◼ FINANCE Bloomberg Businessweek November 16, 2020
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THE BOTTOM LINE Once an avatar of Germany’s tech ambitions,
Wirecard today is in insolvency—with German regulators and top
auditing firms facing questions over their failure to spot the fraud.ensured only a handful of senior employees likely
knew that the numbers for processed transactions
were inflated. The 200 people in Wirecard’s pay-
ment and risk department could see details of trans-
actions and volumes only in the region where they
were based, and few had access to global data.
After the scandal finally broke, both Manila
banks, BPI and BDO, said the relationship pur-
ported by Wirecard and Marsalek was bogus and
unauthorized. A preliminary investigation by
BPI revealed that an unnamed “very junior offi-
cer” of the bank had signed one document, and
another signature looked like an outright forgery.
BDO said paperwork claiming the existence of a
Wirecard account with the bank was falsified. “As
far as we know, about a third of Wirecard’s reve-
nue and 80% of its profits were fraudulent,” says
Karthik Ramanna, a professor of business and pub-
lic policy at the University of Oxford. “A random
sample would detect that, and it’s outrageous that
EY didn’t.” EY has said the missing money was the
result of a complex criminal scheme so elaborate
that it long went undetected by any outsiders.
Investigators say a purchase in India four years
ago illustrates one way Marsalek and his entourage
managed to pocket roughly €1.5 billion. In 2016,
Wirecard agreed to pay a Mauritius fund called
EMIF 1A as much as €340 million, depending on
future profits, for Indian payment company Hermes
I-Tickets Private Ltd. EMIF had bought Hermes for
some $40 million just a few weeks earlier, generat-
ing a windfall for the fund. A suit by Hermes’s previ-
ous owners alleges that Marsalek and a friend were
behind EMIF, and that they walked away with a huge
profit after engineering the rapid resale.
Although Marsalek’s alliance with Braun was tight, it
wasn’t always smooth. Braun was notorious for his
short temper, and he didn’t mind berating Marsalek
in public. Marsalek often deliberately ignored
Braun’s calls on his mobile, and when he did pick
up, he stoically let the outbursts wash over him.
Braun kept his distance from employees, glid-
ing in and out of the underground parking garage
in his chauffeured Maybach limousine before
being whisked into an elevator and up to his office.
Marsalek was more gregarious. He staged boozy
parties in a suite at the five-star Munich Mandarin
Oriental hotel, where he’d theatrically saber open
bottles of Champagne, cheered on by friends and
business partners.
And Marsalek spent much of his time not at
Wirecard’s headquarters, but at a palatial residence
a 15-minute drive away on tony Prinzregentenstrasse.
The neoclassical mansion that rents for €50,000 a
month has 20-plus rooms over four floors connected
via a glass elevator. The salon was furnished with
sofas and armchairs from Italian luxury brand
Giorgetti. The two kitchens bulged with rows of
cognac, vodka, and gin bottles. In the basement,
Marsalek had two intensive-care beds and supplies
of medication for the Covid-19 pandemic.
The conference room next to Marsalek’s office
in the villa was kitted out with noise-absorbing wall
coverings and an antenna directed at the Russian
consulate across the street—though the purpose
remains a mystery. There’s a box with a pair of duel-
ing pistols, sturdy boots and combat pants, and arti-
facts such as stone temple fragments, possibly from
the Syrian city of Palmyra, which Marsalek had
boasted of visiting with Russian soldiers the day after
it was liberated from the Islamic State group in 2016.
A five-minute drive away, at a boutique on posh
Maximilianstrasse, a tailor has a cashmere coat lined
in exotic fur that Marsalek ordered. The executive
paid a €20,000 down payment in cash, but he never
retrieved the garment or settled the final bill. It’s still
waiting, though he’ll have to plop down the money
he owes—and decide to come in from the cold.
�Eyk Henning and Benedikt Kammel, with Karin
Matussek, Birgit Jennen, Cecilia Yap, and Sarah Syed€2001000
1/2010 11/2020▼ Wirecard’s share
price● People with money can cash in on bargains.
Many struggling non-White Americans can’tLow Rates Widen
The Economic Gap
Times are good for most U.S. homeowners, as
record low interest rates spur a surge in refinanc-
ings and help lift home prices. They’re not so great
for Donnell Williams’s clients, most of whom are
Black and don’t have the financial resources to
compete with the well-heeled New York City buy-
ers bidding up prices in his suburban northern
New Jersey territory. “We’re losing ground,” says
Williams, president of the National Association of
Real Estate Brokers, an industry association that
promotes Black homeownership.
It’s another scene from the K-shaped economic
recovery. Across America, cheap credit—for