3090
Views

Payment Vendor Wirecard's Financial Scandal May Involve Crew Wages

alt

By The Maritime Executive 06-19-2020 07:09:33

A once high-flying German digital payments company, Wirecard, is coming crashing down in an unfolding series of financial scandals that may end-up ensnaring the shipping industry, crew members' personal finances, and even possibly some passengers.

The company provided a broad range of digital financial services to a broad range of well-known companies and according to reports in the Miami Herald that includes payment processing for crew members of Royal Caribbean Cruises and possibly other shipping firms. The firm also handled digital payment processing on cruise ships for passengers, airports, airlines, and retailers.

Founded in 1999, Wirecard had grown rapidly with the digital economy. After rumors of potential financial improprieties, including an investigative report by London’s Financial Times, the company had announced it was hiring independent auditors to complete a comprehensive review to respond to the allegations of financial mismanagement and accounting irregularities. The newspaper reported that it had uncovered efforts to inflate revenues and falsified transactions.

In April 2020, the independence account firm KPMG reported that it had found fault with the accounting processes but that it had not been given complete information to respond to all of the allegations.  Wirecard responded by saying the KPMG had not uncovered evidence of any accounting irregularities or fraud and declined to restate any of its past financial reports.

This week the company’s independent auditors said over $2 billion in cash cannot be accounted for in the company’s statements. Wirecard delayed its financial reporting scheduled for June 18 and now its CEO has resigned. This afternoon, the company issued a brief statement saying, “Wirecard AG can confirm that the company is in constructive discussions with its lending banks with regard to the continuation of the credit lines and the further business relationship.” 

The Miami Herald is reporting that Royal Caribbean Cruises said that crew paid was not in jeopardy and that the cruise line only used the company for limited services. However, crew members, many of whom have been furloughed without pay, have been left wondering if the monies they have in the Wirecard accounts is in jeopardy.

Crew working aboard Royal Caribbean’s ships in non-essential functions, such as the hotel department, food service, and entertainment, were largely furloughed in May with limited or no additional pay while the company worked to make arrangements to return crew members home.  

Royal Caribbean has been reporting that the majority of its crew has now been repatriated after its cruise ships were sent to Europe, the Mediterranean, India, the Philippines, and other destinations to provide transportation home for the crew members.   

It is unclear beyond Royal Caribbean if any other shipping companies might have been using the Wirecard systems for payment processing or if any past passengers might have had any monies in Wirecard accounts.

The investigations into Wirecard are continuing. It will likely require additional time and the intervention of financial regulators to understand the full scope of the issues, the potential improprieties, and the impact on the unfortunate seafarers.