Wirecard revealed a more than $2 billion hole in its balance sheet in June.
Photo: lukas barth-tuttas/EPA/ShutterstockBefore it unraveled in an accounting scandal, Wirecard AG WDI -6.08% built up an image as a fast-growing financial technology company. It spewed out news releases publicizing partnerships with blue-chip names such as SAP SE, Zurich Insurance Group and SoftBank Group Corp.
The Wall Street Journal found that some of those partnership announcements were misleading or were promoted without the agreement of the companies involved. The Journal reached out to more than 300 companies with which Wirecard said it had entered partnerships or collaborations.
Singapore
15
China
9
India
8
Germany
68
Europe
141 companies
Asia-Pacific
56 companies
Turkey
8
Japan
7
Number of companies presented
as partnerships or collaborations
in Wirecard press releases,
by region and country, 2017-20
Malaysia
Note: Some companies included
in multiple press releases
Americas
40
U.S.
31
Source: WSJ analysis of
Wirecard press releases
France
13
Middle East
and Africa
8
U.K.
13
Brazil
4
Switzer-
land
9
Austria
8
Sweden
5
Singapore
15
China
9
India
8
Germany
68
Europe
141 companies
Asia-Pacific
56 companies
Turkey
8
Japan
7
Malaysia
Number of companies presented
as partnerships or collaborations
in Wirecard press releases,
by region and country, 2017-20
Note: Some companies included
in multiple press releases
Americas
40
U.S.
31
Source: WSJ analysis of
Wirecard press releases
France
13
Middle East
and Africa
8
U.K.
13
Brazil
4
Switzer-
land
9
Austria
8
Sweden
5
Singapore
15
China
9
India
8
Germany
68
Europe
141 companies
Asia-Pacific
56 companies
Turkey
8
Japan
7
Malaysia
Number of companies presented
as partnerships or collaborations
in Wirecard press releases,
by region and country, 2017-20
Note: Some companies included
in multiple press releases
Americas
40
U.S.
31
Source: WSJ analysis of
Wirecard press releases
France
13
Middle East
and Africa
8
U.K.
13
Brazil
4
Switzer-
land
9
Austria
8
Sweden
5
Number of companies presented as
partnerships or collaborations in Wirecard
press releases, by location, 2017-20
Singapore
15
China 9
India 8
Germany
68
Turkey 8
Europe
141 companies
Asia-Pacific
56 companies
Japan 7
Middle East
and Africa
8
U.S.
31
Americas
40
France
13
U.K.
13
Switzerland
9
Austria
8
Note: Some companies included in multiple
press releases
Source: WSJ analysis of Wirecard press releases
German software company SAP was surprised to see a news release in February from Wirecard saying it had become an “official development partner.”
“Wirecard announced a partnership with SAP that was never signed by us nor was [it] approved from us to publish a press release,” according to spokesman Marcus Winkler. The release listed no contact for SAP. He said SAP didn’t contact Wirecard about the discrepancy at the time.
Wirecard is now insolvent and is being sold for parts after it revealed a more than $2 billion hole in its balance sheet in June. Wirecard declined to comment.
A key question facing investigators and investors: What was the extent of Wirecard’s business of helping retailers to process credit-card transactions? The prolific number of news releases gave investors the impression of a far-reaching business with many potential customers.
Wirecard’s former Chief Executive Markus Braun, now accused by German prosecutors of falsely inflating revenues, put a high priority on issuing news releases, according to former employees. Business unit leaders would get regular calls from the investor relations team demanding things to announce, according to one employee. Some joked internally that these releases were Wirecard’s real product.
A lawyer for Mr. Braun didn’t respond to requests for comment. The lawyer previously said his client was cooperating fully with prosecutors.
In 2019, Wirecard issued over 100 news releases, while competitors such as Dutch payments processor Adyen NV issued 21 releases and the U.S.’s Discover Financial Services put out 80.
“If you’re just scratching the surface and you look at headlines, you’ll say ‘oh that’s pretty impressive,’” said Neil Campling, head of telecoms, media and technology research at Mirabaud Securities. “If you looked at the details, you’d realize it was absolutely meaningless.”
More than 90 companies identified in Wirecard’s releases responded to The Journal’s inquiries. Many declined to comment. Others confirmed that they had legitimate business with Wirecard. Some said they were Wirecard customers but that the releases overplayed their relationship.
“Wirecard partners with world-wide successful gaming company Gameforge,” said the headline of a 2018 Wirecard press release about a linkup with a German videogame company.
“‘Partnering’ is not quite accurate. We are a customer of Wirecard Bank AG. They are one of our payment service providers,” said a Gameforge spokesman this month.
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Michael Hoffmann, co-founder and CEO of German email marketing company kajomi GmbH, said he had never heard of Wirecard before one of its sales representatives asked to meet him in 2017. The representative boasted of the company’s huge size and offered to put kajomi on its payment platform for small-and-medium-sized companies.
Shortly after, Wirecard issued a release naming kajomi as a partner, despite no formal agreement being signed and no money changing hands, Mr. Hoffmann said. While kajomi remains on the checkout portal website, the company has generated no new customers from it, he said. He didn’t object to the press release at the time because he figured it might bring in new clients without any work from his own company.
Wirecard said in a November 2019 press release that it would shape the “future of mobility with renowned partners,” including Swiss concept car maker Rinspeed AG, SAP, vehicle-inspection company Dekra SE, Zurich Insurance and Osram Licht AG .
However, spokespeople for Zurich, Osram, SAP and Dekra said they had joined with Rinspeed, but not with Wirecard. A Rinspeed spokesman declined to comment.
Wirecard’s former CEO Markus Braun put a high priority on issuing news releases, said ex-employees.
Photo: Michaela Handrek-Rehle/Bloomberg NewsPartnerships are an important metric of a company’s growth and potential, said Sanjay Sakhrani, an analyst with Keefe, Bruyette & Woods who has covered Wirecard since 2017. But it is time-intensive to ascertain the robustness and profitability of each relationship to which payment companies lay claim.
“On the surface, when you look at the nature of the announcements and the results, they suggested the company has significant momentum and wind as its back,” Mr. Sakhrani said. “What’s difficult to do is the forensic analysis and determine what is real and what is not.”
Since June, companies have sought to distance themselves from Wirecard.
Allianz SE said it was ending a mobile-payment app it developed with Wirecard. German retailer Käfer AG said it had decided to break with Wirecard after the company filed for bankruptcy and now worked with a competitor for credit-card transactions.
SoftBank Group, which helped arrange a $1 billion investment months before the German payments company went bust, is also looking to end its partnership with Wirecard. A SoftBank spokesman declined to comment.
In July 2019, Wirecard said it had started a partnership with AUTO1 Group, a European car-selling platform backed by SoftBank’s Vision Fund. An AUTO1 spokesman said last month there was “no cooperation with Wirecard. We had a phase of brainstorming, but it never went forward.”
— Paul J. Davies and Will Horner contributed to this article.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
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