ESG Controversy Case Study:

Wirecard: A story of accounting malpractice

September 9, 2022

Wirecard AG is a payment processing company that filed for insolvency in June 2020 after revelations of accounting manipulation amounting to €1.9 billion. The RavenPack Controversy Scoring Framework helps identify news mentions about ongoing controversies, augmenting your investment analysis.

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In 2019, the Financial Times released the results of an investigation into the accounts of Wirecard AG, leading to suspicions of accounting malpractices against the company. Wirecard filed for insolvency on June 25th, 2020, after revelations of accounting fraud amounting to €1.9 billion. The RavenPack ESG Scoring Framework detected these events as follows:

Fraud and sanctions Management and board Legal issues ESG Controversy Scores Jan 2019 Jan 2020 Jan 2021 2 0 4 6 Jan 2022 January 30th, 2019 The FT publishes a report alleging that Wirecard executives had forged and backdated contracts linked to suspicious transactions. February 19th, 2019 BaFin orders an inquiry into Wirecard’s accounting and bans short-selling of the company’s stock. October 21st, 2019 Wirecard hires KPMG to conduct an independent audit. April 28th, 2020 the KPMG investigation finds that Wirecard did not provide sufficient documentation to address all allegations of accounting fraud. June 18th, 2020 Auditor EY refuses to sign off on the 2019 accounts, unable to confirm the existence of €1.9 billion in cash balances. June 19th, 2020 CEO Markus Braun resigns. June 22nd, 2020 Wirecard confirms that the missing cash balances likely never existed. June 23rd, 2020 The former CEO Braun is arrested on suspicion of fraud and released on bail.

It's often difficult to follow all the news to build a complete ESG picture, particularly when events are less reported. Benefits from local and global newswire coverage, RavenPack’s ESG Controversy Scoring Framework gives investors the opportunity to identify companies involved in controversial events reported in local news outlets before the information reaches the mainstream media.

Check out other ESG controversy case studies that have been widely reported, to understand how the RavenPack’s ESG Controversy Scoring Framework works, or request a trial to explore how it could help you stay on top of ESG controversies impacting your brands or portfolios.

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RavenPack’s ESG Controversy Scoring Framework is based on real-time detections of events across 40,000+ news sources in 13 different languages. It follows an event-based approach that can help assess the extent of a firm’s ESG controversy exposure through time by monitoring real-time news coverage.