Wirecard Australia appoints voluntary administrator as sale process fails to find buyer

Staff told a sale process has failed to find a buyer for the operations.

Picture: Getty Images)

Wirecard Australia has buckled under the strain of a global fraud scandal and appointed accounting firm BDO as voluntary administrator, spurring more uncertainty for domestic customers including Westpac and Bendigo and Adelaide Bank.

Documents lodged with the corporate regulator show BDO partners Andrew Fielding and Nicholas Martin were appointed on Monday, which creates headaches for players across the local banking and payments industry who use Wirecard’s products or services including its technology, pre-paid cards or transaction processing.

BDO Australia confirmed it would manage the voluntary administration of Wirecard Australia and conduct an “urgent assessment” of the company.
Business restructuring partner Mr Martin said that while the process was underway it was “business as usual”, as BDO assessed Wirecard’s operations and gauged interest from any potential buyers.
“BDO will commence a process of seeking interest from parties who are keen to be involved in the future of the business,” he said.

Sources told The Australian Wirecard’s local staff were briefed on the administration process on Monday afternoon, after a sale process failed to find a quick buyer for the operations. Employees were told a buyer was unable to be secured for the Australian business given its limited sales and that some of its technology required investment and development.

The Australian last week revealed that Wirecard’s Australian and NZ entities could be tipped into voluntary administration if a buyer wasn’t secured. The preference at the time was to sell the three entities as a group, although Wirecard left the option of offloading the Australian and NZ operations in pieces.

The 70 Wirecard staff across Australia and NZ had also expressed concerns to management about the payment of their salaries after its parent entity, German payments group Wirecard, started insolvency proceedings for a spate of entities last month.

The Wirecard saga which has led to arrests of executives offshore was largely due to alleged fraud and a missing 1.9 billion euros. Wirecard’s global chief executive Markus Braun was arrested and released on bail, and last week the head of a Dubai-based Wirecard subsidiary faced questioning and arrest by German authorities.

The global insolvency proceedings did not include entities across Australia and NZ.

Westpac has a small exposure to Wirecard, although not via lending, Bendigo and Adelaide Bank runs the German group’s products but on its own systems, and payments group Cuscal counts Wirecard as a third-party provider.

Industry superannuation fund-owned bank ME has previously said its customers won’t be impacted by the Wirecard issues, even though it uses third-party software licensed from a NZ company that was acquired by the German group.

Wirecard’s Australia and NZ boss Karl Mohan resigned earlier this month, but was staying on to serve a three-month notice period. Mr Mohan joined the group a year ago and became head of Australia and NZ in January.

Wirecard operates two entities domestically Wirecard Australia, which doesn’t lodge financial accounts, and Wirecard Australia A&I.

Accounts lodged with the corporate regulator for Wirecard Australia A&I – which issues prepaid cards, undertakes transaction acquiring and payment services – showed losses for 2019 of $6m, narrowing from $14.6m in 2018.

The accounts showed the entity was propped up by a $10m capital raising in May, with the parent providing “necessary financial support” because total liabilities exceeded assets.

Additional reporting: David Ross