In 2014 Dan McCrum, a bank analyst turned Financial Times journalist, was approached by an Australian hedge fund manager about a German company named Wirecard. The upstart firm was making waves in financial markets, and the unlikely upward trajectory of its shares had piqued the interest of a few short-sellers, who were digging up information on it, looking to place bets that its share price would fall.
Founded around the turn of this century as a way to process payments for porn and gambling websites, Wirecard had grown at great speed through multiple acquisitions, and flourished into a payments processor that was so big that at one point its CEO considered a takeover of Germany’s biggest lender, Deutsche Bank. The company had jumped from a market capitalisation of €300m in 2006, when it was first admitted to Germany’s TecDAX index, to €4.2bn in 2014, and analysts were optimistic about its future, even though few seemed to understand what it actually did.
But in spite of that optimism, the company had many of the hallmarks of deception: strange acquisitions of small firms in Asia; a chief executive who had lingered in his position for 12 years. It had been fined by Mastercard thanks to “miscoded” payments after it disguised money for gambling, which is heavily restricted in the US, as transactions for other services. McCrum’s first encounter with Wirecard’s chief executive, Markus Braun, was baffling. “We’re an internet company with a bank as a daughter,” Braun told the journalist.
Over the following years, McCrum pursued Wirecard in order to uncover a fraud so audacious it took the company’s auditor, Ernst & Young, years to believe it. His book, Money Men: A Hot Start-Up, a Billion-Dollar Fraud, a Fight for the Truth, is the result, detailing his determination to reveal the lies at the heart of the company, and his increasing bewilderment as it shrugged off his attempts to discover its secrets.
By the end of his pursuit, in 2020, McCrum, his sources and the colleagues who had helped him had been the victims of criminal lawsuits and had received oblique threats of violence by assorted private detectives and heavies. In one case, the violence was not just threatened: a hedge fund manager was punched in the side of the head while she was out walking her dog. At one point, McCrum almost lost his job.
But his reporting forced the company’s hand, causing it to engage the accounting organisation KPMG to perform an internal investigation. The publication of KPMG’s report in April 2020 led to an admission from Wirecard that €1.9bn it had claimed to have on its balance sheet “in all probability didn’t exist”.
McCrum also uncovered sheer incompetence among those running the company, particularly the two men at the very top. Alongside Braun, who seemingly lied to financial markets to buy himself more time, was the chief operating officer, Jan Marsalek, a fast-talking Austrian whose behaviour becomes increasingly bizarre as the tale unfolds. Marsalek allegedly profited to by millions from a particularly questionable Indian deal, and appeared to collude with Russia to plan a coup in Libya, having bragged about being in possession of the recipe for Novichok.
Despite such behaviour, by the time of the KPMG report, the company was valued at €15bn. Marsalek absconded to Belarus and is now on Europol’s most-wanted list; Braun was formally charged with fraud in March this year. Wirecard, whose shares plunged in the aftermath of the report, filed for insolvency in June 2020.
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The book tells the story of the dodgy dealings of the characters at Wirecard’s helm and the fraud that toppled it. It is swashbuckling, with McCrum chasing Wirecard’s cast of executives, whistleblowers and various hangers-on through the gleaming offices of Munich, over international borders and even to fake offices in Asia. But it also highlights the dull bureaucracy that makes up much of business journalism: the coffees at Caffè Nero with sources; the hours spent sifting through documents; the frustrating arguments with lawyers over whether a story has been sufficiently sourced to be printed.
McCrum’s account may read like a crime drama, but really it is a testament to the value of old-school reporting, and the editors who hire the people who do it. At a time when social media is increasingly causing facts to be regarded as beside the point, it is a reminder that the truth is always worth chasing.
Money Men: A Hot Start-Up, a Billion-Dollar Fraud, a Fight for the Truth
By Dan McCrum
Bantam Press, 352pp, £20
This article appears in the 13 Jul 2022 issue of the New Statesman, The Selfish Giant