unanswered.
Our first letter, sent in August to all Supervisory Board members and EY audit partners, addressed our concerns with management’s changing story about MCA. We called upon the Supervisory Board to investigate the Management Board’s inconsistent statements and make public any findings to allay investor concerns. We also provided an in-depth overview of our MCA concerns.
Having received no reply to our first letter, we addressed our second letter directly to Dirk Kocher, the legal adviser to the Supervisory Board from Latham & Watkins, with the expectation that he would circulate it to all Supervisory Board members. The letter addressed the potential personal liability the Supervisory Board members could face by dismissing credible fraud allegations whilst Wirecard was raising capital. According to our counsel, if plausible allegations and/or concerns have been raised to the Supervisory Board but not investigated, its members open themselves up to liability. We also specifically asked about the loan to OCAP and Carlos Haeuser’s move to OCAP.
Our letter today joins other industry voices in calling for an independent forensic audit at Wirecard. The Al Alam data released by the FT and confirmed by Wirecard looks highly suspect, and we believe the Supervisory Board should announce that they will investigate immediately both to allay investor concerns and to protect themselves.
Finally, we recommend individual Supervisory Board members take independent legal advice. Allowing a bond offering to happen, with any knowledge of material undisclosed fraudulent actions could, to quote our counsel:
“…also result in criminal liability of the supervisory board members (“investment fraud”) if the [issuer] issued securities and investors would then suffer material losses/default as a consequence of the misstatement or fraud.”
|Wirecard Brazil (€M)||Our|
|Company Reported MCA||400||400|
|Brazil % Estimate||40%|
|Brazil MCA Estimate||160||160|
|Monthly Credit Volume||37.2||37.2|
|Calculated MCA Balance||18.6||18.6|