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Scandal-ridden Wirecard lays off half its remaining staff in Germany

Jill Petzinger
·Germany Correspondent, Yahoo Finance UK
·2-min read
20 July 2020, Bavaria, Aschheim: The Wirecard logo can be seen at the headquarters of the payment service provider in Aschbeim near Munich. Photo: Peter Kneffel/dpa (Photo by Peter Kneffel/picture alliance via Getty Images)
20 July 2020. Wirecard headquarters in Aschheim near Munich. Photo: Peter Kneffel/picture alliance via Getty Images

Administrators have slashed Wirecard’s workforce in Germany by half, letting 730 out of 1,300 staff go, as part of the insolvency proceedings at the scandal-ridden payments company.

"The economic situation of Wirecard was and is extremely difficult in light of the lack of liquidity and the well-known scandalous circumstances," Wirecard’s insolvency administrator Michael Jaffe said in a statement. "The usual restructuring and cost-adjustment measures are not sufficient.”

The company‘s three remaining board members have also had their contracts terminated, including the interims chief executive, James Fries, who took over from Markus Braun, when Braun resigned after the multi-billion-euro balance sheet scandal began unfolding.

Wirecard, once lauded as a shining example of a dynamic German fintech startup, had a spectacular fall from grace in mid-June, after auditors EY refused to sign off on the company’s 2019 accounts, saying they could not verify the existence of €1.9bn (£1.7bn, $2.25bn) that Wirecard claimed it was holding in trust accounts overseas.

READ MORE: Former Wirecard COO put on Interpol’s most-wanted list

Braun, and two other executives are currently in custody, accused of fraud, and market manipulation, among other charges. The company’s chief operations officer Jan Marsalek disappeared when news of the accounting scandal broke in June and there is an Interpol warrant out for his arrest.

Interpol’s red notice on Marsalek states that Germany charges the former executive with “violation of the German duty on securities act and the securities trading act, criminal breach of trust, especially serious case of fraud.”

Wirecard was ejected from Germany's blue-chip DAX 30 index (^GDAXI) earlier this month. The insolvency administrator is in the process of selling off Wirecard’s assets to try and recoup some of the €4bn that it owes creditors. The administrator said the company’s Brazilian operations have been sold off and the North American subsidiary sale is “well advanced.”