Wirecard’s headquarters were searched by police on Friday after Munich prosecutors launched a criminal investigation against chief executive Markus Braun and the payment group’s three other executive board members.
In a statement on Friday, Munich prosecutors said that the search followed a criminal complaint submitted a few days earlier by BaFin, Germany’s financial watchdog. The complaint relates to potentially misleading statements made by Wirecard to investors ahead of the publication of a special audit by KPMG in late April.
Shares in Wirecard tumbled after the KPMG audit said it was unable to verify the genuineness of sales and profits from third parties between 2016 and 2018 that are central to the whistleblower allegations. The group’s stock has fallen 27 per cent since the publication of the special audit into the allegations, which were reported by the Financial Times.
At the core of the investigation are two statements issued by Wirecard on March 12 and April 22 this year that might have been misleading to investors, the Munich prosecutors said. In each of the statements, Wirecard told investors that KPMG’s special audit had so far not found anything untoward.
In its April 22 statement, when Wirecard announced a second delay to the publication of the KPMG audit, it said that “to date no substantial findings have been made” that required a correction of the financial statements for the previous three years, and that “no evidence was found for the publicly raised allegations of balance sheet manipulation”.
Wirecard, which has long been seen as one of Germany’s most successful technology companies and in 2018 replaced Commerzbank as a member of the country’s prestigious Dax index, confirmed that its offices had been searched.
“The investigations are not targeting the company, but the members of its management board,” Wirecard said in a statement released after the German stock market closed on Friday. The group added that it was fully co-operating with the authorities.
The investigation by Munich prosecutors against Wirecard’s management board adds to its list of legal troubles. Germany’s audit watchdog, the Financial Reporting Enforcement Panel, is investigating the group’s accounting. Shareholders and short sellers have in recent weeks also filed civil lawsuits and criminal complaints.
BaFin is also examining whether a recent €2.5m purchase of Wirecard shares by Mr Braun violated prohibitions against trading within 30 days prior to publication of full-year results.
Wirecard missed the April 30 deadline for the publication of its 2019 annual report, and has delayed the release of figures audited by EY to June 18, blaming coronavirus.
BaFin on Friday declined to comment on the criminal complaint filed against Wirecard executives.
The Bonn-based watchdog said a second internal investigation into potential market manipulation by Wirecard is still ongoing. The watchdog for more than a year has been evaluating if the company’s communication in 2019 in response to whistleblower allegations over accounting fraud were potentially misleading.