Wirecard AG
The €1.9 Billion That Didn't Exist
German fintech darling Wirecard rose to DAX 30 status before collapsing when auditors discovered €1.9 billion in 'cash balances' that simply didn't exist. CEO Markus Braun was arrested. COO Jan Marsalek fled to Russia. It was the biggest accounting scandal in post-war German history.
Key Figures
Timeline
Wirecard founded, initially processing payments for adult websites and gambling.
Wirecard replaces Commerzbank in the DAX 30 index — Germany's blue-chip stock index. Market cap €24 billion.
Financial Times publishes whistleblower report alleging accounting fraud at Wirecard's Singapore operations.
KPMG special audit finds it cannot verify the existence of €1 billion in revenue from third-party acquiring business.
EY, Wirecard's auditor for 10+ years, refuses to sign off on 2019 accounts. €1.9 billion in cash 'missing.'
CEO Markus Braun resigns, then arrested the next day. CFO and CPO also arrested. COO Jan Marsalek goes on the run.
Wirecard files for insolvency. Stock had dropped 99% in 7 days. Marsalek believed to have fled to Belarus/Russia.
Filipino banks confirm the €1.9 billion in escrow accounts never existed. Documents were forged.
What Caused It
- 1Entire third-party acquiring business in Asia was fabricated — fake contracts, forged bank confirmations
- 2Auditor EY failed to verify cash balances for 3+ years — didn't request direct bank confirmations
- 3German regulator BaFin banned short-selling on Wirecard stock — actively protected the fraud
- 4Aggressive expansion into opaque jurisdictions with minimal oversight
- 5Complex web of subsidiaries across Singapore, Philippines, Dubai made verification nearly impossible
Lessons Learned
- 💡If a company's profits come entirely from opaque jurisdictions, assume fraud until proven otherwise
- 💡When the regulator bans short-selling to 'protect' a company, they're protecting the fraudsters
- 💡Auditors must verify cash balances DIRECTLY with banks — EY didn't for 3 years
- 💡Whistleblowers (FT journalists Dan McCrum and Paul Murphy) spotted this years before regulators did