Tuesday 30 June 2020 4:01 pm

Wirecard 'relied on small number of customers'

Wirecard reportedly relied on a small number of customers for the majority of its sales, according to the Financial Times.

An internal company spreadsheet seen by the FT lays bare the extent of Wirecard’s issues. A snapshot of the German payment processing firm’s clients in 2017 shows only 100 customers account for more than half of its sales.

Read more: FCA lifts ban on regulated activities of Wirecard UK

Last week, the firm filed for insolvency after auditors found billions missing. It then acknowledged the €1.9bn of cash probably did “not exist” and the business that accounted for around half of its revenues had been misrepresented.

The document reviewed by the Financial Times is further evidence that Wirecard misled markets about its scale. Former chief executive Markus Braun was arrested last week on suspicion of market manipulation and false accounting, before being released on €5m bail.

In 2017 the German firm claimed publicly to serve 33,000 large and medium-sized businesses and 170,000 small firms. However the internal document seen by the FT shows the customer base was far smaller and more lopsided.

EY, which audited Wirecard’s accounts for a decade, is coming under fire and is reportedly preparing partners for backlash.

An internal note also seen by the FT shows the auditor advising senior partners to tell clients the “objective” of the fraud at Wirecard was to “deceive investors and EY”.

Read more: Deutsche Boerse looks at revising Dax membership rules after Wirecard scandal

It was also claimed last week that the Big Four firm had failed to carry out a standard auditing procedure on the firm for more than three years.

An FT report claimed that between 2016 and 2018 EY did not check with Singapore’s OCC Bank to confirm it held large amounts of cash on Wirecard’s behalf. Instead, EY relied on documents and screenshots provided by Wirecard and a third-party trustee.