Wirecard: Gardaí investigate alleged €400m fraud at Irish arm

Garda bureau investigating whether escrow account ever actually existed

Gardaí are investigating an alleged €400 million fraud at electronic payments company Wirecard's Irish arm, the High Court heard on Monday.

The firm, which has its headquarters in Germany, reported in June that €1.9 billion was missing from its accounts, prompting an inquiry that led to the arrest of several group executives.

The High Court in Dublin yesterday confirmed the appointment of Ken Fennell and James Anderson of Deloitte as liquidators to Wirecard UK and Ireland Ltd, the German group's Irish-registered and based subsidiary. They were appointed as provisional liquidators on October 28th.

Mr Fennell and Mr Anderson submitted a report to the court, showing that the Garda National Economic Crime Bureau was investigating whether a Wirecard UK and Ireland escrow account holding up to €405.3 million actually existed.

The account was included in the company’s assets, but the liquidators stated that its value was zero.

Their report shows that the account was meant to have held more than €393 million, with a further €11.8 million due to be lodged to it. “The existence of these funds is under investigation,” Mr Fennell and Mr Anderson noted.

Wirecard report

Their submission shows that a report from Wirecard UK and Ireland Ltd itself to the Garda bureau sparked the investigation.

The company’s report to the Garda concluded that the escrow account never existed. It also stated that a €40 million loan, which the German parent instructed Wirecard UK and Ireland to advance to a business called Ruprecht in December 2019, was fraudulent.

According to the liquidators, the insolvency administrator, lawyer Michael Jaffé, appointed to Wirecard Group in Germany in August, has also questioned whether the cash in the escrow account ever existed.

Wirecard UK and Ireland’s directors resolved to ask the courts to appoint liquidators to the company once they realised these difficulties would leave it unable to pay its debts.

The questions raised over the €400 million account have effectively wiped out most of the Irish company’s current assets. It owes creditors €83 million, €77 million of which is due to other businesses in its group.

The report calculates that Wirecard UK and Ireland Ltd is likely to realise just €6.7 million of current assets originally valued at €527 million.

They estimate that the Irish company will only receive €1.3 million of €76.1 million owed to it by other Wirecard Group entities. Mr Fennell and Mr Anderson also say that the €40 million Ruprecht loan “is likely to be irrecoverable”.

Corporation tax

The parent group’s collapse has extinguished €29.4 million of goodwill attributed to Wirecard UK and Ireland, leaving fixed assets of just €4,000, the estimated resale value of the IT equipment in its Dublin office.

According to the liquidators’ report, “arising from the alleged fraud and overstating of company revenues” the company could be due a refund of €43 million in corporation tax that it has paid.

The liquidators have been discussing the possibility of getting this refund with the Irish company’s directors and its auditors, PKF O’Connor Leddy & Holmes.

They have also asked the parent group and Germany’s financial regulator, BaFin, to release €4.4 million from Wirecard UK and Ireland Ltd accounts held in Germany.

Wirecard UK and Ireland has two main sources of revenue. One is processing transactions for businesses that accept credit card payments when they sell goods or services. The other is providing services to companies that issue prepaid credit cards, such as Vodafone, Orange and Sisalpay.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas