Wirecard: The Ethical Scandal Analysis

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Wirecard is a German company that provides financial services, the most critical of which is processing payments. It was founded in 1999, and Markus Braun, who served as CEO until the peak of the firm’s scandal in late 2019 and early 2020, at which point he had to resign. Under his leadership, the business became an early online payment service provider and establishing a powerful position in the market. It was eventually incorporated in 2005 via a route that allowed it to avoid extensive scrutiny and auditing (McCrum, 2020). Since that time, the company was constantly accused of unethical and potentially illegal behavior.

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However, despite this troubled reputation, Wirecard grew dramatically and attained a peak valuation of over €24 billion in 2018 (McCrum, 2020). At the same time, allegations of particularly egregious misconduct in Singapore surfaced, and the company’s failure to address the matter internally led to the involvement of the police and global publicity. Wirecard’s resulting collapse and eventual insolvency are the results of the business’s long-standing unethical and illegal accounting practices intended to deceive investors and create artificial growth.


Deceptive accounting is a somewhat regular occurrence in the business environment, whether it results from carelessness or intentional behavior. In Wirecard’s case, one may initially argue that, although the scale of the fraud was massive at approximately €2.1 billion (Anderson, 2020), it was localized in the Philippines and the result of the work of some rogue employees. Under this view, corruption does not necessarily pervade the entire business despite allegedly extending to its CEO. However, a more detailed analysis reveals that this view is inadequately informed, as the company’s misconduct extends substantially beyond the 2020 scandal.

Per McCrum (2020), irregular, suspicious, and non-transparent practices have been present at the company since at least 2005. With this finding taken into consideration, it becomes apparent that Wirecard was, at best, intentionally confusing stakeholders since early on in Markus Braun’s tenure, eventually escalating its misconduct and becoming exposed.

Identify and Explain Concepts

To understand the facts of Wirecard’s misconduct, it’s crucial to establish the particulars of its structure, its method of stock market entry, the concept of accounting fraud, and the people who were supposed to monitor the company externally. In terms of structure, Wirecard was an unusual blend of bank and payment processor with few to no analogs worldwide (McCrum, 2020). As a result, it was challenging to compare its performance to that of other companies to determine whether it was succeeding. Next, Wirecard entered the stock market in 2005 by taking over a defunct listed company instead of performing a traditional initial public offering. This act allowed it to bypass much of the scrutiny traditionally associated with such an act (McCrum, 2020). While this method also affected the trust investors had in the company, they eventually reconsidered upon seeing Wirecard’s success.

Accounting fraud is a universal concept and refers to any misrepresentation of a company’s situation in its financial statements, whether internal or otherwise. It is not necessarily intentional and may be the result of careless bookkeeping. However, in Wirecard’s case, the likelihood of intentional misconduct is overwhelming. With that said, regardless of the cause, accounting fraud is both illegal and highly damaging to a company’s reputation with investors.

The concept of auditing ties into this idea, as it is the task of auditing firms to notice any concerning signs in a business’s outward appearance and expose them as early as possible. Per Anderson (2020), it was Wirecard’s auditing firm, Ernst & Young, that exposed the missing Singapore funds, but it had also had the tools to detect the issue years before. Moreover, this oversight happened in Germany, which is known for its notoriously strict laws surrounding auditing firms (Anderson, 2020). While this legislation prevents a conflict of interest where a firm is both an auditor and a consultant for another, it is possible that another form of unethical relationship was present.

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Connect the Facts

Both Wirecard’s unusual structure and its method of market entry suggest a desire to avoid scrutiny by investors and obfuscate its operations. While it is possible to argue that the former was an adaptation necessary for an emerging online era, the latter is highly questionable in any case. The concerning signs discussed by both McCrum (2020) and Kowsmann et al. (2020) support the hypothesis that Wirecard had stopped operating with an ethical mindset early on in its existence. These indicators include discrepancies in the company’s financial statements, which are often considered early warning signs of accounting fraud.

Nevertheless, these signs were not taken into consideration, as the company’s rapid growth indicates. It should also be noted that Ernst & Young has been involved in several similarly large-scale scandals recently, notably that of Luckin Coffee, another company that misrepresented its rapid growth (Kowsmann et al., 2020). With these facts taken into consideration, the assertion that Wirecard has been deliberately misleading its investors, possibly with E&Y’s help, gains credence.

Key Takeaway

Wirecard’s behavior is overwhelmingly likely to be the result of a deliberate and long-term lack of commitment to ethics for the sake of growth. However, the key takeaway, in this case, lies in the behavior of the people who would normally be expected to ensure that the company acts ethically. Despite the numerous efforts by short-sellers and similar watchdogs to expose corruption (Kowsmann et al., 2020), both investors and auditors willfully ignored the warnings. This outcome highlights how external mechanisms are rarely, if ever, adequate for ensuring that a company is ethical. Any effort at making a company moral and retaining this trait has to be driven from the inside by employees.

Potential Resolution

Wirecard has already filed for insolvency, and it is unlikely that it will recover to its previous heights within the foreseeable future. However, it is possible that it will be acquired by some business willing to reform it and capitalize on the firm’s existing strengths. In this case, a fundamental reorganization of the company’s culture will be necessary. The employees have to adhere to a stringent code of ethics both in letter and in spirit. Moreover, a policy of complete transparency will also have to be implemented to address the shortcomings of Wirecard’s current business model. Having made these commitments and delivered on them, it may be able to recover the trust of customers and investors in the future.


The Wirecard scandal highlights how unethical behavior is not limited solely to a company or a department thereof. Other stakeholders are willing to tolerate and potentially abet it so long as doing so aligns with their short-term profit motives. As such, it is possible for overtly unethical and highly suspicious companies such as Wirecard to become some of the largest businesses in the world. Increased vigilance to avoid such issues is required of every participant in the market, but an internal commitment to moral behavior is particularly critical.


Anderson, R. (2020). Security engineering: A guide to building dependable distributed systems. Wiley.

Kowsmann, P., Davies, P. J., & Chung, J. (2020). Wirecard scandal puts spotlight on auditor Ernst & Young. The Wall Street Journal. Web.

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McCrum, D. (2020). Wirecard: The timeline. Financial Times. Web.

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BusinessEssay. (2022) 'Wirecard: The Ethical Scandal Analysis'. 12 September.


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BusinessEssay. "Wirecard: The Ethical Scandal Analysis." September 12, 2022. https://business-essay.com/wirecard-the-ethical-scandal-analysis/.