Wirecard boosted its cash reserves in 2017 by including money held in “trust accounts” used in its payments processing operations, raising fresh questions about the opacity and integrity of financial statements published by the German fintech.

Cash flow is a key metric of financial health and the fourfold rise in Wirecard’s share price since the start of 2017, which vaulted the group into Germany’s prestigious Dax 30 index, came alongside a marked improvement in its cash generation.

Wirecard’s substantial net cash balance has also offered reassurance to some this year, in the face of a criminal investigation in Singapore into allegations that members of its finance team based there forged contracts and invoices to fabricate sales and profits.

For instance, Sandeep Deshpande said in a September report for JPMorgan Cazenove that “Wirecard has been a target of accounting-related allegations over the past several years”, but highlighted as a strength its “strong free cash flow conversion and net-cash position”.

The German fintech is also undergoing a KPMG special audit, prompted after the Financial Times reported suspicions about Al Alam Solutions, a Dubai partner which appeared to have contributed half of Wirecard’s profits in 2016 and early 2017.

Internal Wirecard documents, seen by the FT, suggest Al Alam was also important to the group’s balance sheet, which held €1.45bn of cash and equivalents at the end of March 2017.

Correspondence indicates Al Alam was associated with €334m held in “trustee accounts” as of that date. It is not clear if that particular sum was included in Wirecard’s calculation of cash reserves; nevertheless other internal documents show an attempt to justify the general principle that money held in such accounts contributed to operating cash flow.

A trust account is sometimes used in payment processing to hold pooled money — for example on behalf of merchant customers.

Wirecard is an acquirer, a business which collects money from credit card issuers when a consumer pays for something with a card. But the group also used some “third-party acquirers” in its payment processing, a term staff repeatedly applied to Al Alam.

Stephan von Erffa, Wirecard’s deputy chief financial officer, received a summary accounting opinion on April 1 2017 which said “management believe that trust accounts held in third-party acquiring business is cash equivalent, part of operating cash flow and not restricted”.

The justification was sent by Edo Kurniawan, Wirecard’s former head of international reporting and a key suspect in the Singapore criminal probe. It indicates that such trust accounts held reserves, typically money due to merchants but held back for a period of time in case of refunds enforced by credit card issuers, known as “chargebacks”, and other fees.

Collins Ntim, professor of accounting at Southampton Business School, said a key test in determining if cash could be recognised on a balance sheet would be who controlled a trust account.

“Trusts are set up to ensure an equitable distribution to beneficiaries. The independent party is the trustee who could address any conflicts,” Professor Ntim said. It would depend on contract terms, he said, but ordinarily “to count the cash as cash and equivalents on the balance sheet, that would be aggressive accounting”.

Asked by the FT to identify the nominated trustees for Al Alam accounts, Wirecard said: “All funds are held with reputable financial institutions.”

It said: “Trust accounts are only used to segregate our own cash from the operating cash of partner acquirers. Such trust accounts are held in the name of Wirecard and the funds can be accessed at any time.” Wirecard also said judgments about cash were subject to detailed review in its audit process.

The group reported a €2.1bn net cash position at the end of June this year. In September it raised €1.4bn of new debt, judged investment grade by Moody’s, and intends to raise funds from consumers by paying an attractive interest rate on Wirecard Bank current accounts guaranteed by the European deposit protection scheme.

Al Alam operates from a small office in Dubai with almost no web presence. A former employee told the FT this year that Al Alam had six or seven staff, and was run by a Wirecard executive — a claim the German company has denied.

Wirecard said: “Al Alam is a payment technology services company providing connectivity to a number of local acquirers via switching and routing services.” Asked to identify an acquirer connected to Wirecard in such a way, the company suggested the FT contact Al Alam about “their partner relationships”. Al Alam, which did not respond to questions, has said it always acted legally.

In October, the FT published internal Wirecard financial reports that indicate it claimed to route billions of euros in payments for 34 clients through Al Alam in 2016 and 2017. Yet out of 34 client names listed in the documents, eight had ceased trading at the time business was attributed to them. A further 15 told the FT they had never heard of Al Alam, of which only four said they were clients of Wirecard in the period concerned.

The FT has asked Wirecard repeated questions about Al Alam since April. On Thursday, Wirecard said: “No ebitda [earnings before interest, tax, depreciation and amortisation] or revenue is generated by Al Alam.”

Wirecard has also said documents published by the FT are not authentic, that the FT’s analysis of them is flawed, and it expects to be exonerated by KPMG. It has said some Singapore staff may face criminal liability for their actions, but that the impact on group financial statements was minimal.

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