Is it Possible to Predict Wirecard’s Demise by Surveillance Tools

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Could Surveillance Tools have Predicted
Wirecards Demise?
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Introduction
Thats a question that deserves looking into a
little further. First, to establish some context,
Wirecard AG was a German FinTech darling
innovating financial payment and processing along
with related services. The keyword here is was,
as in past-tense and no longer is. In September
2018, their valuation approached 25 Billion.
Less than 18 months later, they lost 98 of their
value and are now defunct.
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According to Bloomberg and numerous reputable
media sources, Wirecard is under investigation
for insider trading and other nefarious acts of
fiscal regulatory non-compliance. And its
unclear how many others have profited by placing
short positions to bet against the stock. On June
10, 2020, eight days before Wirecards stock
crashed, an anonymous tipster posted in an online
forum that an EY auditor couldnt account for
missing funds more specifically, missing
billions. Both the German media outlet
Handelsblatt, and BaFin, a German regulatory
watchdog, have confirmed that the now-deleted
post was legitimate.
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So, the question becomes, could eComms
surveillance tools have predicted the fallen
FinTech giants demise and alerted authorities in
time to freeze its assets?
THERE ARE ALWAYS SIGNS
Sophisticated eComms monitoring solutions are
necessary to interpret nuance, emojis and the
like from conversations, but close scrutiny by
watchdogs also proves to be effective. In
essence, thats what Compliance Officers do.
However, at least in the case of Wirecard, a
savvy blogger (memyselfandi007) has been hot on
the tail of the fraudsters back since 2008 when
the company launched. Posts by this blogger
regarding Wirecard have been viewed more than 18
million times.
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Heres where it gets really interesting. The
bloggers posts have been heavily redacted and,
in some cases, removed not by the blogger, but
by Wirecard. The fallen FinTech also filed
numerous lawsuits against this blogger in the
years leading up to the current debacle. Did
BaFin, the EBA, SEC and other regulatory agencies
miss this or dismiss it?
The Financial Times reported an elaborate
book-cooking scheme of an Asian-Pacific
accounting firm with Wirecard as one of its
clients back in February 2019. Shortly after the
whistle-blowers went public, the Singapore Police
raided Wirecards local office. The German
Minister of Finance sounded the alarm to the
German Chancellery in August 2019 but its
unclear if or how that warning was acted upon.
Apparently, were not the only ones asking this
question as The Grand Coalition is now actively
in pursuit of the truth.
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THE AFTERMATH OF ALLEGED MARKET ABUSE
Alleged market abuse is the key descriptor here.
Even so, suspicions of market abuse dont pass
without making a few ripples. In the case of
Wirecard, which has unceremoniously been dubbed,
The German Enron, its not a matter of ripples
its a matter of waves.
Marcus Braun, former CEO, resigned in shame and
has stated that he and Wirecard are victims of
fraud. Jan Marsalek, a former Board member of
Wirecard, has fled Germany, likely with his solid
gold credit card for which he was renowned. He
was spotted in the Philippines and then in China.
Some reports indicate that he is currently in
Moscow whereas other reports cite that he is
under the watchful eye of Russias military
secret service, the GRU. Why did he flee, and can
the regulatory authorities gain access to the
eComms of these former leaders whose behaviors
are now suspect?
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HOW DID WIRECARD COOK THE BOOKS?
The suspected scheme isnt very elegant, but
effectiveness and elegance arent always linearly
equated. A 33-year old Indonesian accountant
operated a firm in Singapore and had notable
clients like Wirecard. He managed only a handful
of employees but, according to testimony that has
since emerged, he artfully taught them how to
cook the books. The practice is called
round-tripping which involves moving a lump sum
of cash from the German bank owned by Wirecard to
a dormant subsidiary in Hong Kong.
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Apparently, the practice had been ongoing for
years (potentially more than a decade) and
Wirecards treasurer and head of accounting
supposedly knew about it. BaFin and Wirecard were
known to each other previously, BaFin launched
investigations into suspected market abuse by
Wirecard in 2008, 2015 and in 2016. The 2019
investigation revealed bombshells like forgery,
falsification of accounts, cheating,
criminal breach and money laundering.
Wirecard was paying Right Momentum Consulting
millions of Euros each year and sending the money
to an address in Kuala Lumpur which could not be
traced. Marsalek was appointed to an accounting
practices review committee commissioned
internally by Wirecards CFO in a classic,
fox-watching-the-henhouse scenario.
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