BERLIN (Reuters) – Auditor KPMG published the results of its independent investigation into Wirecard (WDIG.DE) on Tuesday following allegations by the Financial Times of accounting irregularities at the German payments company.
Here are the key findings of the 58-page report www.wirecard.com/transparency:
ALLEGATION: Wirecard booked half of its worldwide revenues from three obscure third-party acquiring partners.
FINDING: KPMG said it had not been able to conclude whether these revenues did or did not exist for the period 2016-18, while its work to analyse data for 2019 was incomplete.
ALLEGATION: Wirecard inflated the size of cash advances of up to 400 million euros ($433 million) it provided to merchants in Brazil and Turkey.
FINDING: Those payments were legal. The size of the advances was based on management estimates but there were never plans to include these in Wirecard’s financial reports.
“Against this backdrop it was not possible to gain an overview of the customers that, at any given point in time, had received merchant cash advances,” the report said.
ALLEGATION: Wirecard’s Singapore office engaged in sham transactions with fake counterparties to inflate revenues, a practice known as round tripping.
FINDING: Wirecard has addressed these allegations as part of an earlier, extended audit by its main auditor EY. This was reviewed by KPMG.
The evidence shows an accumulation of software-based contracts that lacked economic substance or were not properly accounted for. These allegations are now under investigation in Singapore.
ALLEGATION: Wirecard overpaid when it bought assets in India for 340 million euros in 2015. An unidentified middleman had previously paid 37 million euros for the same assets.
FINDING: It was not possible to establish the identity of the middleman, an unnamed fund, or of its beneficial owner.
Reporting by Douglas Busvine; Editing by Josephine Mason