Wirecard fraud ‘started more than a decade ago’
Wirecard’s fraud started more than a decade before the German payments company imploded, as some senior managers began establishing a network of offshore companies that were used to siphon off millions, a former top executive has told prosecutors.
Oliver Bellenhaus has informed Munich prosecutors that starting in 2010 he created an array of shell companies based in Hong Kong and the British Virgin Islands, according to people with knowledge of the matter.
He said he did so at the behest of Jan Marsalek, Wirecard’s former chief operating officer who is now on Interpol’s most wanted list, the people added.
Bellenhaus has told prosecutors that from 2011, he and Marsalek shifted corporate funds out of Wirecard and into bank accounts in the name of the shell companies, the people said. Some years later, Bellenhaus moved millions of these funds to a private foundation, they added.
A sports-car enthusiast, Bellenhaus ran a Wirecard unit at the heart of the company’s fraud from his apartment in Dubai’s Burj Khalifa. He was arrested in July on suspicion of aggravated fraud and has been in custody since.
Wirecard collapsed into insolvency last June after it emerged that €1.9bn of corporate cash did not exist. Large parts of its outsourced activities in Asia, where the group said it relied on third-party business partners and which on paper generated €1bn in annual revenue, were exposed as a sham.
The account apparently given by Bellenhaus puts the beginning of the fraud five years earlier than prosecutors had suggested last summer. Since his arrest, Bellenhaus has become a chief witness for prosecutors and is co-operating with them.
The demise of Wirecard, once acclaimed as a rare German tech success, has rocked the country’s political and financial establishment.
According to people familiar with the matter, Bellenhaus informed prosecutors that in 2014 he created another shell company, again at the instruction of Marsalek.
Based in the British Virgin Islands, the entity was incorporated under the name of Al Alam Solution, almost identical to the name of a Dubai-based business partner of Wirecard that was central to the fraud.
In late 2015, Marsalek redirected more than €4.5m to the BVI-based entity from a real payments processor Wirecard worked with in Asia. According to the account given by Bellenhaus, Marsalek had earmarked the funds for potential transfer to Wirecard in a plan to give the appearance to audit firm EY that they were coming from the Dubai-based business partner of a similar name.
But the money was never used for that purpose. Instead, when Bellenhaus demanded a significant pay rise, Marsalek suggested that he should keep the money from the shell company, according to his account to prosecutors.
Bellenhaus subsequently set up a private foundation in Liechtenstein to where the funds were transferred, according to people familiar with the matter.
The existence of the foundation and its cash was disclosed by Bellenhaus to prosecutors late last year, after investigators had stumbled upon the foundation, the people said.
Munich prosecutors have used testimony from Bellenhaus to build a prosecution case more widely. They accuse Wirecard’s former chief executive Markus Braun of being the linchpin of a criminal racket that allegedly inflated Wirecard’s revenue in an attempt to deceive investors. Braun denies any wrongdoing.
The former CEO, who also was Wirecard’s single largest shareholder, last summer said the company had been the target of “fraud of considerable proportions”. In November, he told MPs that he hoped prosecutors would succeed in tracing the missing money.
In response to questions from the Financial Times about the account from Bellenhaus, a lawyer for Braun said the former CEO “did not have knowledge about corporate shadow structures, no matter how they might have looked like. Hence he did not benefit from them.”
The same applied for potential embezzlement of funds through such structures. “The public prosecutors will have to thoroughly investigate the whereabouts of the funds from shareholders and investors.”
Lawyers for Bellenhaus and Marsalek declined to comment. Munich prosecutors also declined to comment.