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Germany’s Biggest Corporate Scandal

In this article, The Vastavik explores the fall of Wirecard, and the role played by former COO and current fugitive, Jan Marsalek.

“There are clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception,” said EY Germany

Wirecard was the pride of Germany’s tech industry. It was a symbol of the information age being ushered into Germany, to rival the tech giants in Silicon Valley. Up until a decade ago, Germans weren’t really seen as a major player in the tech industry, although they were undoubtedly at the apex of the automobile and engineering industry. Wirecard was seen as an absolute sure success in the corridors of Berlins corporate offices, combining characteristic German efficiency with new-age technology and algorithms.

For over a decade, Ernst and Young, a German accounting firm, have been auditing and signing off on Wirecards financial books. Despite worries from other financial analysts, EY signed off on troubling books till June of 2020 when they refused to sign off on the fintech companies 2019 records, accusing Wirecard of “an elaborate and sophisticated fraud”

EY’s statement set off a chain reaction of events, with Wirecard soon admitting it was unable to locate almost 2 billion euros in cash, closely followed by the arrest of Wirecard CEO Markus Braun. In the same month, COO Jan Marsalek was also implicated heavily in the crime and disappeared. His whereabouts are still unknown as of early January 2021, despite a worldwide manhunt, and his name being added to Interpols most wanted list.

Attached, is an image of Marsaleks passport, circulated to help airport authorities flag him if he attempted to travel by flight.

Many respected individuals of Germanys financial community have come out against Ernst and Young for allowing this fraud for over a decade.

“It is frightening how long Wirecard AG was able to operate without being objected to by the auditors,” Wolfgang Schirp, a lawyer who has filed suit against EY on behalf of investors, said in a statement. Schirp’s claim, which was filed this month before the fraud was disclosed, alleges that EY failed to flag that 1 billion euros in assets were improperly booked in 2018” reported Bloomberg.

Wirecard was suspected to be involved in some shady finances for years, but every time allegations got serious, Wirecard would show a clean bill of health from auditors and preach unprecedented forecasts. On June 22nd however, Wirecard admitted that the “missing 2 billion” never existed.

Once the scandal came out, CEO Markus Braun was arrested and will likely remain in custody while German authorities investigate with characteristic German diligence. Jan Marsalek also remains a fugitive. Marsaleks lawyer declined to comment on the situation.

A few days after his disappearance, Marsalek texted someone through Telegram and said he hadn’t “decided yet whether to return tomorrow or stay here with my friends.” There is speculation about where “here” refers to, and authorities have questioned all of Marsaleks known friends and family.

Months after his disappearance, evidence came to light to suggest that Marsalek had been working with atleast one foreign intelligence agency and perhaps even more. German lawmaker Patrick Sensburg, who sits on the parliamentary intelligence oversight committee, told business daily Handelsblatt that Marsalek may have worked for several spy agencies simultaneously. He didn't elaborate.

This possible connection with Austrian Intelligence complicates the search for Marsalek. With access to covert resources, Marsalek might not ever resurface again. Other theories suggest he may have been killed in order to ensure his connection to the Austrian BVT remains a secret.

Once the Wirecard fraud came to public attention, many people and companies across Europe were either implicated directly or atleast linked to the fraud. Most people immediately contacted their lawyers, while others like Anastassia Lauterbach, Director of EasyJet, were forced to quit their jobs over the accusations.

Wirecards collapse served as a wake up call due to the failure of auditors and accountants and even financial regulators across the world, especially European regulators who worked extensively with Wirecard and its executives. Many say that German and European regulators should be held responsible for the extreme lack of oversight and possibly intentional ignorance of what now seems to be obviously cooked books.

In the UK, the Financial Conduct Authority took action by suspending Wirecards operations in the country, creating nation wide panic among businesses and clients who were suddenly unable to access their own money for days.

The collapse of one of Europes leading fintech companies highlighted the obvious lack of oversight by auditors and different regulatory authorities but also brought forward a point that many have been demanding for years. A more broad and comprehensive set of regulations for fintech companies to accommodate growing technological and algorithmical advancements as well as data security.


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