* KPMG called in to investigate FT's accounting allegations
* Insufficient documentation to address claims - KPMG
* KPMG: Can't conclude whether declared revenue existed or
not
* CEO: Allegations not confirmed
* Shares lose more than 4 billion euros in value after
report
* For FACTBOX on audit's key findings: [nL5N2CG2UX]
(Updates with CEO briefing analysts, FT, further share drop)
By Douglas Busvine
BERLIN, April 28 (Reuters) - An independent investigation by
auditor KPMG into Wirecard found on Tuesday the German
payments company did not provide sufficient documentation to
address all allegations of accounting irregularities made by the
Financial Times.
Following the release of the report, Wirecard said the KPMG
audit had not uncovered any incriminating evidence to support
allegations it manipulated its accounts and it would not restate
its accounts for the years 2016 through 2018.
"I would like to underline that, overall and in every point,
the allegations were not confirmed," CEO Markus Braun told a
conference call with reporters.
KPMG is continuing its analysis for last year after
receiving fresh data, Wirecard said on Tuesday, as it delayed
the publication of its annual results until next month.
The German payments company hired KPMG last year to conduct
an independent audit to address allegations by the British
newspaper, including that its Singapore office had booked fake
transactions to inflate revenues. [nL8N2AE1AX]
The company has denied wrongdoing and taken legal action
against the Financial Times. In its own report on the KPMG
audit, the FT said it stood by its reporting and is defending
the lawsuit.
Wirecard, founded in 1999, has profited from a boom in
online payments by acting both as an acquirer, handling payments
to hundreds of thousands of merchants, and as an issuer of real
and 'virtual' payment cards to consumers.
Under Braun, who remains its largest shareholder, it won a
spot in Germany's blue-chip DAX 30 <.GDAXI> index in 2018. The
allegations have dogged the company over the past year, however,
repeatedly wiping billions off its stock market value.
Publication of the KPMG audit sparked heavy losses that
deepened as Braun faced tough questioning on a conference call
with analysts. Shares were down 26%, erasing more than 4 billion
euros from the company's market value.
"This is anything but a clean bill of health," said NordLB
analyst Wolfgang Donie, who has a 'hold' rating on the stock.
BLACK HOLE
The main FT allegation where KPMG found fault was that
Wirecard had booked half of its worldwide revenues and much of
its profits from three obscure third-party acquiring partners.
[nL5N2CG2UX]
KPMG said it was not able to conclude whether these revenues
did or did not exist for the years 2016-18.
"The documents presented to KPMG were almost exclusively in
electronic form, making their authenticity impossible to
verify," it said, also pointing to a lack of cooperation from
Wirecard's third-party acquiring partners.
NordLB's Donie said the years 2016 to 2018 "remain a black
hole" that left Wirecard "wide open to further allegations".
KPMG also addressed allegations by the FT of fraudulent
accounting at its Singapore office and overpaying for assets in
India, and from anonymous website MCA-Mathematik of inflating
the size of cash advances to merchants.
"We cannot make a final judgment on whether the
documentation and information are complete, correct and free of
contradiction," KPMG said in its 58-page report https://www.wirecard.com/transparency.
"To this extent, we cannot rule out that we would have come
to a different result if we had obtained access to further
information and documents."
Wirecard either did not provide documents requested by KPMG,
or only did so months later, delaying the overall investigation,
KPMG said, adding that interviews with managers had been
postponed repeatedly.
MCA-Mathematik said in a statement that Wirecard had
"intentionally misled investors about the nature of the merchant
cash advance lending programme" and called for the executive
board to be suspended.
Singapore police confirmed that an investigation opened last
year was continuing but did not comment further on KPMG's
report.
(Additional reporting by Patricia Uhlig, Hans Seidenstuecker
and Aradhana Aravindan
Editing by Michelle Martin and Josephine Mason)
((vera.eckert@thomsonreuters.com; +49 69 7565 1228; Reuters
Messaging: vera.eckert.thomsonreuters.com@reuters.net)) |
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