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. 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. 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. In 2006, Wirecard was included in the TecDAX 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 , 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.