"After EY's auditors refused to sign the group's financial statements a week ago, it became clear at the beginning of this week: Wirecard's rise, the company's success story crowned by its entry into the German Dax share index, was largely based on lies and was presumably a huge fraud".
"There are clear indications that this was an elaborate and sophisticated fraud involving multiple parties around the world in different institutions with a deliberate aim of deception", EY said. It could get a stay of execution until the end of the month, as creditors look to a July 1 deadline for extending the loan, sources familiar with the matter said.
The scheme centred on an illegal practice known as "round tripping" - a sum of money would be sent from a bank owned by Wirecard in Germany to a dormant "customer" company also owned by Wirecard in Hong Kong, appear momentarily on its balance sheet, then be sent back to Wirecard's India office, appearing to local auditors like legitimate business revenue. Besides, its shares, which have lost 90% of their value in less than a week, decreased in Frankfurt after the announcement was made. It's since been confirmed Wirecard has never had any business relationship with Flexi Flex, and a staffer simply copied the company's logo from the internet, and pasted it onto a contract template he completed himself.
It's all shaping up to be one of Germany's biggest corporate scandals.
German law firm Schirp & Partner said that with Wirecard now effectively sidelined, it would file class actions against EY on behalf of shareholders and bondholders.
"It is frightening how long Wirecard AG was able to operate without being objected to by the auditors".
"It is now evaluated whether insolvency applications have to be filed for subsidiaries of Wirecard Group".
But Ipex is not the only bank that is exposed to the grim ramifications of Wirecard's insolvency. This meant there was no way it could repay all its debt, notwithstanding all the legal challenges it will face.
Braun has been charged with false accounting and market manipulation to woo Wirecard's investors and clients.
Braun was arrested on Monday and released on bail of €5 million a day later.
After Wirecard revealed €1.9bn was missing from its accounts on 18 June the FCA told Wirecard UK not to pay out or reduce money it holds for customers unless instructed by them. Wirecard denied the report and sued the Financial Times, claiming that the media outlet was trying to manipulate the market. Three other managers are also under investigation.
The Philippines' Justice Minister Menardo Guevarra said that former Wirecard chief operating officer Jan Marsalek was briefly in the Philippines on his way to China, apparently fleeing the repercussions of the scandal.