Revelations that the German payment company, Wirecard, cannot account for €1.9bn of cash on its balance sheet have hit Alexander Darwall’s European Opportunities Trust hard. Darwall has been a longstanding investor in Wirecard and it is the trust’s largest holding. Wirecard’s shares crashed after its auditor Ernst & Young refused to sign off its accounts, saying that it could not confirm the existence of €1.9bn (£1.7bn) in cash. This has dealt a hefty blow Alexander Darwall and his European Opportunities Trust (JEO), which has a portfolio allocation of 10.3% to Wirecard.
Ernst & young has reportedly informed Wirecard that ‘no sufficient audit evidence could be obtained so far’ of the €1.9bn, which represents around a quarter of the total held on its balance sheet. Wirecard has since said that there are ‘indications that spurious balance confirmations had been provided’ by a trustee of its bank accounts and that the board was ‘working intensively together with the auditor towards a clarification of the situation’. However, if the company’s financial results for 2019 cannot be signed off shortly, €2bn of loans to Wirecard can be terminated. The situation has created some embarrassment for Darwall who has continued to back Wirecard in the face of a series of reports by the FT questioning Wirecard’s accounts.
Update 19 June
Citywire reports that Alexander sold European Opportunities stake in Wirecard yesterday