Bloomberg Businessweek - USA (2020-11-16)

◼ FINANCE

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PHOTOGRAPH BY ANDREAS GEBERT FOR BLOOMBERG BUSINESSWEEK. DATA COMPILED BY BLOOMBERG

that processed payments in countries where

Wirecard held no license. The insolvency admin-

istrator sifting through what’s left of Wirecard

now says the profits booked from those vendors

were largely fictitious, and loans to the partners

enabled Marsalek to funnel money out of the com-

pany. Wirecard said some 300,000 merchants used

its platform in 2019, but the vast majority were tiny;

only about 200 generated annual transactions above

€100 million, and fewer than 20 cleared €1 billion.

Authorities now allege that the bulk of Wirecard’s

business came from bogus transactions with three

companies, orchestrated by a small cadre around

Marsalek. The insolvency lawyer’s report said that

without those fake sales, Wirecard wouldn’t have

beenabletoclaimit madea profit.

SuspicionsaboutWirecard’sassets—initiatedwith

investigationsbytheFinancialTimes—grewalong

withthecompany’sstatus.InFebruary,justa few

weeksbeforehisbarbecuebreakdown,Marsalek

madea triptothePhilippinestoprovetoincreas-

inglyskepticalauditorsandhisownsupervisory

boardthatWirecardcouldaccess€1.9billionit

claimedtoholdthere.Aftergreetingrepresentatives

fromaccountingfirmsEYandKPMGattheManila

airport,hetookthemona tourofBDOUnibankand

BankofthePhilippineIslands(BPI).There,Marsalek

andbankemployeesproduceddocumentsshowing

theexistenceofthefunds.

Theauditorshadn’tcometoestablishwhether

themoneywasreal.Theysimplywantedtoknow

whetherthesumshouldbeaccountedforasfree

cashorassomeless-liquidfinancialasset.Themath

matteredbecauseit helpedlendersdeterminehow

riskyit wastoextendcredittoWirecard.Thetrip

apparentlyhelpeddispelsomeoftheaccountants’

suspicions,thoughnotforlongasKPMGa month

latersaidit couldn’tverifylargepaymentsintosome

trustaccountsbypartnermerchants.

BackinMunichinmid-March,Marsalekwas

confrontedbyWirecard’snewchairman,Thomas

Eichelmann,who’dstarteddiggingintothecompa-

ny’saccountsaftertakingoverthejobinJanuary.

DemandingproofthattheManilamoneywasavail-

able,Eichelmannsuggestedthecompanytrans-

fer€100millionfromthetwoPhilippinebanksto

Germany.Withhisconcernsgrowing,he’dasked

KPMGtoconducta specialaudit,andaccountants

there—frettingthatsomethingwasseriouslyawry—

boostedtherequiredpaymentto€400million.

Marsalek frantically engaged in circular

transactions, wiring money to Manila to book it

back to Germany in a desperate attempt to prove

its existence, according to a person familiar with

the details. But he couldn’t come up with the entire

amount. Early on June  18, Marsalek sent a text

message to an acquaintance that Wirecard was about

to postpone its annual report because EY had indica-

tions that the €1.9 billion on the balance sheet was

spurious—a revelation certain to set off a cataclysmic

chain reaction. Still, Marsalek didn’t seem alarmed,

telling his friend that he was continuing talks with

the Filipino bank. Wirecard might even retract the

delay that same day, he texted, though he admitted

a U-turn could make the company a “national joke.”

Any hope he would reverse his fortunes and

those of Wirecard were crushed later that day. Braun

summoned Marsalek into his office, and the two sat

side by side at a long conference table, with Braun

doing the talking, according to an employee who

briefly entered the room. If Marsalek tried to save

his job, he was unsuccessful. Shortly after 6 p.m.,

Wirecard sent out a terse statement saying the COO

had been suspended. Marsalek texted a friend that

he would drop by that weekend in Starnberg, an

affluent lakeside enclave south of Munich. He later

canceled, saying he’d gone back home to Austria,

and he’s been on the run since.

The wheels swiftly came off the Wirecard

express. On June 22, the company stunned investors

by disclosing “a prevailing likelihood” the €1.9 bil-

lion didn’t exist. The stock quickly lost 99% of its

value, and within a week Wirecard said it was filing

for insolvency. Never before had a company listed

on the DAX gone bust.

Authorities have interviewed more than

100 potential witnesses in an effort to reconstruct

the activities of Marsalek and his team and to under-

stand who inside the company might have been

complicit. Among the questions is whether Wirecard

had ever been legitimate—or if it was built on crim-

inal intent from the start. The company’s structure

▲ The €50,000-

a-month villa that

Marsalek rented on

Prinzregentenstrasse

in Munich