German payment processor and financial service provider Wirecard collapsed this Thursday after its auditor Ernst & Young revealed a massive irregularities within its records. The $6.69 billion worth company filed for insolvency stating that the company will be unable to pay $1.5billion of loans due raising concern over its survival.
The firm’s collapse was ignited when it’s long time auditor Ernst & Young refused to guarantee and sign off the firm’s accounts for 2019 citing irregularities. Hours later Wirecard’s CEO Billionaire Markus Braun admitted to falsifying records and that $2.1 billion of its cash reserves did not exist. Hours later news of his arrest further fuelled the company’s collapse.
In a statement released by Ernst & Young, they stated that “There are clear indication that this was an elaborate and sophisticated fraud involving multiple parties around the world”. Wirecard did not respond to this allegation but the company is the first to go bust from amongst the German blue chip DAX stock index after winning a spot amongst Germany’s top 30 publicly listed companies. According to a banker who lent to the company, more than $1.5 billion was lent to Wirecard from 15 banks with over $500 million in bonds issues. The firms collapse have left the public with a $4billion debt with financial agencies stating that the money is “simply gone”.