June 19, 2020 / 6:44 AM / 23 days ago

Wirecard hits out at fraudsters amid search for missing billions

* $2.1 bln hole in accounts puts shares into spiral

* Auditor’s refusal to sign off accounts could hit loans

* CEO blames fraudsters

* Shares fell more than 60% on Thursday

By Michelle Martin and John O’Donnell

FRANKFURT, June 19 (Reuters) - German payments company Wirecard lashed out against unidentified fraudsters on Friday after $2.1 billion went missing from its accounts, sending its shares into a tailspin and putting a question mark over the company’s future.

Earlier this week, Wirecard’s auditor refused to sign off its 2019 accounts over the missing money, a setback that could trigger billions in loans being called in as soon as Friday.

“It cannot be ruled out that Wirecard AG has become the aggrieved party in a case of fraud of considerable proportions,” Chief Executive Markus Braun said in a sombre video posted online. He did not identify those he suspected of fraud.

The episode marks a dramatic turn in the fortunes of a homegrown tech firm that attracted some of the globe’s biggest investors when it was propelled into Germany’s prestigious Dax blue-chip index more than a year ago

Wirecard was a welcome technology success story in a country that made its name in heavy industry. But its fortunes unravelled after a whistleblower alleged that it owed its success in part to a web of sham transactions.

The company dismissed the claims but its failure to win a clean bill of health this week from auditors for its accounts shattered investor confidence, sending its stock into a spiral.

Wirecard earlier announced the appointment of James Freis as director for compliance, replacing board member Jan Marsalek.

In-house auditor EY was unable to confirm the existence of 1.9 billion euros ($2.1 billion) in cash balances on trust accounts, representing about a quarter of its balance sheet, Wirecard has said.

EY had regularly approved Wirecard’s accounts in recent years, and its refusal to sign off for 2019 confirms failings found in an external probe by KPMG in April.

The CEO said on Thursday the company was urgently seeking to work out what had happened.

The episode is also embarrassing for Germany’s financial regulator Bafin. “Bafin looked on for far too long,” said Fabio De Masi, a lawmaker in the German parliament, calling for a “radical” change in its approach to supervision. (Reporting By Michelle Martin; Writing by John O’Donnell; Editing by Jan Harvey)

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