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Wirecard CEO quits as search for missing $2.1-billion hits dead end in Asia – The Globe and Mail

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Markus Braun, CEO of scandal-hit German payments provider Wirecard resigned, as it was announced Friday.

CHRISTOF STACHE/AFP/Getty Images

Wirecard’s chief executive quit on Friday as the German payments firm’s search for $2.1 billion of missing cash hit a dead end in the Philippines and it scrambled to secure a financial lifeline from its banks.

Markus Braun, who built Wirecard into one of the hottest financial technology investments in Europe before questions over accounting saw it crash in value, leaves the firm facing a looming cash crunch and mired in allegations of fraud.

Braun resigned just hours after releasing a video blaming Wirecard’s problems on fraud, saying he accepted “responsibility for all business transactions lies with the CEO.”

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Wirecard, which has seen nearly €10 billion ($11.2 billion) wiped off its market value in just two days, had been a welcome technology success story in Germany, a country better known for its prowess in heavy industry.

But it has been under scrutiny since a whistleblower alleged that it owed its success in part to a web of sham transactions, a scandal that some fear will now damage Germany’s reputation.

Wirecard said in a statement that James Freis, a former compliance officer at Germany’s stock exchange, had been appointed as the firm’s interim CEO.

It is holding emergency talks with banks to secure a financial lifeline, three people with knowledge of the matter said, after its auditor, Ernst & Young, would not sign off on its accounts.

On Thursday, Wirecard warned that loans of roughly €2 billion ($2.24 billion) could be terminated if its annual report is not published on Friday and it has until evening to strike a deal with the banks, the sources told Reuters.

Wirecard’s share price dropped by as much as 50% on Friday in a continuation of Thursday’s rout, with the stock hitting €20, a far cry from the €200 it was priced at when it joined Germany’s prestigious blue-chip Dax index in late 2018.

“Wirecard is a company that has caused serious damage to the credibility and trust of the Dax with international investors. This will have significant consequences for the image of the German capital market,” Carola Rinker, a German economist specializing in accountancy fraud, said.

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Wirecard’s shares tanked again on Friday after two Philippine banks, BPI and BDO, said it was not a client of theirs and alleged that documents had been falsified.

‘SPURIOUS’ DOCUMENT

Braun, who has aggressively defended Wirecard against allegations of accounting fraud, had earlier said that the firm could itself have been the victim, without giving details.

“Attempts by Wirecard to appear as the victim in the missing 1.9 billion euros have been undone within hours of Wirecard management’s video yesterday evening,” said Neil Campling at Mirabaud, the only analyst to have a price target of zero.

Ernst & Young had regularly approved Wirecard’s accounts in recent years, and its refusal to sign off for 2019 confirms failings found in an external probe by KPMG in April.

While Wirecard did not give any details of where the missing money is alleged to have gone, statements by the two Philippine banks denying any involvement spooked investors in the firm.

“The document claiming the existence of a Wirecard account with BDO is a falsified document and carries forged signatures of bank officers,” BDO said, adding that it had reported the matter to the Philippines’ central bank.

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BPI also said Wirecard was not a client, adding:

“Their external auditor presented to us a document that claimed that they are a client. We have determined that the document is spurious. We continue to investigate this matter,” BPI said in a statement.

The Wirecard scandal, which was extensively investigated by the Financial Times newspaper and has been the subject of several reports by so-called short sellers, has also damaged the standing of German financial regulator Bafin.

“Bafin looked on for far too long,” Fabio De Masi, a German lawmaker said, adding that the agency must be improved.

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Buffett’s Berkshire Ends Deal Drought With Dominion Bet – Yahoo Canada Finance

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Buffett’s Berkshire Ends Deal Drought With Dominion Bet

(Bloomberg) — Warren Buffett finally found his next crisis-era deal.

His Berkshire Hathaway Inc., which has stayed relatively quiet during the tumult of the coronavirus pandemic, broke its silence at the end of a holiday weekend with its biggest acquisition in more than four years. The agreement for Dominion Energy Inc.’s natural gas pipeline and storage assets signaled to the market that Buffett is willing to pounce despite his cautious tone in May about the pandemic, according to David Kass, a professor of finance at the University of Maryland’s Robert H. Smith School of Business.

“He’s willing to make investments now, of a fairly sizable amount,” Kass said. “It’s very positive that he’s sending a signal for the right deal at the right price, $10 billion or more, ‘We’re ready to go, we’re ready to invest.’”

Buffett, who has crafted Berkshire into a conglomerate valued at $434 billion, built his reputation as an investor able to swoop in during volatile markets to strike unique and complicated deals in past crises. After being stymied on the acquisition front during the recent bull market for stocks, Buffett still wasn’t striking any deals during the initial stages of the pandemic and even dumped his stakes in the major U.S. airlines.

His inability to make a major acquisition recently has drawn scrutiny from his critics who have argued that Buffett has lost his ability to pull off the game-changing transactions that helped vault Berkshire into the ranks of the most valuable U.S. public companies. Now, the deal to buy substantially all of Dominion Energy’s natural gas transmission and storage assets for $4 billion, along with the assumption of $5.7 billion in debt, shows that Buffett is willing to put his money to work, Kass said.

“We are very proud to be adding such a great portfolio of natural gas assets to our already strong energy business,” Buffett, who is chief executive officer and chairman of Omaha, Nebraska-based Berkshire Hathaway, said in a statement Sunday.

“I’m inspired to see that, given that he’s bearish, he’s still willing to make acquisitions where he thinks it makes sense and where it meets Berkshire’s hurdle points,” said Darren Pollock, a portfolio manager at Cheviot Value Management, which invests in Berkshire shares.

Buffett has considered its energy business one of the “lead dogs” of Berkshire’s non-insurance operations alongside its railroad. Berkshire’s purchase expands its hold in the sector, adding more infrastructure to handle natural gas to its already sprawling energy operations across states such as Nevada and Iowa. Berkshire also struck the deal at a low point in the market. Natural gas futures in the U.S. dropped last month to their lowest point in 25 years and have recovered just slightly since then.

“This looks like confirmation that commodities like energy are undervalued,” Bill Smead, chief investment officer at Smead Capital Management, which owns Berkshire shares, said in an emailed comment. “At the bottom, assets move from weak hands to strong hands.”

Berkshire is digging deeper into a business that’s been facing increasing scrutiny amid the push for energy companies to shift away from fossil fuels. In its own statement on Sunday, Dominion Energy cited its target to reach net-zero emissions by 2050.

The deal also highlights the work of one of Buffett’s key deputies, Greg Abel, who led the energy business for years and is now chairman of Berkshire Hathaway Energy alongside his role as Berkshire’s vice chairman for all non-insurance businesses. Abel has gained a reputation as a key dealmaker for Berkshire with the 2013 purchase of NV Energy and even the battle to buy Oncor Electric Delivery Co., which didn’t ultimately come together. Abel is viewed as a potential successor to Buffett, 89.

The Dominion deal is set to be Berkshire’s largest acquisition ranked by enterprise value since its purchase of Precision Castparts Corp. in 2016. Still, Buffett ended the first quarter with a record $137 billion on hand and has been hankering for an “elephant-sized acquisition” to put a chunk of his cash pile to work. The Dominion agreement’s total enterprise value would account for about 7% of that total.

“It’s not something that’s going to move the needle from a balance sheet standpoint, but it’ll produce several hundred million dollars a year in net income to Berkshire,” said Cheviot’s Pollock. “That’s no paltry sum. That adds up over time.”

(Updates with shareholder comment in seventh paragraph.)

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Alberta to give out second round of 20 million masks through fast food restaurants – Edmonton Journal

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Alberta will distribute another 20 million non-medical masks, mostly through drive-thru restaurants, beginning July 13.

As with the first round distributed in June, Albertans can pick up the masks at McDonald’s, A&W and Tim Hortons.

The province recommends the wearing of a mask to help prevent the spread of COVID-19 when two metres of physical distancing is not possible.

“The first phase of free mask distribution in Alberta was a huge success and the response was an incredible show of community support,” Health Minister Tyler Shandro said in a Sunday news release.

Masks will also be distributed to municipalities without easy access to a restaurant, First Nations and Metis settlements, long-term care and senior’s centres, women’s shelters, homeless shelters and addiction treatment facilities.

Convenience-store chain 7-Eleven will assist with the distribution of masks to transit services throughout Alberta.

Last month, four free masks could be picked up at one of 600 drive-thrus, using the honour system. Shandro said 95 per cent of people in the province live within 10 kilometers of one of these restaurants.

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Calgarians are making Stampede show go on

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BMO Kids’ Day Pancake Drive-thru

July 8 at Stampede Park, from 9 a.m. to 4 p.m.
Complimentary breakfast, provided by BMO
Advance registration at CalgaryStampede.com required.

Community Pancake Drive-thru

July 11 at Southcentre Mall from 9 a.m. to noon
Advance registration at CalgaryStampede.com required.

Stampede Food Truck Rally

A taste of the midway, from corn dogs to cotton candy.

July 6, Max Bell Centre, 2 to 8 p.m.
July 7, Max Bell Centre, 2 to 8 p.m.
July 8, Grey Eagle Casino, 2 to 8 p.m.
July 9, Shane Homes YMCA at Rocky Ridge, 2 to 8 p.m.
July 10, Spruce Meadows, 2 to 8 p.m.
July 11, Vivo, 2 to 8 p.m.
July 12, Grey Eagle Casino, 2 to 8 p.m.

Source: Calgary Stampede

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