Wirecard Says Missing $2.1 Billion Never Existed, Rips Up Earlier Accounts (reuters.com) 82
Wirecard said on Monday that 1.9 billion euros ($2.1 billion) missing from its accounts was likely never there and it was looking at the sale or closure of parts of its business as it sought to avert a looming cash crunch. From a report: The former German stock market darling, which processes payments for companies including Visa and Mastercard, has seen billions of euros wiped off its value in recent days and began trading in Frankfurt down 40%. Wirecard is scrambling to shore up its finances and has appointed investment bank Houlihan Lokey as it seeks a deal with creditors, after seeing its credit rating slashed to junk by rating agency Moody's on Friday. In a statement on Monday, Wirecard also withdrew financial statements for 2019 and said it was examining cost cuts to address the crisis which has engulfed what was once hailed as a relatively rare success story for the German technology sector. "The Management Board of Wirecard assesses ... that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist," it said.
All money can be disappeared at will (Score:1)
Re: All money can be disappeared at will (Score:3, Insightful)
I thought about this for quite a while, and in the end, it comes down to which bit of work is comparable to which other bit of work (aka worth).
How many hours of John Carmack game engine programming after a good night's sleep and two coffees is worth exactly as much as how many hours of my buddy over there harvesting bell peppers in Hungary on the first day of harvest time, after coming over from Romania and having slept only 6 hours in a shitty bed?
Or how about how many IdTech 9
engines (yet to be developed
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> As long as we don't have a system to determine that, it's all make-believe anyway.
We do. In modern terms it would be called crowd sourced economics.
The grocery store sets what the believe they can sell bell peppers at and still make a profit. Too high no sales, too low and they may outstrip supply.
The distributor buys bell peppers at what they believe they can sell to grocery stores and still make a profit. Too high no sales, too low and they may outstrip supply.
The farmers grows bell peppers and se
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> it's all make-believe anyway
Even if you have a system to determine it, it is still entirely make-believe.
A "system" serves solely to increase and sustain the total energetic commitment to that belief, rendering its signal correspondingly more expensive to revert to noise.
A massive stone pyramid is much more of a commitment to a set of social values represented by that monument, than is a speech given about those values.
But the speech, being infinitely lighter, can be carried everywhere, by anyone, and
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If only they'd had more advanced physics and engineering, the pharaohs could have built ring habitats around the planet and solved that problem.
Here's a system (Score:3)
> Which bit of work is comparable to which other bit of work (aka worth).
> How many hours of John Carmack game engine programming after a good night's sleep and two coffees is worth exactly as much as how many hours of my buddy over there harvesting bell peppers
Here's a system to determine that. First, we should recognize that if I offer you a cup of coffee, the value that coffee has to you is based on how much you want the coffee, vs how much you want other things. You don't want the coffee more or
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The problem is the distortions introduced into the system by reality. The actual implementation consists of a lot of people at the bottom who are bent over a barrel and a small number at the top who can take or leave nearly anything with little consequence.
This is further compounded by the consistent studious avoidance of much of Smith's warnings and advice.
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I'm sorry, "the man" follows you into the store and tells you what you have to buy? I'm not sure I'm following what you're saying.
> distortions introduced into the system by reality. The actual implementation
Since you're talking about "the actual implementation" I reality, perhaps you can give an example of what you're talking about? I guess you're talking about where forced to buy one product, though you'd prefer to buy some other product that is the same price.
I guess I can think of a COUPLE examples
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Here's a BIG one, Smith advised that corporate charters should be granted very sparingly, the resulting corporation held close to it's charter, and on the condition that the corporation's existence be in the public interest.
He also called for vigorous regulation of the market to keep the playing field level and topen.
The lack of that is why we have so many corporations and so employers and sellers that are so much more economically powerful than workers and customers. That tends to put both over a barrel h
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I appreciate that Smith had that philosophical thought.
You mentioned "the actual implementation", in "reality", making it so you can't choose between similarly priced products. That's what I was asking about - the practical reality of determining the value to you of an item based on what you are willing to pay for it.
"put both over a barrel having to accept whatever might be offered just to live"
So there are things you must have just live, where you don't have competing products to choose from? What speci
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You mentioned "the actual implementation", in "reality", making it so you can't choose between similarly priced products.
I did not.
There are choices, but many of them read like the old adage about the Model-T, "you can get it in any color you like as long as it's black".
Very few markets actually manage have sale price approaching the marginal cost of production. It's not a surprise when, as I pointed out, sellers typically have 6 orders of magnitude more economic power than buyers.
That wasn't just a philosophical musing of Smith's, it was a reasoned precondition for the whole thing to work. If you reject that, you reject Capi
Re:All money can be disappeared at will (Score:5, Insightful)
Money has always been something of illusion. Even the notion of relative scarcity, which up until the 20th century was pretty much the underpinning of all currencies, is somewhat arbitrary. Sure gold and silver are relatively scarce as compared to other metals, but any intrinsic value is really their usefulness, and let's be blunt throughout most of recorded history metals like copper, tin and iron were of far greater value for what could be done with them than the precious metals. Money is essentially an agreement between all parties concerned to confer some value of the currency in question. When precious metals were used, it was easy enough to disrupt that value by flooding the market (which happened with gold and silver when the Spanish emptied the coffers of the Mesoamerican civilizations in the 16th century, and again in the 19th century when vast amounts of Chinese silver flooded the global markets).
If we put value where it belonged, we'd probably use grain crops and Portland cement as currencies. Of course, they're not easy things to stick in your wallet, so you'd have to have this chits that were representative of wheat and cement to carry around, and they have to be reasonably durable so they wouldn't fall apart when they rubbed together or got wet, so a durable metal would be the best. And of course, you'd have to guarantee that the metal was counterfeit, clipped or debased, otherwise the agreed upon ratio between chits and wheat would be undermined.
Oh wait, this sounds a lot like....
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I'd be very interested to see how well that worked, with money being hard-tied to something - sure it would have some downsides, but perhaps worthwhile.
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We base civilization on the illusion of language (Score:2)
Money is just one domain specific form of it.
Somewhere, (Score:1)
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Somewhere, Charles Ponzi is smiling.
Soo, they miscalculated by 1.9B? (Score:4, Insightful)
Somehow that does not sound credible in a f****** online payment processor!
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Really. Seems like they would be better off just saying someone stole it.
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Re:Soo, they miscalculated by 1.9B? (Score:5, Insightful)
Oh, certainly it does. It means a VP or senior accountant was cooking the books for bonuses for years likely and got away with it because no one double checked them (because no one looks when things are going good as they don't want to rock the profit ship) and they had enough cash in the bank that the imaginary money was never needed. This continues until it either swells to an untenable amount and/or times turn bad and the company suddenly needs the money and... it's not there. Until the company has a 3rd party look at the books, which can take weeks, months, or even years, they'll never be sure who cooked the books. I'm sure a senior executive is currently trying to get passage to a non-extradition country right about now. It has a few similarities to a Ponzi scheme, though they're different criminal animals.
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For 1.9M, yes. For 1.9B? No way.
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Hah. You'd be shocked at the level of criminal shit that happens at billion dollar companies that gets ignored as long as it looks good on paper and the bonus checks clear at the bank.
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Thing is, this is a German company. Germans are anal about keeping books. Really anal. For something this big to slip through, there will be heads rolling. It's national news there and going to be for a while.
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Oh, I have no doubt that heads will roll now that this has come to light. The CEO will be fired, period (whether he was involved or not) and possibly the entire board of directors and VPs cleared. Finding the actual person(s) responsible will take a while and a 3rd party audit. There's virtually no way this was an accident. If somehow it was, it's incompetence of an unprecedented scale.
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You're thinking from US perspective. This is Germany. Those people are really, really pissy about sticking to the rules. There's a reason why, as the old European joke goes, "in hell, police are German".
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Heaven:
The police are British
The cooks are French
The engineers are German
The administrators are Swiss
The lovers are Italian
Hell:
The police are German
The cooks are British
The engineers are Italian
The administrators are French
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The COVID-19 depression will smoke out all kinds (Score:3)
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Have no fear. The central planning committee has said there is no amount of money printing it won't do to make sure businesses don't have to be responsible. We're at $7.5 trillion of money pulled out of thin air and the party won't end at the end of the year when we hit $8 trillion.
Instead of using all that money from the largest corporate tax cut in U.S. history for things such as paying down debt and increasing employee salaries (you know, trickle down and all that), corporations raised executive salaries
They did reinvest some of the money (Score:2)
Seriously, the Tax cut actually cost jobs. A lot of them actually. Supply side economics doesn't work. Companies don't hire because they've got cash, they hire to meet demand.
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In any major listed company there are external parties looking at the books all the time. To fool/obfuscate them, like Enron did, takes significant intelligent willful effort and not a small bit of forgery, bribery, and lying. Wirecard, like Enron, was professionally audited---necessary for publicly listed companies.
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Disclaimer: I don't know what exactly happened. But there there are some really good articles on the German website www.finanz-szene.de about Wirecard.
Wirecard has been cash-strapped for at least 5 years. This is really unusual because as payment processor they get advance payments. Cash should be no issue.
Also they bought some pretty expensive payment companies during the last years. The question is whether they really paid for these companies the agreed price or used the transactions to hide lost money. F
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Interesting. Dubious, ego-driven or fraudulent acquisitions could indeed have ruined them. Would not be the first time that happened.
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> Also they bought some pretty expensive payment companies during the last years. The question is whether they really paid for these companies the agreed price or used the transactions to hide lost money. For example an unknown Indian company was bought for 340 million and no one knows who is the seller...
This sounds like the fraud. The executives used shareholder's money to buy low quality or nonexistent assets in which they or their friends had a hidden personal stake.
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They've only had one 900 Million funding round, stock option packages for management will have scammed some money from the stock market ... but most of the money they stole was from creditors it seems.
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Markus Braun better book his holiday soon if he wants to have his heart attack and cremation before he gets arrested.
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It's a rounding error.
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I believe that's how Reuters themselves have phrased it at some point. Reuters still call Wirecard "the former German stock market darling". I suppose they're trying to be trendy by following the "fake news"-phenomenon like it was a fashion trend exclusively designed for this year's press and media collection.
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Mittelstand companies are boring. Really boring. They're slow and steady success stories. There's no massive clickbait of boom and bust. So media doesn't care, and out of sight, out of mind.
And then when one corporation fucks up as Wirecard seems to have fucked up, it makes news. And since pundits haven't heard about German slow and steady companies in the media, they assume they're not there.
Re: Why do you keep repeatig that lie? (Score:2)
You know what they call fast growths in chemistry? *Explosions*. :D
They use that term in biology too. When talking about pathogens, extinction events, or occasionally the gold miners spirit after the resulting dead ecosystem.
In short: Stagnation means stability means survival. Unlimited growth means inevitable death.
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Indeed. Though personally I prefer calling rapid expansions bubbles. But that's just me.
Just Kidding (Score:3)
Sorry everyone, just kidding, the money never really existed. Never mind those forged documents. We just need to do a little restructuring here.
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I'd like to see what they are going to tell the tax office.
Don't they have a bank account app? (Score:2)
The Management Board of Wirecard assesses ... that there is a prevailing likelihood that the bank trust account balances in the amount of 1.9 billion EUR do not exist," it said
Can't someone call the bank and say "Hey, this is Frederick, down at Wirecard. What's our current account balance? Oh? Overdrawn, you say? Ok, thanks."
Re:Don't they have a bank account app? (Score:5, Funny)
They hired Robinhood's UI team to develop the front end.
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Germans will handle paying for it. They always do.
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Beats me, but it ain't like anyone asks the population. You think anyone wanted to prop up the failing airlines?
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I don't mind propping up Lufthansa. It is a decent airline, unlike a certain Irish one.
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I remember what happened the last time they were required to pay restitution. Back in 1919, IIRC.
This is why you don't want intermediaries (Score:1)
Fork. Done. (Score:1, Insightful)
They're done. Nobody comes back from this much forgery.
E
P.S. Great job, regulators, to make sure this German merchant processor complied with all your wonderful "EU directorives" and invented 2.1 BILLION DOLLARS on their balance sheet. That's only beaten by Enron (who had legitimate trading losses, not an invented amount of cash.)
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Here's a brief blog post someone pulled together [gaillelaw.com] about all the leaders of Enron and where they were as of 2016. Turns out you can recover from that much forgery.
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The EU directories cannot help much if the business in question operates in the Philippines.
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Yes. And that is how this kind of fraud happens.
Did they really just say that? (Score:3)
"It's not a loss, don't worry, we were just cooking the books in the pressure cooker".
I mean, for real?
In other news... (Score:2)
The CEO announced today that he is buying a new Leer jet and a mansion in Honolulu, Hawaii. The Senior VP was unavailable for comment because he is out of the office picking up his new Veneno Roadster and had been heard muttering "forget grams, I'm buying kilos". The CFO was also unavailable having taken an unscheduled vacation to the Cayman Islands with a briefcase full of gold.
The company did release a statement that this of course has *NOTHING* to do with the 2.1 billion that they say never existed. We a
Does Germany have the equivalent of the SEC? (Score:2)
The US Securities and Exchange Commission regularly either fines or jails executives for this kind of thing frequently.
Is there an equivalent for German public companies?
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Regularly? Only if it makes front page of the NY Times, otherwise they pay a fine with company funds, resign, and then go on to ruin some other company.
Alternate headline (Score:2)
Pick one or the other. Something like this doesn't just disappear. Either you lost the money, or you defrauded investors by claiming you had money which didn't exist.
Never existed? (Score:2)
They must be on those millions of fake Wells Fargo accounts.
That is supposed to make me feel better? (Score:2)
Wirecard was already sounding shady (Score:4, Interesting)
I hadn't heard of this company until an NPR podcast last week about how they were targeting a critical short seller with a disinformation, intimidation, and surveillance campaign.
https://www.npr.org/2020/06/02... [npr.org]
Shady, shady, shady
Cryptocurrency-related (Score:3)
In general, you should assume that anything even vaguely crypto related (Wirecard was the processor for some crypto-backed cards) is a scam. You won't be right 100% of the time, but you'll be right so often that you won't notice. And you'll still have all your money!
Where do they hide all the money? (Score:2)
Cash in a bank account seems like it would be tough to fake. Do auditors just take companies' word for it or do they call the bank and check? I assume large corporate banking isn't like my Chase or credit union personal checking accounts, and they probably invest cash in all sorts of exotic stuff that normal investors don't have access to...but cash is cash. Either it's there or it's not and the bank would know (unless the bank was in on it too.)
It also seems like something a forensic accountant would just
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Whoever does it knows how to hide it good. You can bet on that.
They're criminals after all. It's their business.
Pay no attention to this money (Score:1)
What BS. I bet it all ended up in some big guys account - Soros, Halliburton, etc. Someone got it.
It's probably funding antifa. Helping those mysterious bricks that show up. Bailing people out.