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  • Writer's pictureLiviu Cotora

WIRECARD: The risk in the intangible value chain


We are writing thousands of pages on the NON-FINANCIAL Reporting and how we “certify” almost every Company with the many abbreviations : ethic, eco, green, resilience, durability, and finally well accepted ESG (environment, social, governance), but the non-financial Intangible Assets are not based on evidences, only declarative fulfilled cases in hundreds of lines spread on tens of pages.

Imagine that we treat Tangible Assets the same way and we don’t consider the expense receipt, like a posting in the Accounting system, and we declare that our expense was “moderate “or “insignificant”.

How good will be our financial managing without “proofs”, how many different words do we need to qualify “something”, and how much the business context will change this appreciation, how realistic is a Reporting system based on this qualifier?

Management thinker Peter Drucker said “you can't manage what you can't measure.”

If we don’t measure the Intangible Asset Governance, we will not manage Governance.

The value contributions related to the Governance must be identified for each Company, depending of its activity, and send them to the Business Value creation Centers, along the Business Process lines from every and each Company Value Center.

The Value Contribution can be positive when the contribution, the “proofs” of the Intangible Asset, is growing the Company Market Value, or can be negative when the contribution is a risk to lose Company Market Value.

The Company inside value market will be organized to give access to the audit, experts, control authorities, to have a validation role on this intangible value transactions regarding the intangible asset GOVERNANCE.

The Intangible Values transactions will be readable, auditable and each one will have a validated value based on a measurement unit, equivalent with the value positive contribution or negative value of the company value destruction.

Positive or negative value contributions are obtained based on the parties’s Fair negotiation inside the Company Intangible Value Market, without hierarchy and oppressive wish. The whistle-blower will be anonymous, and the expert, auditors, institutional checker can be time by time like “contributions - receiver value center”.

This inside Company Intangible Values Market will be the “Warrantor”, that anonymous whistle-blower can from inside of his activity prevent the bad Governance act like: corruption, fraud, falsification, non-conformities with the regulations, sexist attitude, ...

The Intangible Value Market Journal from the “contributors & receivers” value centers, will be the irrefutable probe and the trace of the Racine of the incident. Auditors will like to be in charge of recorded facts, values, and no investigation to jeopardise their customer partnership.

Stock Exchange and regulations body will be pleased to act in a total discretion with digital presence in the Company Intangible Values Market.

Matthew Earl the whistle-blower in WIRECARD case tried from 2016 to send “value contribution”, negative value linked to Risk, and no “value centers” was in place, able or willing to receive this Governance “prove”, but the company was a star of the stock exchange.

Many employees from many different WIRECARD subsidiaries could send this negative value contributions earlier, save the financial disaster, reputation and millions of euro in investigations.

Instead of this valuable Governance model, ESG declarative Reporting, so much promoted by so many stakeholders and institutions, couldn’t detect anything.

WIRECARD is now presenting, the negative Value Chain, with negative value exchanges in between the Partners.

What is this “negative value exchange”? is risk value increasing Company liabilities, destroying Company Market Value (the business model of short selling).

Negative Value contributions are: Corruption, subordination of the different authorities, falsification, manipulation of the accounting evidences...

The real contractual value chain can be perfect but the Intangible Value Chain was hidden, and the subordination power of the invisible value centers of this negative value chain was not auditable.

Why the stakeholders are cashing the imminent risk when they know it? Because the Negative Intangible Value Chain is built on subordination, blackjack on revenues, fear for reputation, fear for the financial penalty, fear to lose the bonus.

Can the Governance continue the negative value chain? for short time, but not to long, the accumulated risk will explode and destroy the Company, like Enron or WIRECARD.

I know the same story of another DAX star high-tech in this dangerous Negative Intangible Value Chain position, hide from his non-financial Reporting the many years long court actions, aggressive and violent justice subordination acts, intimidation and money power-wall in EU new-member countries with weak legal system.

Why the stakeholders don’t act? they act in long time after or never, they doubt, they fear the financial interest. Why the Company inside Intangible Values Market is a better solution?

First the Intangible Value Market wasn’t built specially for this reason and the millions of transactions are dedicated to evaluate the Intangible Assets Values and creation cycles.

Next argument is that the “Company floors” are much easier to disseminate irregular facts and validate them between colleagues. Most of the irregularities are issued by singular or small group of Humans with pecuniary interest like bonus, upgraded position...Few cases when the Board takes a decision like a criminal act, even more in the new regulatory mechanism.

Once the criminal act admitted the Real Governance must act, and separate the act and incriminated person from the Company protection, is hard but this save the Company Value and stakeholders interest, even if is the founder.

The Company Intangible Value Market is the Intangible Assets Accounting system and all the “intangible transactions posting are register, is a transparent non financial Reporting regarding all the Company business processes.

Integrating the Intangible part of the value creation activity, like an augmented part of the actual IAS, FASB rules, will make more Readable every tangible value transaction.

Readable, transparent, measurable, is good for the investor Trust, and puts Stockholders in the heart of the Company.

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