Wirecard CEO Markus Braun resigns as accounting scandal batters shares

• The German payments firm said in a brief statement that Braun had resigned “with immediate effect” and that James Freis would take his place as interim CEO.
• On Thursday, Wirecard admitted that auditors at EY couldn’t find 1.9 billion euros ($2.1 billion) of cash on its balance sheet.
• Shares of the firm have collapsed in recent days, falling more than 60% on Thursday and an additional 45% on Friday.

Wirecard CEO Markus Braun has stepped down amid a deepening accounting scandal that has rocked the company’s share price.

The German payments firm said in a brief statement Friday that Braun had resigned “with immediate effect” and that James Freis would take his place as interim CEO.

It comes just one day after Wirecard admitted that auditors at EY couldn’t find 1.9 billion euros ($2.1 billion) of cash on its balance sheet. The firm was forced to postpone its 2019 annual report — the fourth time it has done so this year.

It also warned on Thursday that, if it did not provide consolidated financials by Friday, approximately 2 billion in loans could be called in. There are fears the company could go insolvent by the weekend.

Shares of the firm have collapsed in recent days. On Thursday, Wirecard stock plummeted more than 60%, while on Friday they fell as much as 45%.

Wirecard shares pared some of their losses shortly after Braun’s resignation was confirmed, but remained over 34% lower for the session.

The news follows an extensive investigation by the Financial Times into the Munich-based payments processor’s accounting practices. Among the newspaper’s allegations are that Wirecard’s Singapore office used forged and backdated contracts to inflate revenue, and that staff appeared to conspire to fraudulently inflate sales and profits at its Dubai and Dublin subsidiaries and potentially mislead EY.

The company has repeatedly denied the FT’s allegations and even sued the newspaper over its reporting, accusing it of colluding with short-sellers. An external investigation by law firm RPC, however, found no evidence of collusion with market participants.

Wirecard did not immediately respond to a request for comment when contacted by CNBC Friday, but in a video posted online, Braun before his resignation said it “cannot be ruled out” that Wirecard was itself the victim of “considerable” fraud.

Wirecard had claimed that the missing cash flagged by EY was supposed to be held in two Asian banks. But the banks in the Philippines BDO and BPI said that Wirecard was not a client and alleged that documents had been falsified.

The exit of Braun marks a sudden and dramatic conclusion to his 18 years at the helm of Wirecard. Braun had previously resisted calls from investors to quit, repeatedly defending the company’s accounting procedures.

Freis, formerly the head of compliance at German stock exchange operator Deutsche Boerse, was already tipped to join Wirecard’s management team in a new compliance role. Wirecard announced Freis’ appointment to the board late Thursday.

Bafin, Germany’s financial regulator, has opened several investigations into Wirecard and searched its offices earlier this month as part of a probe into management.