Wirecard offices raided as fraud allegations gain momentum

Wirecard’s offices in Germany and two locations in Austria have been raided by Munich prosecutors looking into the €1.9 billion that went missing from the company’s accounts.

12 prosecutors and 33 police officers are conducting the searches, a spokeswoman for the Munich authority said. The action is part of the probe that led to the arrest of former Chief Executive Officer Markus Braun last week.

Wirecard filed for protection from creditors after investigations revealed that €1.9 billion previously reported as cash was missing from its accounts and probably never existed. On Monday, a Munich court appointed Michael Jaffe as its preliminary insolvency administrator.

Braun turned himself on June 22 in Munich as part of a probe into the company’s accounting practices. A day later, he was granted bail of €5 million and released from custody. He’s being investigated for forging accounts and market manipulation allegations.

Wirecard’s administrator said “numerous” companies have expressed interest in buying parts of the payments group that last week became the first member of Germany’s prestigious Dax index to file for insolvency. Jaffé, one of Germany’s leading specialists for complex insolvencies, will soon ask investment banks to oversee the potential sale of some of Wirecard’s units.

In a statement released following the first meeting of a committee of creditors, Jaffé said the main objective was to keep Wirecard’s subsidiaries in business and stabilise its operations.

The crisis engulfing Wirecard has already disrupted services for customers who relied on the German group’s technology to make payments via FinTech apps. The UK’s Financial Conduct Authority last week imposed a ban on the activities of its British subsidiary, Wirecard Card Solutions, but lifted the restrictions on Monday.

A sale of Wirecard’s subsidiaries needs to happen within weeks or they will lose any remaining value. “Wirecard has very few physical assets, and the risk is that many of its clients will switch to rivals soon,” said a person familiar with the matter. The administrator, who was appointed by a Munich court last week, did not disclose the names of any potential buyers.