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‘€1.9B missing’

18 June 2020 by jbchevrel

Wirecard (WDIGR) is a CDS that hasn’t been in any itraxx index. We close WDIGR 5y CDS wider by about +33pt to 70pt mid. 1s5s mid closed 7.5pt. Along with CDS, stocks crashed c-70% after WDIGR said that some €1.9B was missing in cash and that “spurious cash balances” might have been provided to auditor EY. In a statement, WDIGR said it was working intensively with the auditor to clarify the situation. WDIGR had delayed 3x its 2019 release. WDIGR noted that conditions attached to its borrowing meant that if financial statements for 2019 were not published by Friday June 19 then €2bn of loans to the company “can be terminated”. Last year already, there was a controversy about WDIGR accounting and business practices. White-collar crime investigators raided WDI offices in Singapore multiple times in connection with allegations that sales and profits were invented at numerous subsidiaries of WDIGR across Asia. Edo Kurniawan, the company’s head of international reporting, was named among six suspects. Back then CEO said it was just a ‘local difficulty’ with a minimal financial impact. Some leaked internal company spreadsheets and correspondence between senior members of WDI finance team indicated a concerted effort to fraudulently inflate sales and profits at Dubai and Ireland branches, and meant to mis lead auditor EY.