Wirecard AG: KPMG delivers report on special investigation

No incriminating evidence was found for the publicly raised accusations of balance sheet manipulation. In all four areas of the audit – third-party partner business (TPA) and Merchant Cash Advance (MCA) / Digital Lending as well as the business activities in India and Singapore – no substantial findings were found which would have led to a need for corrections to the annual financial statements for the investigation period 2016, 2017 and 2018.

In the course of the audits of the annual financial statements for the years 2016 to 2018, the available evidence and audit procedures were sufficient to provide evidence of the revenues from third-party partner business (TPA). However, due to the increased forensic requirements of the investigation by KPMG, it was not possible to obtain all of the requested data that would have fulfilled the requirement to provide evidence of sales revenues in these years, as these documents are mostly in the third-party partner’s access area. As Wirecard now maintains the necessary data itself, more than 200 million data records were made available to KPMG for a forensic examination for the period December 2019. This did not give rise to any indications of discrepancies between the sales revenues reported and the account balances. 

KPMG identified documentation and organizational weaknesses in the period under review, which have already been identified by Wirecard. Since 2019, these have been remedied by setting up the Global Compliance Organization and with the support of external consultants.

KPMG sees no further need for an audit of Wirecard’s business activities in Singapore beyond that already carried out as part of the audit of the 2018 annual financial statements.

With regard to the structure of the "Merchant Cash Advance" business of the Wirecard companies in Turkey and Brazil, there were no indications of legal inadmissibility.

According to Wirecard AG, the purchase price for the acquisition of the "payment business" of an Indian group of companies was determined on the basis of strategic considerations and plausibly verified by means of various objective factors, such as a company valuation of the payment business based on the results of the financial due diligence, corporate transactions by third parties, avoidance of minority companies and the strategic interest in entering the Indian market within the framework of the Group’s globalization strategy. KPMG has not been able to identify any other evidence in the documents submitted or the investigation activities carried out that would indicate factors in pricing that are not objectively justified.

Wirecard AG made all payments in connection with the takeover of the Indian Group’s "payment business" exclusively to the seller, whose beneficial owner could not be finally verified by KPMG on the basis of public registers. KPMG has found no indications in interviews, documents submitted and the investigative activities conducted that members of Wirecard’s management were involved in this seller.

The sale of individual assets in the wake of the acquisition of the payment business from a company acquired by the Wirecard Group in the course of this transaction to a company associated with the seller was fully comprehensible by KPMG, both in terms of the contract and the settlement. According to the documents submitted by KPMG and the investigation activities carried out, there were no indications of "roundtripping".

Since October 2019, KPMG has been conducting a special investigation on behalf of the Supervisory Board of Wirecard AG in order to clarify the accusations of balance sheet manipulation made against the company by the media.

The publication of the annual financial statements and the annual press conference will not take place on April 30, 2020. Wirecard will coordinate with the auditors E&Y as quickly as possible when the audit work can be completed, taking into account the Corona-related restrictions and the KPMG report.