German prosecutors suspect Wirecard was looted before its spectacular collapse in June, with $1 billion funnelled to opaque partner companies even as the payments group fought allegations of accounting fraud.
According to people familiar with the probe and a document seen by the Financial Times, the embezzlement is suspected to have taken the form of unsecured loans, which Wirecard claimed were for advance payments to merchants processing card transactions through its partners in Asia.
These loans, made to partner companies in Dubai, Singapore and the Philippines, are a focus of the investigation against former chief executive Markus Braun and other senior ex-employees.
Munich-based Wirecard collapsed in June under €3.5 billion of debt in one of Germany’s largest postwar accounting frauds. Mr Braun and three other former executives were arrested by Munich prosecutors last month and are in custody. Mr Braun has denied any wrongdoing.
Money flowing out of the company accelerated in the months before the collapse. About €155 million appears to have been paid out over the first three months of 2020.
The bulk of the new loans extended in early 2020 went to Ocap – a Singapore-based company run by a former Wirecard executive whose wife at the time still worked in a senior position at the company. In the first quarter, Ocap received almost €100 million, giving it a total debt to Wirecard of €230 million, according to a document seen by the FT and two people familiar with the matter.
Ruprecht Services, another Singapore-based payments company, received a loan of €40 million in the first quarter, lifting its total outstanding debt to Wirecard to €53 million, according to a person familiar with the details. It suspended operations this week.
The additional lending to the two Singapore-based entities pushed Wirecard’s total loans to business partners in Asia to €870 million by March 2020, according to a document.
The additional lending came even as KPMG was conducting a special audit at Wirecard in an effort to confirm or refute allegations published in the FT about accounting fraud at the company.
Loans also went to Al Alam in Dubai, PayEasy in Manila and Senjo in Singapore – three companies that Wirecard has in the past said processed credit card payments on its behalf in jurisdictions where it did not have its own licences to operate.
This so-called “third-party acquiring business” was overseen by Wirecard’s former chief operating officer Jan Marsalek, a 40-year-old Austrian who has now disappeared.
In June, Wirecard admitted that “previous descriptions of the [third-party acquiring business] business by the company are not correct,” adding that it was examining “whether, in which manner and to what extent such business has actually been conducted for the benefit of the company”.
Christopher Bauer, a former Wirecard employee who went on to run PayEasy, was registered as dead late last month in the Philippines.
Oliver Bellenhaus, the former boss of a Dubai-based Wirecard subsidiary that dealt with Al Alam, reported himself to the police in Munich and is expected to serve as a witness for the prosecution at any future trial.
Singapore-based Ocap, the entity receiving loans just before Wirecard’s collapse, describes itself on its website as “a technology-driven provider of financing solutions for businesses” but until 2018 it described its business as “general wholesale trade of crude oil and other oil products”, according to KPMG’s special audit report, seen by the FT.
By late 2019 Ocap was in arrears in interest payments and a person familiar with the details said the loan was at risk of being classified as non-performing, but it was nonetheless extended by Wirecard’s management for another year.
In its report KPMG also pointed out that Ocap’s chief executive, Carlos-Dieter Häuser, was a senior manager at Wirecard until 2018. His wife, Brigitte Häuser-Axtner. was a director at Wirecard Asia Holding, the subsidiary making the loans to Ocap.
The ultimate beneficial owner of Ocap is unclear. According to the KPMG report, a company based on the Isle of Man named Delphinium Capital holds 100 per cent of Ocap.
Mr Häuser and Mr Marsalek told KPMG during the special audit that Swiss Life (Singapore) was the sole owner of Delphinium and "hence benefited from Ocap's business performance".
Swiss Life said its subsidiary in Singapore was holding the stake in Delphinium Capital as part of a “unit-linked life insurance product”, which was set up in 2017. The insurance company refused to disclose the ultimate beneficial owner, but said the owner had “no visible connection whatsoever to Wirecard or any connected companies”.
Swiss Life added that it was holding the asset “on a fiduciary basis and completely refrains from taking investment management decisions. In addition, Swiss Life does not benefit from the underlying asset performance at all.”
The insurance company added that it had been “in continued exchange with the relevant authorities in Singapore in relation with the contract in question” and declined to comment further.
Asked about specific details, Senjo said it denied that it or any of its portfolio companies "were in receipt of loans and other monies from Wirecard amounting to the separate sums of €63 million and €53 million. Senjo Group cannot comment on anything further due to confidentiality obligations."
Wirecard, its administrator, Mr Braun’s lawyer and Munich prosecutors declined to comment. Ocap, Al Alam, PayEasy, Ruprecht, Mr Häuser and Mrs Häuser-Axtner did not respond to requests for comment. – Copyright The Financial Times Limited 2020