On a Wire – Wirecard AG

(and will try not to get too unbalanced). There are many pieces/threads to this. Some aren't static, some are incomplete, and some remain hidden. (And despite my best efforts it may be excruciatingly boring to others.)

The this is: Wirecard AG, Financial Times, Skripal/OPCW, MI5/6, GU (previously GRU), Jan Marselek, and various other related public and private sector individuals and operations.
WWSW provides the most straight-forward and somewhat complete report on Wirecard AG, but a chronological summary may make it easier to understand.

Founded in 1999, it handled payment transactions for porn and gambling sites on the internet. Jan Marsalek, born in 1980, came to Wirecard as a 20-year-old school drop-out. He was hired because he was familiar with the early mobile phone technology WAP. Markus Braun, born in 1969, joined Wirecard as a management consultant from KPMG.

All the reports on Wirecard agree about its roots. Per Wikipedia:

The predecessor company of Wirecard regarding the IPO was InfoGenie AG based in Berlin, whose shares had been listed in the Neuer Markt stock market segment since October 2000. This company was active as an information service provider offering telephone advice hotlines on various topics.[9] When the shares became penny stocks following price losses, the stock exchange operator Deutsche Börse wanted to exclude InfoGenie from the Neuer Markt, which was prohibited by court in April 2002.[10] In mid-December 2004, an extraordinary general meeting of InfoGenie decided to transfer the non-listed Wire Card, whose core business was real-time payment processing on the Internet including risk assessment, to InfoGenie AG by way of a capital increase against investment in kind on 1 January 2005, and to rename InfoGenie to Wire Card. Thus, Wire Card became a stock corporation listed in the Prime Standard stock market segment through a reverse IPO.[11] In 2006, Wirecard was included in the TecDAX[12] and in September 2018 in the DAX.

2006 was the year the US banned payment processing of on-line gaming. That reportedly reduced Wirecard's revenues and more importantly profit margins because a much higher rate was charged for porn and gambling payment processing than for non-controversial purchases. However, it's possible that it only required Wirecard to better mask the payment processing as an intermediary between the porn/gaming sites and the billing credit cards – VISA, Mastercard, etc. Either way, it was at that point that Wirecard began expanding internationally.

May 2008 Wallstreet Online anonymous post:

- intransparent reporting (back then no payment volumes were reported, the structure of the report did not reflect the business, some cash flow items were reported in the wrong category etc., it was never clear what cash actually belonged to Wirecard and what was customer’s money)
-strange M&A activities toward year ends
-aggressive profit accounting (“too good to be true”)
-continuous capital raising despite reported profitability and “available cash”
involvement of the CEO and the former head of the supervisory board in a dubious company/bankruptcy (a bankrupt company called 10tacle)
-rumors that the company was “money laundering” Online gambling profits for US citizens
in summary, Wirecard looked like a very dubious, low quality organization. The original post contained the German expression “Bumsbude”….

More detailed but not significantly different from what pops up on financial message boards, much of which is gossip and fiction and ignored by the subject company and investors who do their own analysis.* However, it is illegal for a short seller to trash talk a company. What's extremely interesting in this instance is that the German Criminal Police tracked down this anonymous poster and investigated his/her activities. Cleared him/her but he/she refrained from posting after that. Does this suggest that way back in 2008, that Wirecard was being protected by high government officials? It was unusually aggressive in going after short sellers and negative financial reports.

Moving right along, more from WWSW. EY (formerly Ernst & Young) issued clean audit reports on Wirecard. And Wirecard was attracting some major investors. Alexander Darwall, of Devon Equity Management, began purchasing Wirecard stock by 2007 when he was at Jupiter Fund Management Plc. Aiken Asset Management made purchases by 2008. By 2020 BlackRock had more than 5% of Wirecard's stock. New customers were obtained but not of a stature similar to that of investors. Wirecard detractors and short-sellers mostly melted away for a period after 2009.

The Hacker (of course)

(Like Wirecard, I never heard of any of this.)

Back in July of last year [2015], the controversial government spying and hacking tool seller Hacking Team was hacked itself by an outside attacker. The breach made headlines worldwide, but no one knew much about the perpetrator or how he did it.
...Hacking Team is a Italian company that sells spyware and hacking services to police and intelligence agencies across the world. Through the years, researchers have documented several cases where Hacking Team's tools were used against journalists, dissidents, or activists.

What went unnoticed or unremarked upon in the hacker's release was:

Jan Marsalek, seems to have taken a meeting with the infamous Italian surveillance technology provider Hacking Team in 2013. At the time, Marsalek is described as an official representative of the government of Grenada, a small Caribbean island of around 100,000 people, in a letter that bears the letterhead of the Grenada government. The documents were included in a cache published after Hacking Team was hacked in 2015.

Did Marsalek obtain surveillance tools? Unknown. Grenada official admits that he met Marsalek, but denies any business dealings with him and claims that the letter is fraudulent.

[The Hacking Team was purchased by Memento Labs in 2019]

Wirecard moving on up

It bought or created a bank' the better to handle its crypto debit card business sector, particularly after Wavecrest faltered.

Important connections were being made and/or cemented. From WWSW:

Several high-ranking German and Austrian politicians, predominantly from the right-wing fringes of the political spectrum, were in close contact with Wirecard or were active as lobbyists for the corporation. //
Numerous high-ranking politicians, including Chancellor Angela Merkel (Christian Democratic Union, CDU) and Vice-Chancellor Olaf Scholz (Social Democratic Party, SPD), are also involved in the affair. As recently as September 2019, when reports of irregularities had been circulating at Wirecard for four years, Merkel had been advertising for the group on a trip to China.
As finance minister, Scholz is responsible for Bafin (Federal Financial Supervisory Authority), which had covered up Wirecard’s machinations for years. Although the Financial Times has repeatedly reported on opaque money flows and possible balance sheet forgeries at Wirecard since 2015, Bafin did not investigate the accusations. Instead, it issued a ban on short sales and filed criminal charges in 2019 against the FT journalists, whom it accused of manipulating the share price by negative reporting. Scholz’s state secretary, Jörg Kukies, a former banker at Goldman Sachs, met with Wirecard CEO Braun for confidential talks as late as November 2019.

In 2018 Forbes called Wirecard one of the most innovative tech companies. (Forbes probably no more understood the business of Wirecard than it had Enron.)

Beginning in 2015 FT reporters frequently raised issues about Wirecard and by 2019 heightened its scrutiny, raising serious accounting issues. EY delayed issuing the audited financial statements. April 2019, Softbank stepped in with a billion dollars to cover cash flow problems. KPMG replaced EY as Wirecard's auditor, but not to the benefit of Wirecard.

Wirecard crashed in June 2020. $2 billion is reportedly missing. Too soon to tell if it was embezzled or never existed. CEO Braun was arrested. Masalek disappeared. German lawmakers put Scholz on the hotseat. Hopefully only the first round for him and heat on others need to begin.

The Skripal/Novichok piece

After years of credible reporting – generally dismissed in real time – what possessed FT reporters to wrap it up with a connection to Russia/Putin on 9 July 2020?

A few people have now claimed that Masalek often bragged about having close ties to many government intelligence agencies, including GU (which always gets reported by its prior name GRU). If Masalek's braggadocio is true, it's unlikely that it was the only thing he bragged about. It's not even beyond the realm of possibilities that Wirecard moved around some cash for an intel agency and/or provided customer information to authorities. However, as Scholz and other German officials were protecting Wirecard, that would be the most likely culprit.

If, as FT claims, Masalek was in possession of the classified OPCW report on Wiltshire Novichok in 2018, why would he be waving it around for unidentified traders? What possible purpose would that serve Masalek? FT went a step further on this claiming that Maselek had claimed that he obtained it from GU, and also reported that the classified report confirms MI5/6/Met claims of Novichok from Russia.

FT declined to disclose when and from whom they obtained a copy of the classified report. And inadvertently let it slip that the cover sheet included a bar code which was subsequently identified as being the Austrian government copy and according to one Austrian publication the government is now on the hunt for who released it.

Super-sleuth Bellingcat (of course) “Marselek located in Belarus: Data Points to Russian intel links.”

The most obvious conclusion is that FT is either in on this ruse or was punked by Bellingcat working for MI5/6 and/or BND. When in the hotseat, blame it on Russia/Putin. No evidence or “date points” needed just pass along alleged claims by a shadowy figure such as Mifsud who has now been replaced by Marselek. As if he has been an unknown entity to German and probably Austrian officials and large investors for over a decade.

A whole lot of government VIPs, large business entities, wealthy investors are known to have had their fingers in the Wirecard house of cards for a long time. Yet, somehow without a trace, Russia is being dragged into this major financial fraud.

*Any financial analyst of any skill should have been able to draw similar conclusions about Wirecard if she/he analyzed the company and the financial statements over a number of years. Reached back as far as the documentation allowed. In my experience there is what I call a “spookiness” to the financial statements of companies engaged in financial fraud.

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mimi's picture

that the whole IT elite hacks itself into pieces and hopefully some rats eat the pieces and there is an end to its empire.

I have to say good bye.

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@mimi However, the real tech has been a positive. It's all the junk (mindless toys, porn, gambling, surveillance ops both public and private, etc) and the gazillion billionaires that the junk creates that is the blight. Billionaires that are allowed to avoid paying taxes and instead buy more market share and/or bankrupt preexisting smaller businesses. Absent being a well-regulated utility accessible to all, the internet has devolved into one giant marketplace that ordinary people appear to like very much. Beats me why anyone would waste time "following" quite limited narcissistic exhibitionists and use their smart phone to shop for hours every freaking day.

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@Marie
When people are locked down they need something to do. What? talk to each other? Discuss current events with their kids? Are you crazy? Much cooler to play 'hunt the Wumpus' or 'Where's waldo' or "follow" some brainless twit's ravings. Remember, this is the USA where TRUMP actually became a Presidential major party candidate.

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I've seen lots of changes. What doesn't change is people. Same old hairless apes.

@The Voice In the Wilderness were playing dumb games, etc.

Some older people learned all sorts of things to do in their free time. Read, cook, can, sew, garden, and projects that are generally put off. No-cost, social games (bridge, poker, scrabble, etc.) aren't as easy at the moment, but doesn't take that much thought on how to continue them.

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@Marie
I just don't understand people any more. They are incomprehensible. Last week the Chicago police shut down a open house party. It took them five hours and they cited over 700 people. I cannot imagine have 700 strangers wandering about my house even if their wasn't an epidemic going on.

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I've seen lots of changes. What doesn't change is people. Same old hairless apes.

@The Voice In the Wilderness Airbnb (iow rental) house party. Likely kids (immature brains) being copycat rebels because it's cool and might give them some good stuff to post to their Instragram account and earn them a few bucks.

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@Marie @Marie
They weren't clear. "I just have to look good, I don't have to be clear"

Memory is funny. I remember "When it's said and done we haven't told you a thing
We all know that Kraft is king". As "When it's said and done we haven't told you a Goddamn thing
We all know that crap is king" Freud and fuzzy car radio?

I'm smiling now because I remember the look of horror on my neighbor's face as I pulled my convertible into the driveway with the radio and my lungs belting out "White Rabbit". Still have the car. Lungs are gone. Afraid to check Wikipedia. I don't want to read that Grace Slick is dead.

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I've seen lots of changes. What doesn't change is people. Same old hairless apes.

@The Voice In the Wilderness some time ago. Now she paints. Kaukonen is still recording and touring.

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@The Voice In the Wilderness

"No, I haven't taken a test. Why the hell would I take a test?" Biden said during the interview, a full version of which will air Thursday. "Come on, man. That's like saying you, before you got on this program, you take a test where you're taking cocaine or not. What do you think? Huh? Are you a junkie?"

Guess he's never heard of employer skills and drugs tests. We're a test happy nation, except for when the subject knows he/she will fail. (Also going without comment, the results of Trump's cognitive test were not released to the public. Like his claimed genius IQ (probably more in the 115 range), he's skating on his claim of the results.

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@Marie
Probably the first time in his life that he ever set foot in a supermarket.

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I've seen lots of changes. What doesn't change is people. Same old hairless apes.

lotlizard's picture

@Marie  
25th Amendment to remove Trump on the grounds of alleged mental unfitness, and then look who they choose to jack-boot into the nomination.

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ggersh's picture

@Marie the masters of SV are an even more evil bunch. I for one
can't name a single SV billionaire worth a nickel when it comes
to being human not a single one.

If puters and tech were the cure all to all of societies needs then
why are at where we are at w/the world falling apart at the seams

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Buy a Bible don't read it and you'll be a Catholic
Buy a Bible read only what suits you and you'll be an Evangelical
Buy a Bible read it fully, analyze it, reason it and you will be
an Atheist

@ggersh Nothing inherent in a tool to solve problems or even being used constructively.

SV gazillionaires are the same breed as the nineteenth century robbers barons. They want more wealth, more power, and no taxes, low employee wages and benefits. Although I do think the robber barons actually had to do real labor and for an extended period of time before their bucks began rolling in.

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lotlizard's picture

@ggersh @ggersh  
Valiant enlightened libertarian capitalist industrialists who see themselves turning the SF Bay area, or even perhaps the entire West Coast after seceding from the U.S., into Galt’s Gulch and building a new world, if the pesky proles and pols would only stop getting in the way and just continue letting them do whatever they want.

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mimi's picture

@Marie @Marie
I used it, I tried to learn unix systems and saw tremendous opportunities in it. Built my own large web site. Mr Bezos taught me a lesson pretty fast, pretty nasty and from there on I watched what developed. Now we have a surveillance empire enabled by the IT terchnology and if you think that is a good thing, I have to disagree.

I am an IT resister, because they enable oppression, manipulation and mislead the 99 percent and the IT technocrats play the role of a drug dealer, they sell their goods to make the population addicted. Just try to live without ever using a computer or mobile phone or tablet for more than a week. I bet assume you can't.

I wait for the day when I can overcome my own addiction. I live with two people who never learned to use a computer and they live without on and no smart phones. They constantly mock me as being addicted to google around on the internet and that I am negative about almost everything. NO fun. I always go gardening when they get on my nerves. Sigh.

May be it's just my personal living conditions I am in that makes me that much of an unquatified and bitter resister. I became a little news junkie gal as I ended up in one way or the other to work for the press (just couldn't get anything else in the US). For that reason I do appreciate the value of the all sorts of media outlets I can read on the internet. Just that it gets too much, too confusing, too enervating.

So, now I will read Joe's EB just to prove how much I appreciate the news ...:-)

I am sorry to have made a ranting OT comment to your essay. I really needed to vent. I try to read your essay again tomorrow.

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@mimi completely off-topic, but it's probably not worth the time and effort to explain it.

btw -- other than an aging laptop and shared internet service, I don't have any tech toys. Not even a TV. However, I'm not at all a resister. It's more that tech doesn't fascinate me even though I began doing some system analysis (and some coding along the way) in the late 1970s. Engaged in many fights with programmers that claimed what I proposed wasn't possible. Of course it was, but perhaps not in a mainframe environment or within their skill sets. Purchased my first PC in 1988, several years before I had a PC on my work desk. As I'm not a visual person, hated the Apple PC with all those stupid icons. It was only after lots of content had been loaded onto the internet and search engines came into existence that it became a usable tool for me. (Instant access to annual and quarterly SEC filings made analysing corporate financial statements easier.) Blogging captured my fancy and I like Youtube. What I resist is on-line purchasing. Amazon hasn't gotten a penny from me and I found it very discouraging in its early years that to save a buck or two, so many people rejected their local booksellers in favor of Amazon.

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Former Wirecard partner dies in the Philippines (Link is just one of many sources reporting this claim.)

This "partner," Christopher Bauer, operated a Philippine based payment processor named Payeasy. (And on the side Froehlich Tours, a bus and coach rental business.) Philippine financial authorities put Payeasy under investigation in late June 2020. Bauer's widow has claimed that he died on 27 July. Philippine authorities are investigating the veracity of his reported death for two very good reasons.

First, Wirecard had claimed that it had $2 billion in two Filipino banks. The two banks denied any such deposits and any business relationship with Wirecard; that was easily established as true.

Second, when Marsalek first went missing, Philippine immigration records indicated that he had entered the country and shortly thereafter boarded a flight for China. No such flight existed on that day. Authorities quickly established that an immigration officer has falsified the record and Marsalek had not entered the country in June. (The officer has been arrested.)

Equally interesting is that Baucus made an appearance in FT - Wirecard - 14 Oct 2019 report. The FT report that should have led financial regulators in several countries to move in on Wildcard and its partners.

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