From FT: A small group of Wirecard shareholders are attempting to force their own review into allegations of fraud and false accounting at the German fintech, following what a lawyer for the investors called “a history of cover up” at the Dax 30 company.
The campaign was launched after Wirecard announced late on Friday night that its longstanding chairman Wulf Matthias had resigned “for personal reasons”, to be replaced by Thomas Eichelmann, the former Deutsche Börse chief financial officer.
Wirecard has faced questions over its accounting practices for months, after the Financial Times reported concerns raised by whistleblowers, and in October hired big four accountant KPMG to investigate the matter, overseen by Mr Eichelmann.
Wolfgang Schirp, the lawyer for the investor group, said his clients “have seen the stock fall and fall and just want to know what’s going on”. He said the group comprised more than 100 mostly German individual shareholders, family offices and small fund managers, who together own more than 2 per cent in the company.
The group first needs backing from 5 per cent of shareholders for an emergency meeting to vote on the appointment of their own special auditor who would provide a full report to investors. “We don’t want the management from the company to filter the information,” Mr Schirp said, citing concerns that any findings might be watered down.
Meanwhile, Artisan Partners, an investment manager which has long been one of Wirecard’s largest shareholders, on Monday disclosed it had cut its stake from 4.5 per cent to 3 per cent.
Wirecard is a payments specialist that displaced Commerzbank from the Dax 30 index in 2018, following years of rapid expansion. However, its market value has dropped by a third since the FT last year began to report on alleged accounting irregularities in the group’s operations in Singapore.
The company has faced criticism from German investor associations about its disclosures and response as the Singapore scandal unfolded. Mr Schirp pointed to questions about whether Wirecard should have previously disclosed problems in Singapore, where it faces a criminal inquiry into suspected forgery and fraudulent accounting at eight subsidiaries in Asia.
KPMG was appointed after the FT published documents that appeared to indicate a concerted effort to fraudulently inflate sales and profits at Wirecard subsidiaries in Dubai and Dublin.
The company has denied wrongdoing, said the FT’s reporting was based on inauthentic documents, and said that the purpose of the special audit was to provide additional confidence to investors.
Wirecard has always received clean audits from EY, its existing auditor.
It said it will publish the results of KPMG’s audit, once available. “This of course does not restrict the rights of shareholders to bring forward such a motion,” it said.
Mr Eichelmann joined the Wirecard board in mid-2019, taking control of its accounting committee. He had pressed hard for a thorough and independent evaluation of the accusations as well as the publication of the final KPMG report, according to a person familiar with the discussions.
“[Mr Eichelmann] is facing a short window of opportunity to get to the bottom of things,” said one insider, adding that he was new to Wirecard and has no personal stake in past conduct.
Mr Eichelmann, 54, started his career as a business consultant at Boston Consulting, Bain and Roland Berger. In 2007, he joined Deutsche Börse as chief financial officer where he kicked off a cost-cutting programme designed to slash annual costs by €100m.
While analysts praised Mr Eichelmann’s cost-cutting zeal, he fell out with the worker’s council and fellow board members and left prematurely after just two years. Deutsche Börse said at the time that Mr Eichelmann’s departure was “a result of partial differences concerning individual business aspects, but in positive accord with the supervisory board”.