Wirecard asset sale underway as investigations and legal claims build
The fallout from the Wirecard scandal has continued apace over the past week. Firstly, the sales processes for the insolvent Wirecard AG’s core business, the acquiring and issuing business, as well as the independent business units of the group’s companies worldwide have been launched. Following a further meeting of the preliminary creditors’ committee of Wirecard AG, Michael Jaffé, the preliminary insolvency administrator of Wirecard AG, announced that more than 100 parties have already registered interest.
After signing a confidentiality agreement, potential investors will soon be able to obtain information via virtual data rooms and start due diligence processes. The aim is to find near-term investment solutions in the interest of creditors, employees and customers.
Activities for the US company Wirecard North America are the most advanced. The international investment bank Moelis & Company has already been mandated to support the sale of this company with the approval of the preliminary creditors’ committee. Investor processes are also currently being initiated for other international affiliates as well as the core business, acquiring and issuing.
Elsewhere, the investigation by Monetary Authority of Singapore (MAS) into Wirecard has expanded to cover fiduciary and corporate services firm Citadelle and payments operator Senjo Group. The two firms are being investigated for suspected falsification of accounts under the country’s Penal Code, as well as carrying on a trust business without a licence under the Trust Companies Act.
The investigation follows the announcement on 29 June that MAS and the Accounting and Corporate Regulatory Authority are collaborating with the Commercial Affairs Department (CAD) of the Singapore police to scrutinise recent developments relating to Wirecard AG. The review surfaced reasons to suspect that offences may have been committed. As part of the investigation, CAD and MAS have obtained documents and records from Citadelle and Senjo, and have interviewed persons involved in the companies.
In a statement, MAS said it is aware of media reports alleging that Citadelle has handled monies for Wirecard in a trustee capacity. The provision of trust services as a business in Singapore is an activity regulated by MAS under the Trust Companies Act. Citadelle is not licensed to provide trust business services in Singapore, and is not supervised by MAS. MAS has listed Citadelle on the Investor Alert List on its website, which provides a list of unregulated persons who, based on information received by MAS, may have been wrongly perceived as being licensed or regulated by MAS.
Wirecard AG itself is now also facing a class action law suit in the US on behalf of investors that purchased securities in the company between 17 August 2015 and 24 June 2020. The complaint, filed on 7 July, alleges that throughout that period, defendants, including the company’s auditor, made false or misleading statements.
In particular, the complaint asserts that Wirecard overstated its cash balances during the Class Period, falsely claiming €1.9 billion of cash in a trust account that was missing, and overstated its financial results, including revenue and EBITDA. In addition, the complaint says that Wirecard did not have adequate risk management or countermeasures, and Wirecard’s auditor failed to audit the Company in accordance with applicable auditing principles.
A final unintended consequence of the Wirecard fallout this week has seen spend management platform Soldo announce that it has extended its partnership with Mastercard, to become a principal member of the global pay-tech giant. The migration was originally planned for August 2020, but has been accelerated due to Wirecard’s temporary suspension of service by the UK Financial Conduct Authority (FCA).