Wirecard

» see wirecard.com as it lived, on the wayback machine

~ the obituary ~

wirecard sat in the part of business news i skimmed as a computer engineer, not the part i had money in. bavarian payment processors were not on my morning reading list even during the years when the ft investigation was live. i knew the shape of the story from a distance, mostly through techmeme headlines: german fintech on the dax, missing money in the philippines. that was about all i had until june 2020.

the missing money was €1.9 billion. really though, that was the number ey stopped being willing to sign off on in mid-june 2020, and once that number went public the rest of it fell apart inside a week. the company had claimed the cash was held in escrow accounts at two philippine banks. bdo unibank and bpi both put out statements saying no such accounts existed and no such money had ever been on their books. by then, the entire third-party-acquiring business that made wirecard look profitable had been fiction for something like five years.

they filed insolvency on 25 june 2020 in the district court of munich. markus braun, the ceo who had run it since 2002 in a black turtleneck he seemed to think was doing a jobs impression, was arrested on 22 june. jan marsalek, the coo, was fired on 19 june. a few days later marsalek was on a private jet from bad voeslau outside vienna to minsk. he has not been publicly located since, though german and austrian intelligence both believe he crossed into russia and is likely a long-standing gru asset.

~ the case file ~

~ the ft investigation ~

this happened outside the parts of the internet i was reading closely, but dan mccrum at the financial times had been publishing pieces suggesting wirecard was cooked since around 2015. for some reason the story kept getting drowned out by wirecard-funded pr and by bafin, the german financial regulator, opening a criminal complaint against mccrum himself for suspected market manipulation. bafin actually banned short-selling on wirecard for two months in early 2019 to protect what it saw as a german success story from anglo-saxon speculators. that decision is going to be studied for a long time as a case of national-champion protection short-circuiting the normal disclosure feedback loop.

the ft was proven right on almost every specific in the summer of 2020. the third-party acquirers in the philippines and dubai either did not exist or were shell entities booking imaginary transactions. wirecard subsidiaries were funneling made-up revenue through those shells to prop up group financials. really though, the fraction of wirecard that was real was smaller than the fraction of enron that was real, and everyone had believed both for the same reason: the auditors kept signing.

~ what got buried with it ~

wirecard had wrapped up a genuinely large piece of european payment plumbing over its two decades. it was the acquirer behind aldi's card terminals in a chunk of european countries. it processed for lufthansa and ikea alongside a lot of smaller retailers who had never asked who was moving their card volume behind the scenes. anyway, when insolvency hit, that plumbing had to be ported quickly. mastercard and visa gave the wirecard entity a limited license extension to avoid retailer chaos, deutsche bank and other european processors picked up the client book piece by piece.

~ the long tail ~

braun was convicted in munich on 4 december 2024 of fraud plus accounting manipulation, sentenced to a bit under four years. marsalek is still missing and still on europol's most-wanted list, most likely carrying a russian passport somewhere in the fsb orbit. really though, the ey germany audit practice took the biggest reputational hit of any big-four unit in a decade and is still shrinking from it. bafin got restructured and its head walked. the dax rules got rewritten so that a company under active regulatory scrutiny cannot be added to the index without a delay clause.

wirecard the brand died on 25 june 2020, but the case is going to be doing damage to german corporate credibility for another decade. the enron comparison held.

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