Three reports by the Financial Times have accused Wirecard's Singapore office of forgery, falsification of accounts and money laundering. A probe has now been opened into the journalist who made the accusations.
Just a few months after it displaced Germany's second-largest lender, Commerzbank, from the DAX stock market index, fintech champion Wirecard's rapid international expansion has again been called into question.
Allegations of questionable accounting methods and other financial irregularities have surfaced against the Asian headquarters of the e-payments firm in Singapore.
Launched in 1999 as a processor of electronic payments, Wirecard was valued at €23 billion ($26 billion) last year, despite concerns about its "very complicated" business model.
Allegations against Wirecard
On January 30, the Financial Times (FT) accused Wirecard's Singapore office of using forged and backdated contracts in an attempt to boost revenues.
A whistleblower told the newspaper that Edo Kurniawan, a senior executive for the Asia-Pacific region, had ordered the transactions.
An internal company presentation dated May 2018 revealed potential violations of Singapore law, including falsification of accounts and money laundering, the FT said.
The presentation, prepared for the company's four senior-most executives, set out how some €37 million was transferred between several Wirecard subsidiaries and other companies, in suspicious and complex transactions.
A second FT report on February 1 alleged that lawyers commissioned by Wirecard had found evidence of "serious offenses of forgery and/or falsification of accounts/documents" at the group's Singapore office.
The document, claimed to have been accessed by the business daily, said the actions may well have been instigated to "conceal other misdeeds, such as cheating, criminal breach of trust, corruption and/or money laundering."
Wirecard's technology allows mobile and online payments as well as payments at traditional store checkouts
In a third report dated February 7, the FT claimed that two senior executives at Wirecard's Munich head office had at least some knowledge of the elaborate transaction scheme, known as "round-tripping."
The paper described how Wirecard's bank in Germany would transfer money to a dormant subsidiary in Hong Kong, which would then be wired to a fake customer, before being sent to Wirecard's India bank.
The third article expanded on the German payment firm's internal investigation into the matter, carried out by one of Asia's largest law firms, Rajah and Tann.
Their initial probe found the potential for accounting irregularities in Germany for several of its Asian businesses. It also said suspicious transactions, including money laundering, should be flagged to financial authorities, the FT said, having seen a copy.
Wirecard denies all
Although police raided Wildcard's Singapore offices, in Germany, the Munich state prosecutor's office said a few days later it had found no evidence of the alleged wrongdoing reported by the paper.
The Munich-based e-payments firm issued a categorical denial of FT's original article, accusing the journalist responsible of publishing "a false, inaccurate, misleading and defamatory article" that "lacks any substance." It said it would sue the newspaper.
As well as denying any wrongdoing, Wirecard alleged that before publication, short-sellers had actively pushed down the value of the company's stock.
Investors punish the fintech king
The firm's shares fell by almost 40 percent in the wake of the scandal, leading German financial regulators to launch an investigation into possible market manipulation over the story.
Several lawsuits have been filed against Wirecard in the United States by investors who suffered losses due to the scandal.
Germany's financial watchdog Bafin on Monday banned short-selling the company's shares on Germany's stock market for two months as a result of the volatility in the price of Wirecard's shares.
"In recent days, there has been a further substantial increase in the net short positions," Bafin said, adding that the events had created market uncertainty, particularly over the appropriate price determination for the firm's shares.
Less than three weeks after the scandal surfaced, the Munich prosecutor's office said it had opened an investigation into an FT journalist over the allegations.
Senior Munich prosecutor Anne Leiding told the AFP news agency: "We have one concrete criminal complaint from an investor against a Financial Times journalist." She said another potential investor claimed to have advance knowledge of the article.
In response, the FT said the accusations of market manipulation or unethical reporting by the newspaper or its reporters were "baseless and false."
Tainted by previous controversies
Wirecard has been a perennial target for speculative short sellers who have questioned its accounting methods and rapid international expansion.
Fraud allegations prompted previous short-selling attacks in 2008 and 2014, including one where German small shareholders' association SdK accused the firm of false accounting.
During its 20-year history, the company has been accused of money laundering, corruption and facilitating illegal gambling, although no charges have been brought to date.
In 2016, the share price slid after a note from a little-known market intelligence firm Zatarra Research alleged false financial communication and fraud. That probe ended without charges against the firm.
Many investors remain wary of Wirecard's incredible rise to prominence, including Warburg Bank analyst Marius Fuhrberg, who said the firm has a "very complicated" business model.