German online payments firm Wirecard AG has seen its stock plunge by more than one-third over the past few days on reports of accounting misdeeds at its Singapore unit.
The company is fighting back by questioning the foundations of the allegations.
A preliminary review in May last year by a respected Singapore law firm listed allegations of potential financial irregularities, money laundering and forgery at Wirecard’s Asian unit.
However, the German company said that the report is based on evidence that is either faulty or forged.
A deeper investigation by the law firm so far has not “found any evidence of criminal misconduct,” Wirecard chief executive Markus Braun said by telephone on Friday from the company’s headquarters near Munich, Germany.
“This whole issue will be resolved quickly,” he said.
Yet investors got another red flag on Friday when Singapore police raided Wirecard’s offices there, ratcheting up concerns over its accounting practices.
A spokeswoman said that the company had “provided the police with comprehensive supporting material in regards to their inquiry.”
The 31-page initial investigation that Rajah & Tann Singapore LLP completed last year is largely based on the accounts of a person the lawyers call “Bobby.”
The document describes allegations of criminal activity ranging from backdating agreements to forged invoices.
Wirecard has said that the report is authentic, but that the findings relied on documents of suspicious provenance, possibly intended to damage Wirecard or profit from short-selling, as its stock has lost about 9 billion euros (US$10.2 billion) in value since the Financial Times first published the allegations on Wednesday last week.
German prosecutors said that they have launched a market manipulation probe in response to a criminal complaint Wirecard filed in the wake of the share drop.
Officials have not named any suspects and said that they have not found any reason to investigate Wirecard employees over accounting fraud allegations.
Wirecard said that after Rajah & Tann wrapped up the report, it hired the firm to do a fuller investigation.
Braun last week saw the original report for the first time, he said, adding that until then, the entire affair had been handled by the company’s internal compliance team, which by design does not include the chief executive officer to avoid pressure from top management.
Braun said that a final report would be available in “a matter of weeks” and that he is confident that it would clear the company and its employees of wrongdoing.
Rajah & Tann’s preliminary investigation focused on three Wirecard employees in Singapore.
There is evidence to suggest that they “knowingly worked together to create and backdate agreements billed by Wirecard Singapore up to three years prior,” the report said.
The documents cite actual companies, but the lawyers said that they did not include correspondence to back up a real commercial relationship.
“To date, we have not seen a single e-mail from any of the counterparties, which, given the nature and size of the deals, raises doubt as to the authenticity of the same,” the lawyers wrote. “There are strong reasons to believe that both the agreements and invoices may be fictitious.”
The company said that the preliminary report is based on evidence provided by the person identified as “Bobby,” including the e-mails it cites.
The investigators preparing the report did not have access to the company’s servers to judge the authenticity of those e-mails, Braun said.
He pointed to a statement this week by Rajah & Tann, which said that in preparing its new report, the lawyers had “made no conclusive findings of criminal misconduct on the part of any officer or employee of the company.”
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