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Wirecard shares to rise after the law firm erased headquarters of misconduct

FRANKFURT (Reuters) – the Local employees at the Singapore office of Wirecard have committed crimes, but these were not relevant for the German payment company into the financial position, an investigation by an external law firm has found.

The head office of Wirecard AG, an independent provider of outsourcing and white label solutions for electronic payment systems is to see in Aschheim near Munich, Germany-September 6, 2018. REUTERS/Michael Dalder

Shares in Wirecard, under pressure since the Financial Times ran the first of a series of investigative reports in January claimed fraud and false accounting of the company’s Asia-Pacific office, rally by up to 30 percent on the news.

Wirecard had initially rejected it on the FOOT of the report as “false, inaccurate, misleading and defamatory”. However, in the final conclusions, Singapore law firm Rajah & Tann found evidence that the crimes would have been committed.

“The review … is not to reveal the findings of the crime in respect of the headquarters of Wirecard,” the company said in a summary of the law firm of the conclusions.

“Criminal liability can, however, be attributed to individual local staff in Singapore, according to local law.”

ROUND-TRIPPING?

The negative news knocked billions off the value of the Munich-based Wirecard, the top German company in the booming fintech sector, months after the deposed Commerzbank of the blue-chip DAX index.

The FT on the basis of its reporting a preliminary report of Rajah & Tann last May that examined a whistleblower’s allegations to the address of the administrative staff in the Singapore office conducted sham transactions, or the so-called ’round-tripping’, to the starting point of the income.

These were not confirmed in the law firm’s final report: “The independent review had no findings of round-tripping or corruption,” Wirecard said.

Singapore police then opened an investigation and raided Wirecard the buildings in the city-state.

The police probe has piled the pressure on the Wirecard CEO Markus Braun – long the goal of the so-called short sellers who publish negative research to take advantage of the fall in the share price of a company.

German prosecutors have, however, responded to the extension of the ongoing investigations into alleged market manipulation. Germany’s markets regulator has imposed a temporary ban on short selling in Wirecard stock remains in the market.

“This is the basis for our opinion that the entirely negative attitude of FT was exaggerated and also made of a strong buying opportunity for fundamental investors,” said Hauck & Aufhaeuser analyst Robin Brass.

Detailing Rajah & Tann’s findings, Wirecard, said the suspect transactions had no material on the company’s financial reports.

The turnover of 2.5 million euros ($2.8 million) was incorrectly listed in the 2017 annual report as it should have been booked for 2018. Further, an asset of 3 million euros was incorrectly booked for a week in 2018, and would not be included in 2018 the financial statements.

Wirecard said it would postpone the release of its 2018 annual report from three weeks to 25 April, to give time to the law firm of the findings of the account.

The company confirmed guidance that her 2019 income, measured as earnings before interest, taxes, depreciation and amortisation (EBITDA) would be between 740 million and € 800 million.

($1 = 0.8859 euros)

Reporting by Douglas Busvine; editing by Thomas Seythal/Keith Weir

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