MANILA, Philippines — Why would a big German payments firm like Wirecard AG even consider investing about a quarter of its resources in a country like the Philippines where it has little business operations?
This is what puzzles bankers and analysts as the search for Wirecard’s $2.1 billion in missing funds turned to the Philippines due to spurious documents alleging that the German firm had assets stashed in two local banks.
An analyst sought for comment said this controversy should have no impact on the country.
Both BDO Unibank and Bank of the Philippine Islands (BPI) have declared that the documents were fake and that no financial transaction had ever taken place.
Wirecard earlier admitted that the funds could not be accounted for and that some of its personnel had deliberately issued false or misleading statements “in order to deceive the auditor and create a wrong perception of the existence of such cash balances.”
Funds did not enter PH
The chief executive of Wirecard, Markus Braun, who built the company into one of the hottest financial technology investments in Europe and a rare tech champion for Germany, quit on Friday as the company faces a cash crunch after saying it may have been a victim of fraud.
The central bank said on Sunday that none of the $2.1 billion missing from the scandal-hit German payments firm appears to have entered the Philippine financial system.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno said in a statement that BDO and BPI had suffered no losses despite having been named in connection with the missing funds.
The search for the missing cash hit a dead end in the Philippines, but the two banks have said documents purporting to show Wirecard had deposited funds in them were false.
“The initial report is that no money entered the Philippines and that there is no loss to both banks,” Diokno said, though he added that the central bank was investigating.
“The international financial scandal used the names of two of the country’s biggest banks — BDO and BPI — in an attempt to cover the perpetrators’ track,” he said.
BDO and BPI have stated that Wirecard was not their client and that they had no business relationship with the German firm, Diokno said.
Bank employees suspended
BPI, however, told Reuters on Saturday that it had suspended an assistant manager whose signature appeared on one of the fraudulent documents.
BDO told the central bank that it appeared one of its marketing officers had fabricated a bank certificate.
Diokno reiterated that the Philippine banking system was in a strong position going into the coronavirus pandemic and well-capitalized.
Financial observers were relieved that BPI or BDO had no liabilities in the first place, but many would like to see more stringent measures to reduce risks of bank personnel from going rogue.
Dent in credibility
“[While] local banks may not be directly involved in the mess, the mere fact that some staff may be involved will put a dent in the credibility of the banking sector,” said a stock trader at a local brokerage house.
Fund manager Astro del Castillo, managing director at First Grade Finance, said “the ripple effect will be felt mostly overseas rather than locally. The two big banks already denied their relationship with Wirecard.”
In February, Wirecard signed a partnership with Aboitiz-led Union Bank to improve corporate banking services. But since the enhanced community quarantine delayed the testing phase, this partnership was never rolled out.
“We signed a cash management service where we pay their merchants in the Philippines. This was on testing [mode] but [was] delayed due to lockdown,” Union Bank president Edwin Bautista said in a text message.
Bautista said UnionBank did not have any financial exposure to Wirecard.
—With a report from the wires