Sensefolio had predicted Wirecard’s internal fraud that was publicly disclosed on the 18th of June 2020 during which regular auditor Ernst & Young refused to approve Wirecard’s financial statements, saying it couldn’t verify more than $2 billion in cash. This latter led to the arrest of the Wirecard’s former CEO, Markus Braun, by Munich prosecutors as the scandal over 1.9 billion euros ($2.1 billion) that went missing prompted probes into suspected market manipulation and false accounting.

This article will show how the fraud could be predicted by analysing Sensefolio’s ESG Scores and, more importantly, Wirecard’s Sensefolio’s Governance pillar and the scores of its constituents.

A Research made by the Sensefolio Market Intelligence team.

Wirecard’s Sensefolio ESG Score

After analysis of the Wirecard’s Sensefolio ESG Score over the past 2 years, we’ve noticed some drops in the Governance pillar, and hence the overall ESG Score after some significant news, announcements and executives’ speech analyses.

This notably includes the following news:

• “Executive at Wirecard suspected of using forged contracts“— 30/01/2019 (source: https://www.ft.com/content/03a5e318-2479-11e9-8ce6-5db4543da632)
• “Wirecard Concentrates on Innovation, Not ‘Controversy’: CEO Braun”- 13/06/2019 (source: https://www.bloomberg.com/news/videos/2019-06-13/wirecard-concentrates-on-innovation-not-controversy-ceo-braun-video)
• “Wirecard’s suspect accounting practices revealed” — 14/10/2019 (source: https://www.ft.com/content/19c6be2a-ee67-11e9-bfa4-b25f11f42901)

By looking at all the constituents of the Sensefolio’s Governance pillar, you can see that categories such as:

• Board Leadership
• CEO/Executive Leadership
• Management Leadership
• Indirect Economic Impacts
• Anti-Corruption Policies
• Regulatory Capture Political Influence

were all in the “red” as it was mainly dropping below the 40% Sensefolio mark over the 2-year period, which would categorise the company as a “non-ethical” institution behaviour.

A Research Made by the Sensefolio Market Intelligence team

Find more research notes on:
https://sensefolio.com/research/

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