London-listed Network International, a payments company, has been accused of keeping investors in the dark after hiring a legal firm over concerns about links to disgraced payments processing company Wirecard, The Financial Times (FT) reports.
On Sunday (Dec. 20), Network revealed it had hired Freshfields Bruckhaus Deringer to help in the $288 million acquisition of African payments company DPO Group, which has connections to a former Wirecard executive.
Over the weekend, reports said the short-sellers that previously targeted Wirecard over its global scandal of missing funds were now looking into Network International over a subsidiary of DPO, AconaOnline, which is now in liquidation. FT reports that AconaOnline was purchased by DPO in 2013 by German businessman and Wirecard exec Dietmar Knochelmann and others. Knochelmann was convicted in Israel for crimes unrelated to DPO, FT writes, along with another individual who became a minority shareholder in DPO years before his conviction, and who now still holds 1.24 percent of the group.
In a statement, Network International said that the hiring of Freshfields Bruckhaus Deringer was intended to “take additional steps” to address the matter properly.
“We have not found any evidence to date of any wrongdoing by DPO or its management and can confirm that no Wirecard directors or executives, past or present at any time, have ever been involved in the management of DPO,” they said, according to FT.
Fraser Perring, founder of Viceroy Research, said he thought investors “should not have been kept in the dark” about the hiring of Freshfields, saying Network International “in our opinion should have notified the market of the investigation and importantly disclosed what elements/areas they were looking into,” FT reports.
“The major issue is not just the association with Wirecard but the costs, the margins and other items,” Perring said, according to FT.
The Wirecard scandal has gone in multiple directions since the company’s downfall earlier this year, with auditors EY caught up in the fray over their reported mismanaging of Wirecard’s audits for years, as well as Deutsche Bank head of accounting Andreas Loetscher having to step down over his own role at EY in years past.