Hundreds of Wirecard millions disappeared in Asia and Mauritius

In the Wirecard scandal, there are many indications of large-scale fraud – questionable loans, a letterbox company in the Indian Ocean and a fugitive former CEO

Vienna/Munich – Hear nothing, see nothing, say nothing – this is a common code among many prisoners. If lawbreakers serving their sentence are guided by the Japanese proverb, it is not surprising. If the management of a DAX-listed company such as Wirecard does, however, it is. The scandal surrounding the insolvent payment service provider from Aschheim near Munich is taking on undreamt-of dimensions and indications of a gigantic fraud are mounting. The missing 1.9 billion euros on the balance sheet, which Wirecard stumbled upon, probably never existed. Away from that, however, a lot of real money flowed under dubious circumstances.

As research by the Süddeutsche Zeitung (SZ), WDR and NDR shows, hundreds of millions of euros may have disappeared via a letterbox company on Mauritius and questionable loans to Asian companies. The whereabouts of the money are unclear. This is the result of a previously unpublished special report by KPMG’s auditors, which the media were able to view. 232 pages full of inconsistencies, it says.

Auditors suspect ex-Wirecard board member Jan Marsalek of having enriched himself via a mailbox company in the Indian Ocean.

Money lost in the ocean

One deal from 2015 stands out. Wirecard wants to conquer the Indian market and take over the payment business of the Great India Retail Group. The project is called “Peacock”. But the people from Aschheim look through their fingers. For now. A mailbox company, located in the tax haven Mauritius, secures the Indian business by 35 million euros. Thereupon Wirecard buys the Indian company from the obscure fund called “EMIF 1A” – which has a share capital of 100 dollars – for 216 million euros plus 110 million euros profit participation.

In the end, Wirecard transferred “only” 315 million euros. According to SZ, however, the deal was so non-transparent that even KPMG never found out where the money ended up. Former board member Jan Marsalek stated in the minutes that it was not customary to investigate the people behind the deal. Burkhard Ley, then Chief Financial Officer, said that no one had ever asked who was responsible – hear nothing, see nothing, say nothing.

Although it was suspected that Marsalek himself was behind the fund, this could not be proven. An arrest warrant was issued against him, as was ex-company boss Markus Braun. Braun turned himself in and was released on a million-dollar bail. Marsalek is on the run.

Fraud investigations

In 2018, the group is said to have enabled two Asian companies to take out loans of 250 million euros without requiring collateral. Another company is said to have received 115 million. And although this company had not paid interest in the millions, the board of directors approved an extension of the loan. According to KPMG, the head of these companies was a former Wirecard manager. Wirecard had passed on its own customers to these companies, it is said. However, it remains unclear which customers are involved. Wirecard did not comment on these findings.

As a result of all this, it is no longer auditors who ask the questions, but the public prosecutor’s office. Until now, the Group was suspected of having falsified balance sheets and manipulated the stock market price. In the near future, investigations into fraud are also likely to be added. On Wednesday, the Munich public prosecutor’s office carried out a raid on the group for the second time within a short time.

Softbank distances itself from Wirecard

The Japanese technology group Softbank hears and sees these processes and also has something to say about them. According to the Wall Street Journal, the Japanese apparently want to terminate the partnership, which is basically set to run for five years. Wirecard is thus losing the most important partner for major future projects. The deal caused a great stir last year. Softbank had indirectly invested around one billion dollars in Wirecard via a convertible bond.

Contrary to what the name suggests, Softbank is not a bank, but a holding company which, under the direction of its boss Matayoshi Son, invests in start-ups and future technologies around the globe. Softbank wanted to help Wirecard to enter the Japanese and South Korean markets, among others. Moreover, five Wirecard AG subsidiaries filed for insolvency on Thursday. In legal circles, damage in the billions is expected to result from the peacock having lost its feathers. (Andreas Danzer, July 2, 2020)

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